Standing Senate Committee on Legal and Constitutional Affairs
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Proceedings of the Standing Senate Committee on
Legal and Constitutional Affairs

Issue 29, Evidence - April 22, 2015


OTTAWA, Wednesday, April 22, 2015

The Standing Senate Committee on Legal and Constitutional Affairs, to which was referred Bill C-377, An Act to amend the Income tax Act (requirements for labour organizations), met this day at 4:32 p.m. to give consideration to the bill.

Senator Bob Runciman (Chair) in the chair.

[English]

The Chair: Good day. Welcome, colleagues, invited guests, members of the general public who are following today's proceedings of the Standing Senate Committee on Legal and Constitutional Affairs. We are here today to begin our deliberations on Bill C-377, An Act to amend the Income Tax Act (requirements for labour organizations).

This bill proposes to require labour organizations and labour trusts to submit an annual information return, providing certain financial information to the Canada Revenue Agency for public disclosure. It would also impose a monetary penalty on labour organizations and labour trusts that fail to submit such a return. Bill C-377 was originally introduced in the House of Commons in December 2011 by Mr. Russ Hiebert, Member of Parliament for South Surrey—White Rock—Cloverdale in British Columbia. The bill was reinstated by the house at the start of the current session, and this is our first meeting on the legislation.

As a reminder to those watching, these committee hearings are open to the public and also available via webcast on the parl.gc.ca website. You can find more information on the schedule of witnesses on the same website under "Senate Committees."

For our first panel today, please welcome the sponsor of the bill, Russ Hiebert, M.P., South Surrey—White Rock —Cloverdale. You now have the floor, sir.

Russ Hiebert, M.P. for South Surrey—White Rock— Cloverdale, sponsor of the bill: Thank you very much, Mr. Chair.

Senators, it's my privilege to be invited to appear before you to advocate for my private member's bill, Bill C-377. My bill has had an interesting journey to this point. I won't tell you the whole story today, but you might be interested to learn that back in 2011 I was the very first member of Parliament to have his name drawn for private member's business in this the Forty-first Parliament.

Now four years later, there appears to be just enough time left to consider Bill C-377 and, if you and your colleagues deem it appropriate, pass it and have it become law.

And there are a number of solid reasons why you should pass this bill.

First, requiring labour organizations to file their financials for subsequent public disclosure would be an important step forward for transparency and accountability in a group of institutions that receive massive public benefits. Indeed, labour organizations in Canada operate tax free, and their members receive full income tax deductibility for their dues payments and receive their strike pay tax free. Dues deductibility alone costs the federal treasury approximately $500 million a year.

This Senate, in this Parliament, recently passed another piece of transparency legislation titled the First Nations Financial Transparency Act. I believe that with the publication of the first year's reports, band members and the Canadian public have now seen that most bands are, in fact, fiscally responsible, and those that are not are now being held to account.

Likewise, with the financial information that Bill C-377 provides, the public will be empowered to gauge the effectiveness, financial integrity and health of Canadian unions, and the value that taxpayers receive for the benefits that they provide.

This bill will bring Canada into the 21st century with respect to transparency for labour organizations. Public financial disclosure for labour organizations is already the law in other developed nations and our major trading partners, including the United States, Great Britain, France, Germany and Australia.

In fact, since I last appeared before the Senate committee to talk about Bill C-377 two years ago, a royal commission in Australia on trade union governance and corruption has met and recommended strengthening the disclosure regime there, including posting audited union financial statements on a government website.

There is no doubt in my mind that a requirement for public disclosure will help many Canadian unions avoid financial irregularities.

Again, in just the last two years since I appeared before the Senate on this bill, we've heard the scandalous revelations of the Charbonneau commission in Quebec, learned of an investigation of theft, breach of trust, fraud, laundering and the proceeds of crime involving executives of the Ontario Provincial Police union. We've seen a Quebec Federation of Labour boss convicted of fraud for inflated expense claims, witnessed charges of fraud laid against a business manager of the local International Brotherhood of Electrical Workers in Windsor, Ontario, and so on.

While Bill C-377 will not prevent all criminal activity, it is clear that if the books are published, it becomes much more challenging for would-be criminals to take advantage of union members' money.

It is also clear that union members, as well as the general public, want this type of accountability. According to a 2013 Léger poll of 1,400 Canadians, 83 per cent of the general public surveyed indicated that they want this type of law, and 84 per cent of current union members also agree.

This poll is consistent with past polls, including a Nanos survey in 2011 asking the same question.

Now, let me take a moment to address the critics of the bill. First, some have suggested that it will create a paper or expense burden for unions. However, a significant number of union leaders have already testified both before the house and the Senate in this Parliament, and almost all of them have stated that they already provide this financial information to their members.

Senators, if this information is already being provided to members, then there is little to no expense to provide this information to the Canada Revenue Agency as well.

Of course, there will be a cost to the government to collect and publish this information. The CRA has confirmed to Parliament that the estimated start-up costs of implementing Bill C-377 will be $1.2 million for each of the first two years, and $800,000 annually thereafter. I believe that this is a modest price to pay to obtain transparency on the use of hundreds of millions of dollars in public benefits.

Second, some union leaders have questioned the constitutionality of the bill, so please let me address that head on. I believe Bill C-377 is constitutional for the following reasons.

First, Bill C-377 is concerned only with matters that already fall under the Income Tax Act and have long been constitutional, namely the filing of financial information and the publication of data. For nearly 40 years the Income Tax Act has required the collection and public disclosure of the same sort of information from charities, and this has never been successfully challenged.

Second, Bill C-377 does not regulate the activities of unions, and it does not tell them how to spend their money. Anything they are doing today they will still be able to do after this bill is passed.

Finally, Bill C-377 does not violate any Charter rights, or the privacy of Canadians, by asking for limited disclosure of salary and benefits, or for paid time spent on political activities. Indeed, so-called sunshine laws in various Canadian provinces have been in place for decades, and on the issue of privacy, former Privacy Commissioner of Canada Jennifer Stoddart confirmed for the Senate Banking Committee on May 29, 2013, that nothing in Bill C-377, if passed, would violate the Privacy Act.

While you'll undoubtedly hear more legal opinions on these matters, what is clear is the point that motivated Stéphane Dion, the former leader of the Liberal Party of Canada and a constitutional scholar, to vote to allow this bill to move forward when it came before the Subcommittee on Private Members' Business of the House of Commons. Mr. Dion recognized the simple fact that Bill C-377 is clearly not unconstitutional.

After hearing from all your witnesses, I would urge you to come to the same conclusion that he did, that the questions raised by some about constitutionality are not sufficient justification to prevent the bill from moving forward for consideration by the full Senate at third reading.

If you believe in the principles of transparency and accountability for our public institutions, then I urge you to support Bill C-377.

Thank you again for inviting me here today, and I would be pleased to answer your questions.

The Chair: Thank you, sir. We'll begin those questions with the committee's deputy chair, Senator Baker.

Senator Baker: Thank you, Mr. Chairman, and welcome to the witness. I'll try to be brief so that others can ask questions.

First, Mr. Hiebert, you say that it will cost the taxpayers of Canada $1.2 million in the first year of operation if this bill passes. As you know, there's a parliamentary rule that applies to the Senate. We cannot approve a private member's bill that involves an expenditure of public money.

How do you answer that?

Mr. Hiebert: Mr. Baker, the Speaker of the House of Commons addressed this matter when it was before our chamber and came to the ruling that the CRA can incorporate into its current activities and under its current budget these kinds of activities. And so therefore it did not require a Royal Recommendation.

Senator Baker: Well, your evidence is that it's going to cost $1.2 million in the first year and $800,000, as I understand it, the year after. That involves a parliamentary rule, which is very clear. My understanding is that there was no amount of money that was determined that it would cost the public treasury when the bill was before the House of Commons.

Mr. Hiebert: As I said, the Speaker addressed this question when he —

Senator Baker: He did not address the question of $1.2 million.

Mr. Hiebert: He addressed the question of the additional cost to the CRA.

Senator Baker: When did you find out it would cost $1.2 million?

Mr. Hiebert: When the CRA came as a witness before the Senate two years ago.

Senator Baker: That was after the House of Commons passed it.

Mr. Hiebert: They testified.

Senator Baker: Okay, let's move on. You say this is similar to the system in place in the United States. It's my understanding that in the United States the system you're referring to applies only to private sector unions; is that correct?

Mr. Hiebert: I believe it applies to a variety of unions.

Senator Baker: No, private sector unions; there's a restriction on it. As well, the $5,000 applies only to unions that have an income of over a quarter million dollars a year; is that correct?

Mr. Hiebert: That's correct.

Senator Baker: There you go; so we don't have a similar piece of legislation.

Could you clarify the wording on page 3 of this bill, where you say:

. . . a statement with a reasonable estimate of the percentage of time dedicated by persons referred to in subparagraph (vii) to each of political activities, lobbying activities and other non-labour relations activities . . .

Now, in the previous paragraph, this not only includes persons receiving over $100,000 but also includes, and I quote, "persons in positions of authority" with the unions.

This clause will apply to somebody in a position of authority in a tiny municipality that has a union. How would you determine the percentage of time — a reasonable estimate — that somebody spends on political activities and non- labour relations activities in that community? Wouldn't it be rational for that person to say, "That's none of your business how much time I spend working for the Conservative Party of Canada"? Normal people would look at you and say, "This was settled many, many years ago. It's nobody's business if I spend time, on my time, working for a political party or for the church or anybody else." But this captures it because there are no parameters in law here. How do you respond to that?

Mr. Hiebert: Mr. Baker, this legislation was largely mirrored after the U.S. requirements, and many Canadian labour organizations that are headquartered in the United States currently have to disclose exactly this kind of information. You can look it up on the U.S. Department of Labor website, as I have, where Canadian labour leaders, workers and lobbyists currently disclose the time they spend on political activities.

With respect to the hypothetical situation that you're giving, in that case I would imagine that it wouldn't be a great deal of time, and so the answer would be negligible or nearly zero, if anything at all.

Do I think there should be separate standards? Do I think that some Canadian labour organizations should have to disclose their political activities to the U.S. Department of Labor and other Canadian labour organizations should not? No, I don't agree with that premise at all. I believe there should be a level playing field in Canada, where all labour organizations have to disclose the same kind of information, and currently that is not the case.

Senator Baker: You're going to have this —

The Chair: I'm sorry, senator. Senator Dagenais.

[Translation]

Senator Dagenais: My first question is on unions and their legal counsels, and some social stakeholders who are up in arms against this bill. You may be aware that I was once the head of a union and its vice-president of finance. For 15 years, I drafted financial reports for the union. I published public reports when I was the head of the association. Is it too much, in Canada, to ask unions to publish their financial statements? In addition, I would ask why, in your opinion, unions are so scared of a review of the expenses they make with money that is raised without being taxed, and when those that pay in, benefit from tax credits?

Mr. Hiebert: Thank you for your question.

[English]

No, I do not believe that it is extraordinary for Canadians to expect labour organizations to disclose this kind of information to them. In Canada, we support a variety of institutions: charities, First Nations, labour organizations. They all receive substantial public benefits. In the case of labour organizations, their benefits accrue to the tune of around $500 million a year in tax deductions. Do I believe that Canadians have an interest in knowing what they're getting for that foregone tax expenditure? Yes, I do. As I said, we do it for charities. We recently extended it to First Nations. For many years we extended it to federal and provincial government Crown corporations. We have learned that transparency and accountability are good for the institutions that serve the public.

We know from polling that Canadians want this kind of information, repetitive polling, where 83 per cent of Canadians have repeatedly said this would be good for the country. The fact that we're currently doing it for some institutions also demonstrates support.

In the case of charities, for nearly 40 years they have had to disclose information like this. It's put on websites that the public can see so that when they donate to them, they have some sense that their money is being well spent because there's some accountability. I believe the same rationale applies to labour organizations.

When the government, the Canadian public, foregoes so much money to support these institutions, and rightfully so, nobody's questioning that, there is a subsequent or reciprocal obligation on their part to provide at least some information. We're not asking for everything, and we know there are exemptions that we can get into, but just some information as is currently required by the U.S. Department of Labor. This is what really got me started at the very beginning: I found out that some Canadian labour organizations already disclose this information, and have for years, but to no Canadian source, to the U.S. Department of Labor. When I looked them up, I asked why this is the case. Why would they not also have this kind of disclosure in Canada? That's the purpose behind the bill.

[Translation]

Senator Dagenais: Are Canadian unions as involved in politics as it is claimed? If that is the case, do they truly do so with the support of their members? Does the current inquiry into the Police Association of Ontario strengthen the basis of your bill? You also mentioned what happened in Quebec with the Charbonneau commission and FTQ- Construction. Suffice it to say from all of this that unions must be transparent. These two examples show that this is the case.

[English]

Mr. Hiebert: Well, to answer your first question, I think Canadians don't know how much unions are involved in political activity. We have hearsay and are able to determine some information to that effect because of the disclosures on the U.S. Department of Labor website by Canadian labour organizations. We really don't know to what degree they're involved, and the members don't know to what degree they're involved in political activities.

This proposed legislation would provide some indication. It puts no restrictions on that involvement and no barriers or regulation. It simply requires information to let the public know what they're involved in, as we currently see on the U.S. Department of Labor website.

With respect to the Ontario investigation into the police association or the FTQ construction in the Charbonneau commission, these things have transpired since I introduced the bill, and some people have made a connection. I've always been of the opinion that the purpose of the bill is to gauge the effectiveness, accountability and health of these organizations. I've always made the presumption that whatever Canadians would find would affirm their confidence in these institutions.

The Chair: I have to ask you to sum up.

Mr. Hiebert: These might be exceptions; and I expect that they are exceptions to the rule. This kind of bill would likely help to identify, but I would believe that overall we would find very positive support for unions through their disclosures.

Senator Ringuette: For members of this committee listening to this issue in committee for the first time, I'd like to say that Senator Bellemare and I are the only ones who went through the process a few years ago in the Senate Banking Committee. From my files here, you can see that extensive research has been done. I would like to take the opportunity to make a few corrections to the witness's statement.

The first one is with regard to the constitutionality of the bill and the witness's statement that Stéphane Dion had agreed to this bill as a member of a subcommittee. Let me read a letter signed by Mr. Dion to Senator Gerstein that was filed on June 5, 2013, with regard to this issue. The second paragraph is as follows:

[Translation]

I am flattered by the confidence that my colleagues have in my constitutional skills. However, I must make it known that the Subcommittee on Private Members' Business of the Standing Committee on Procedure and House Affairs is not a constitutional court. It does not carry out an in-depth, exhaustive, and definitive analysis of bills. In this committee, we simply decide whether or not a bill should be debated or voted upon.

And he ends the paragraph by saying the following, and I quote:

Quite the contrary, this means that constitutionality is a subject of legitimate debate between parliamentarians.

In other words, this was in no way a constitutional endorsement.

I would also like to make a correction regarding costs. The Canada Revenue Agency has indicated that the bill's implementation cost would amount to $2.4 million, given that 1,000 entities will have to submit documents to the organization. We must take into account the number of relevant entities, and we are not only talking about unions, if you look carefully at the definition in Bill C-377.

[English]

Labour organizations also include employer organizations.

[Translation]

The Parliamentary Budget Officer estimates that the first year's outlay will amount to nearly $60 million. These are significant costs.

[English]

The record needs to be clarified on a very important statement by the witness.

Mr. Hiebert, you talked about transparency, effectiveness, accountability, and you said that taxpayers need to receive information with regard to tax breaks. Do you believe that should also be the case for businesses that get tax breaks and are involved in labour relations?

Mr. Hiebert: Is that your question?

Senator Ringuette: Yes.

Mr. Hiebert: Okay. I'd like to start by addressing the earlier comments that you made. With respect to the Subcommittee on Private Members' Business, they have several criteria that they use to evaluate whether or not a private member's bill will proceed for general consideration. One of those questions is, is the bill clearly not unconstitutional?

When Mr. Dion was challenged by an NDP member of the House of Commons on this question, he voted with the majority to allow the bill to proceed because it obviously passed that criterion. Otherwise, if it had not passed that criterion, he would have voted contrary. That's what I'm referring to when I say that there's support from Mr. Dion. At that stage, he clearly did not believe that it was an unconstitutional bill; otherwise we would not be here today.

Regarding the cost, I believe that the estimates provided by the Parliamentary Budget Officer are far less relevant than the estimates provided by the actual ministry that has to implement this piece of legislation. They did come and testify before a Senate committee and indicated, as I said, the first two years would cost about $1.2 million per year and then it would be about $800,000 thereafter. I think that's really the relevant information. The rest is simply speculation.

In terms of corporations, I have frequently been asked why this bill does not apply to other institutions. The simple answer is that I'm focused on this category of institution, just like in the past, and legislation was brought forward to focus on charities in 1977. Since then, they've had to disclose. More recently, the First Nations Financial Transparency Act focused on that type of institution. Now they have to disclose.

The Chair: I have to interrupt there. I'm sorry. Senator Plett.

Senator Plett: Thank you, chair. I'm not sure which witness I should be asking the question of right now, but I think I'll focus on the official one, Mr. Hiebert.

Mr. Hiebert, thank you for your tenacity in working with this bill as long as you have, and I believe it is now time that we finally put this to rest and make this bill law. I appreciate the work you've done.

We have a couple of police officers here, and the sponsor of the bill was the head of a police association. However, my question is still around the police associations. You and I have talked about this in the past.

Some of the members of police associations around the country have raised concerns with regard to safety. Have you met with members of the Canadian Police Association? If so, could you talk a little bit about their concern and assure the committee that this bill in no way jeopardizes the safety of the police association members?

Mr. Hiebert: Thank you for the question, Senator Plett. When the bill was in the House of Commons, yes, we did hear concerns expressed by the Canadian Police Association, and yes, we did meet with them to address their concerns about the disclosure and exposing of sensitive, identifying information. That is why we brought forward amendments to satisfy that particular concern that they had expressed at that time. I believe that since that time, since the amendments were put in place, they are content with that element of the bill. They may not be satisfied with the bill in its entirety, but they are with that particular element.

I do note, however, that there are many police unions in Canada that already publish names, including in some cases photographs, on their own websites. My amendments to the bill address that issue, but the broader concern about whether or not those kinds of individuals should be disclosed publicly remains; it's still out there.

Senator Plett: Thank you. The National Hockey League Players' Association has also raised some concerns. Again the same question: Have you met with the NHL Players' Association, and have you addressed some of their concerns?

Mr. Hiebert: I have not met with them. I've not received a request to meet with them. This is the first I'm seeing this. I've heard of the concern from other members, and all I can say is that we're not here to pick and choose which organizations should be required to disclose. The definition of a labour organization is drawn from previous case history and previous legislation, and it is fairly all-encompassing. If they fall under the definition, then so be it. But the broader purpose of this bill is to provide transparency and accountability for these kinds of institutions.

Senator Plett: Because of political activity, and they say that they would not be involved in any partisan political activity.

Mr. Hiebert: If that's the case then their disclosures in that particular area would be nothing; it would be zero.

Senator Jaffer: Thank you for your presentation. I want to go to something completely different. Knowing that you're also a lawyer, I would like you to address the issues that have been raised by many under the Charter of Rights and Freedoms: the issue under 2(b) and 2(d), the guarantee of freedom of expression and guarantee of freedom of speech. Do you have any concerns? Does this bill comply with the Charter of Rights and Freedoms when it comes to 2(b) and 2(d)?

Mr. Hiebert: I believe it does, yes. I believe that the fact that the bill specifically exempts labour organizations from detailed disclosure about their core activities addresses that issue. I believe that requiring them to disclose the gifts that they give or travelling to conventions would not inhibit them in any way from associating or their expression. The fact is the bill does not regulate them, in any way. As I said in my opening statement that, if this bill were to pass, unions could continue to do what they've been doing. They simply have to disclose some elements of what they've been doing. Because it doesn't regulate or inhibit them, I do not believe it could be subject to. But I do not feel it would fail under a Charter challenge in that respect.

Senator Jaffer: Mr. Hiebert, I have a question further to what Senator Baker was asking you about, on page 3, subparagraph (vii.1). Can you define what "other non-labour relations activities" are? What is your definition for that?

Mr. Hiebert: The bill itself does not have a definition of "other non-labour relations activities," and to some degree that would be left to the CRA to provide more specific guidance on the detail of what that would mean. A straightforward reading would be that it's non-labour relations activities.

Senator Jaffer: Would that cover a Boy Scout leader working in your church? You drafted this, and so I'm asking you: How could you tell any person in Canada to set out what their non-labour activities are? Would it be working in the church, being a Boy Scout leader?

Mr. Hiebert: As I said, honourable senator, when it comes to the specific examples that you're providing, I believe that in that case, if there's an institution that falls within the definition of labour organization, and they have that particular question, that's a question that they could put to officials at the CRA. But, as we all know, in legislation, you cannot anticipate every hypothetical situation and cover it off. You have to provide general guidance. The language we've used in this bill is consistent with the language used within the Income Tax Act and the definitions used in the act. It's similar to the law as it was drafted back in 1959 and updated in 2004 in the United States.

The Chair: We have a little under 15 minutes, and I have seven questioners remaining. I want to encourage all of you — I know it's a challenge at the best of times — and to our witness as well, to please try to tighten up your responses to questions. That would be appreciated.

Senator McIntyre: Thank you for your presentation. In perusing Bill C-377, my understanding is that the $5,000 disclosure threshold does not apply to the core functions of a labour organization. For example, if the funds were expended for administration, overhead, or labour relations activities, my understanding is that then only an aggregate figure would be supplied for all spending in those areas. However, in the case of related party transactions, conflict of interest, involvement of labour union in lobbying or political activities, full reporting on the details of those transactions will be needed. Am I correct in this assumption?

Mr. Hiebert: The bill specifically exempts those core activities of a labour organization. In those instances, they simply have to disclose an aggregate amount.

Senator McIntyre: In other words, a lump sum.

Mr. Hiebert: Yes.

Senator McIntyre: They don't have to get into details?

Mr. Hiebert: Correct.

Senator McIntyre: Does the bill require audit statements?

Mr. Hiebert: No, it does not.

Senator McIntyre: It makes no requirement that the filing be audited, for example? My understanding is the only activity required by the bill is the filing of an information return.

Mr. Hiebert: Correct.

Senator McIntyre: Thank you.

Senator Fraser: Mr. Hiebert, welcome. In your opening statement, you, like Senator Dagenais and numerous other supporters of this bill, mentioned the Charbonneau commission as an indication that there is a problem of corruption, I guess, in unions that needs to be tackled. I'm a Quebecer. I've paid attention to the Charbonneau commission. I note that we do not have its report yet. I also note that among the witnesses who provided very troubling testimony, if memory serves, a greater number were employers than representatives of unions. You say this is a sector-specific bill, but in fact unions exist in a unique circumstance in that they exist as part of, if you will, a matched set. They exist to function in an adversarial relationship with employers. Why are you not demanding that employers also give this, and not just give it to the CRA but make public this extraordinary degree of detail down to the purpose of every single contract of $5,000?

Mr. Hiebert: Thank you for the question, Senator Fraser. As I indicated in an earlier answer, I believe that when you deal with organizations, you have to recognize that they operate differently. Just as charities operate differently than labour organizations and First Nations operate differently than charities, I believe corporations operate differently than labour organizations. I would not be opposed to someone among my colleagues or from your upper chamber bringing forward similar disclosure requirements for corporations. I'm simply here saying that what I discovered and identified was that some Canadian labour organizations have to disclose this information and others do not. The ones that do don't have to disclose it in Canada, but they have to disclose it to the U.S. Department of Labor. I think that if Americans deserve this kind of disclosure, so do Canadians.

Senator White: Thanks for being here today. I'll start by saying I'm all for transparency, but, in response to your comment just now, those who do have to respond to it in the United States, as an example, don't have to do it in accordance with the Income Tax Act. They have to do it in accordance with what law?

Mr. Hiebert: They have their own LMRDA — the Labor-Management Reporting and Disclosure Act.

Senator White: A labour law. The challenge we would have in Canada, I take it, is that labour law is not federal law but provincial law.

Mr. Hiebert: It's provincial, correct.

Senator White: Have any provinces in Canada today already instituted such a regime under their labour law?

Mr. Hiebert: Seven of ten provinces require some degree of disclosure under labour law, of differing amounts to members. But you have to remember this bill is about disclosure to the Canadian public, because it is the Canadian public that is supporting these institutions to the tune of $500 million a year, with tax deductions.

Senator White: I understand, and I appreciate it. I want to start again by saying I'm a believer in transparency, but I'm also a believer in ensuring that legislation is brought through under the appropriate light and developed under the appropriate laws. I guess the only concern I have and the convincing I need is that the labour law is not the place. It shouldn't be dealt with provincially rather than the Income Tax Act federally. That's my challenge. To be fair, when you use the U.S. as an example, and yet the U.S. does not use their income tax act as the sword in this case and instead uses labour law, which in the United States is federal, I'm not sure that it satisfies me.

Mr. Hiebert: Can I comment? The simple point is that we require other disclosure by organizations through the Income Tax Act, like charities, and that's why I believe it's the appropriate place for disclosure.

Senator Joyal: Mr. Hiebert, I met with the representative of the NHL Players' Association, Mr. Fehr, three weeks ago. The way he explained his case to me was very genuine. He said to me they enter into a licensing agreement with third parties to sell the images, the cards, the jerseys, the video games and all the paraphernalia that accompanies NHL activities in Canada. We know all Canadians, especially in those weeks, have their attention focused on that. He said, "We were caught by this bill. I'm sure unintended, but nevertheless we are in there. We would seek an exemption to this bill because, quite obviously, our activities don't compare to the activities of the union." He said they thought there should be an exception and a clause to recognize exceptional circumstances whereby an association like them would not be caught by the definition. He said he thought it was proper to request that considering that it would not jeopardize the objectives of the bill.

Do I understand that you would support such an exception clause in the bill, or are you saying so be it, as you said in an earlier answer?

Mr. Hiebert: I would not support a particular amendment to address a particular issue. I think we have to look at the broad situation. I simply want to note that I have heard no similar concern expressed by other professional sporting organizations, like baseball or basketball, so I'm not sure why we would even entertain an exemption to one professional sporting body and not the others.

Senator Joyal: The way Mr. Fehr mentioned it to me, when the debate took place in the other place, he thought there was so much concern about traditional unions that they didn't think they would be caught by it. I'm sure that if you canvas the other national sports players' association, they will find themselves in exactly the same position as the hockey league. I'm sure they will concur in the same conclusion. Because of the proprietary rights that they negotiate with third parties in relation to the players, whatever the players may be, they will find themselves in exactly the same situation. Again, it's not to avoid public interest, transparency and all the objectives that you explained to us being the objectives of your bill. I think that there is a genuine concern here that there are third-party agreements that should be protected by the privacy that normally, in the business of trade of images of players and the like, should be recognized. To me, it makes sense. I'm surprised to realize that you're not open to some flexibility in your bill.

Mr. Hiebert: As I said, it's interesting that other professional sporting associations don't have the same concern. They also operate within the United States. The definition is very similar to what is applicable in the United States. If the concern was here, you would expect it to be in the United States as well. It's simply not one that's come to my attention.

Senator Batters: Thank you very much, Mr. Hiebert, for being here. Congratulations on all the work that you have done to bring this bill to this stage in your now 11 years, I believe, that you've been a member of Parliament.

Picking up on the U.S. example, I understand that a number of other jurisdictions as well, including the United States, already have legislation in place establishing similar financial disclosure requirements. We've discussed that a little so far today, but I just wanted to give you more of an opportunity to tell us a bit about that experience. Have disclosure laws worked effectively in those jurisdictions? What has been the impact on labour unions? Has it destroyed labour unions?

Mr. Hiebert: Thank you for the question. As mentioned, virtually all of our trading partners, the G7 members and others, have similar union disclosure requirements — the U.K., of course the United States after which this bill is modelled, France, Germany and Australia. My research has suggested that labour organizations are strong in those countries and have not suffered adverse effects, whether in negotiations or in any of the other elements of their service to their members as a result of requiring them to disclose information to the public. We have an experience in a variety of other countries over a lengthy period of time, none of which suggests that it's a problem. We have Canadian labour organizations that have had to disclose this information to the U.S. Department of Labor for many years and have not objected to those requirements. So why don't we require those same institutions to disclose in Canada and incorporate the other ones that have not had to disclose? That's what this bill is here to address.

Senator McInnis: Thank you for coming. It's been an interesting bill and a long journey for you. I agree with transparency, particularly when it comes to union members, but I want to ask you a question because we read this in the papers and so on. Is this bill more about going after unions or some kind of frontal attack to get at unions? Is it more about exposing any third-party involvement that may be in the form of dollars being contributed to political parties to influence the outcome of elections?

Mr. Hiebert: Thank you very much, Senator McInnis, for the question. I have said from the very beginning that I believe labour organizations play a valuable role in Canadian society and are worthy of the support that the public provides them through the tax deductions that we do. They assist in providing a healthy environment, proper compensation.

No, in no sense should this bill be construed as anything other than an opportunity for labour organizations to justify and to demonstrate that they are healthy, that they operate effectively, and that Canadians can have confidence in the work that they do.

The Chair: I'm sorry. We've exceeded our allotted time. I'm sure we could go on longer, but, Mr. Hiebert, thank you for being here and putting forward your case. It's very much appreciated.

In our second panel I'm pleased to introduce, from the Canadian Labour Congress, Hassan Yussuff, President. As individuals appearing today, we have Brian Johnston, Partner, Stewart McKelvey; and Paul Cavalluzzo, Senior Partner, Cavalluzzo Shilton McIntyre Cornish LLP. Welcome, gentlemen. You all have opening statements, I understand. Perhaps, Mr. Yussuff, we could begin with you. The floor is yours, sir.

Hassan Yussuff, President, Canadian Labour Congress: Honourable senators, thank you for inviting me to testify here today. I'm Hassan Yussuff, President of the Canadian Labour Congress, proudly representing some 3.3 million unionized workers across this country.

You have our detailed comments on this bill and our written submission that we submitted to the clerk. Senators, there is no demonstrable rationale for Bill C-377. The Canadian Labour Congress believes that Bill C-377 is an unwarranted, unconstitutional and indefensible bill that is inherently flawed and must be defeated. I will start by looking at the constitutionality of this bill and open with issues of confidentiality and privacy.

Bill C-377 appears to directly target activities protected by the Canadian Charter of Rights and Freedoms by requiring disclosure of time spent on political activities. Privacy is recognized as a fundamental constitutional right under Canadian law.

This bill is inviting constitutional challenges and litigation. The publication of private, personal information on payments to an individual, such as their name and address from pensions to health benefits, could make these individuals vulnerable to con artists and illegal schemes and is a breach of their privacy rights.

This bill contravenes the freedom of association guaranteed under the Charter of Rights and Freedoms. Canadian courts have recognized time and time again that constitutional protection for freedom of association is essential because employers can interfere with workers' democratic self-association and self-governance.

Senators, transparency is a wonderful thing. If only we had transparency in politics the same way we have it in democratic organizations like the trade movement.

I'm the president of the country's largest democratic organization, and I'm accountable to my executive, council, convention and membership. Asking us to open our books to employers is like asking a political party to turn over their books, with detailed reporting of every expense and strategy, to their opponents. In fact, Senator Segal made a smart comparison, asking if Coca-Cola should be forced to disclose its marketing plan and expenditures over $5,000 to Pepsi.

Labour unions have said it before, and I will repeat it again: We have no issue with providing financial details about our operations to our members. We do it on a regular basis.

The labour board can confirm that every request for disclosure has been fulfilled. In fact, I ask this committee to call on the Chairperson of the Canada Industrial Relations Board to testify on this issue. If you think our members would allow us to get away without reporting to them in detail, then you've never been to a union meeting or a union convention.

There's, of course, the existing legislation. Bill C-377 goes well beyond the federal sphere by trying to regulate unions and labour relations in areas of provincial constitutional jurisdiction. Most provincial laws will require disclosure of financial information to union members. British Columbia, Saskatchewan and Nova Scotia, for example, require unions to provide each member with an audited financial statement on an annual basis. Five other provinces, and the Canada Labour Code, require that these statements be provided upon request.

In fact, there is only one underlying reason for this bill: It is to single out, interfere with and weaken unions across this country. Let me tell you, we have no intention of being weakened. We will defend working people across this country, whether from attacks from governments or attempts from employers to cut wages and benefits. It is clear we are already more than accountable, of course, and transparent to our members under the existing legislation, and we make sure of it.

This bill also interferes with the internal affairs and administration of trade unions in a way that is prohibited under the Canada Labour Code and provincial labour laws and labour relations statutes across this country.

Finally, this bill guarantees that the costs will be borne by a lot of people in terms of what they will have to pay. It will mean higher cost for pension plans and trust funds. It will likely mean less benefits and higher premiums, and possibly increased contribution payments from our members. It will mean a higher cost to the federal government, of course, to the tune of over $20 million in the first two years and $3 million ongoing thereafter, according to the CRA.

Senators, in previous hearings on this issue, you amended this bill and sent it back to the House of Commons. Passing this flawed bill would now be an affront to working people and to proper legislative practice in this country. Bill C-377 is flawed, so no amendments will ever be enough. The only way is to withdraw this bill entirely.

I'll end with a quote from my good friend Senator Hugh Segal, who said that this bill:

. . . is an expression of statutory contempt for the working men and women in our trade unions and for the trade unions themselves and their right under federal and provincial law to organize.

I couldn't agree more. I hope we can count on your support in working with Canadians to defeat this bill.

Brian Johnston, Partner, Stewart McKelvey, as an individual: Thank you, Mr. Chair and senators. I'm honoured to be here and to provide my thoughts on Bill C-377.

My area of practice is labour and employment law. I have been doing that on the management side, principally, since 1981 when I was admitted to the Nova Scotia bar.

I'm a management-side labour lawyer. I have been recognized in the Lexpert/American Lawyer Guide to the Leading 500 Lawyers in Canada. I'm in the Expert Guide to the World's Leading Labour and Employment Lawyers, the International Who's Who of Management Labour & Employment Lawyers, Expert Guide to the World's Leading Labour and Employment Lawyers in Canada.

I grew up in Sydney, and I wanted to be a labour lawyer since I was in Grade 10. My father was a steelworker. His father was a steelworker. They were union members for a lot of their working lives.

I have represented unions. I've organized unions. Sometimes I've acted on behalf of unions as they deal with their own employees.

I suspect that given my background, and because you're hearing from so many on so very many issues on this bill, you want me to address a significant question, which is whether this bill is bad for labour relations. I don't believe it is. I think it's wholly consistent with and doesn't offend the principles that we look through a prism with in respect to labour laws — namely, balance, transparency and accountability.

Now, to put all this in context, about 5 million Canadians are covered by collective agreements, and the CLC is the umbrella organization for many of those unions, representing about 3.3 million or so. About 30 per cent of Canadian workers are unionized. In the U.S., it's about 11 per cent. The vast majority of Canadian workers are represented by big unions; the top eight unions represent about 48 per cent of all Canadian unionized workers.

The Canadian labour movement is not downtrodden. The number of union members has grown over the last 15 years. In fact, the labour movement is celebrating — and I took this from Mr. Cavalluzzo's website — the exciting start to 2015 with the Supreme Court of Canada having released three decisions defining the scope of constitutional protection for workers' rights under the Charter. This new labour trilogy advances protection for the fundamental rights of workers. Based on freedom of association protection under the Charter, it protects the rights of employees, as it says, to establish, belong to and maintain union membership; to join a union; to engage in collective bargaining; and to strike.

So these Charter decisions in 2015 secure the future of the Canadian labour movement. Therefore, let me just go back to balance, transparency and accountability.

Balance is a hallmark of any labour-impacting legislation. Labour codes seek to achieve balance so that employers can bargain with unions as equals. This bill does not disturb that balance. Unions already know an awful lot about the employer's financial situation, including compensation and benefits. There's a lot of disclosure that employers go through within Canada. Most employers, on the other hand, are quite in the dark about union arrangements, but they generally assume that unions have substantial financial resources and support, and in my experience employers aren't wrong in that belief.

Transparency is another hallmark. Unions have the right to demand considerable information to be disclosed through the collective bargaining process. For example, any employer who asserts that it doesn't have enough money to give a raise will be expected to disclose the basis for that assertion. Labour boards and arbitrators have broad subpoena powers to insist on employer disclosure, along with the duty to bargain in good faith.

Finally, there's the matter of accountability. Legislation that affects labour matters typically deals with some expectation of accountability. Employers and unions have to follow the rules. If they breach the rules, there are remedies or there are penalties.

We know of the substantial reporting expectations of publicly traded companies — salaries, bonuses, share options — governments, municipalities, school boards, universities and presidents' contracts being in the news. It's not unusual for the quantum of lawyers' fees to be disclosed, including mine.

And then there's the widely used "sunshine lists" derived from compensation acts, like the one we have in Nova Scotia, introduced by the NDP government, fulfilling a commitment to be more open and accountable about the operations of the government, where names are named.

So, at the end of the day, someone other than me is going to be deciding about whether the existing substantial benefit under the Income Tax Act derived for both unions and union members should be balanced with this bill.

In my view, Bill C-377 will not undermine labour relations. Unions are here to stay in Canada; the Charter has assured that.

Thank you.

Paul Cavalluzzo, Senior Partner, Cavalluzzo Shilton McIntyre Cornish LLP, as an individual: Thank you, Mr. Chairman, and I thank all the senators for inviting me here today to speak.

I am a constitutional and labour lawyer and have been in practice in Ontario since 1973. I represent trade unions, professional organizations, employees, pension funds and so on, and I've argued many constitutional cases in the Supreme Court of Canada.

Now, as a senior constitutional lawyer, I thought it was important for me to come before you to share with you my grave concerns in respect of the constitutionality of Bill C-377.

But before doing that, I just want to generally review what I think it is. It's an intrusive, paternalistic piece of legislation that is an insult to the working people of this country, because it implies that workers cannot — cannot — ensure that their own trade unions are accountable and transparent. A trade union is a voluntary association. It is made up of its members. Its responsibility is to its members. It seems to me — and the Supreme Court noted in a case very similar — that the trade union is a very democratic organization, and the state has no interest in intervening in its internal affairs.

In terms of the constitutional issues, there are so many constitutional issues raised by this bill that I don't have time to share them all with you. I'm going to focus on only two.

The first — and you have my written brief — is called a division-of-powers problem, because, as was stated before, labour relations in this country are a matter of provincial-as-primary jurisdiction. Federal jurisdiction is the exception. Ninety-two per cent of the employees in this country are represented by trade unions under provincial jurisdiction. The federal government has no business attempting to regulate the labour relations of the province.

I heard Mr. Hiebert's evidence, and I couldn't think of any better evidence that demonstrates what the real purpose of this legislation is. It has nothing to do with taxation. The jurisdiction of the federal government under the Constitution Act in respect of taxation can be found in section 91.3, and it talks about raising money. This bill has nothing to do with raising money. What it has to do with is, as he suggested, making trade unions more transparent and accountable. And that demonstrates beyond doubt that this legislation has to do with trade unions. The federal government has no business intervening in provincial jurisdiction, and I'm sure the provincial governments will come forward and suggest that.

Only 10 per cent of the employees in this country fall under federal jurisdiction, and those would be the only employees that would be impacted by this legislation because, in my view, the courts will find that it's within provincial jurisdiction because it's a labour relations law and not a tax law.

I couldn't believe it. Mr. Hiebert comes before you and says that it's based on the American labour act. Yes, labour relations in the United States are a federal matter. That's why the federal government there has passed the Labor- Management Reporting and Disclosure Act that he is relying on. It's not a provincial or a state act.

Quite apart from the division-of-powers problem, there are serious Charter of Rights problems with this legislation. I'm focusing only on two sections, section 2(b) which protects freedom of expression and section 2(d) which protects freedom of association. What business does a government in this country have asking a voluntary association like a trade union how much money they are spending on political activities? How much money are you spending on lobbying? That's a matter of political expression, which lies at the core of this country. Government has no business asking any organization how much money they are spending on political activity.

The other point is in terms of association. The whole point of freedom of association is to equalize the power between workers and employers. Why aren't employers being asked for the same kind of detailed reporting and disclosure requirements? I heard about the royal commission in Quebec. Most of the problems I heard were employers, not trade unions. And the whole point of freedom of association is to ensure that equalization.

Well, what you're going to do with this legislation is force trade unions to disclose internal financial information to the employer, which is going to substantially interfere with collective bargaining. That's what the Supreme Court of Canada said recently, in the trilogy of cases which Mr. Johnston referred to, no government has business doing. It's freedom of association. It protects the internal workings of an organization.

In closing, I've left you with a document here, and just let me briefly refer to it.

The Chair: No, I'm afraid we don't have time. We have the document. You will perhaps have an opportunity during questions to refer to it.

Senator Baker: Thank you to these three witnesses. Mr. Cavalluzzo and Mr. Johnston have many pages of case law. Mr. Cavalluzzo, you have 150 reported cases, judgments in Westlaw Carswell.

Mr. Cavalluzzo: I didn't know that.

Senator Baker: Mr. Johnston is approaching 100, and of course Mr. Yussuff, who, in law with the Labour Relations Board, has had many cases in the past. He's done a wonderful job for the workers of Canada years ago.

If you could comment on two matters so that the chair won't have to cut me off if I get too rambling. The two matters are these: In the United States, the law that's been referred to, this $5,000 figure came into effect in 2005 after a couple of court decisions from legislation originating in 2002. It applies only to private sector organizations, unions in the United States; it does not apply to any public sector unions.

Second, the size of the unions in the private sector is divided into three forums: one, two and three. One are the big ones; two, the medium-sized ones; three, the bottom ones.

This legislation bears no resemblance to that in effect in the United States.

My question to you is this: When I look at this, the most offending part of this legislation, I just can't get over it. I know Canadians would be absolutely outraged to hear it, and it has nothing to do with what either one of you mentioned, but I know it's on your mind. It's this: Every single person in a position of authority in a union in this country is now going to have to produce a statement with a reasonable estimate of the percentage of time dedicated by those persons to political activities, to non-labour relations activities in their communities. A small community in Newfoundland or Nova Scotia, and you've got the shop steward or the president of a little municipal union having to print out, every single year, what his or her political activity was and to say what activities they were involved in that were non-union related.

That strikes me as being very offensive to Canadians. Do either of you have any comments?

Mr. Cavalluzzo: I certainly do. Because in the Lavigne case, the Supreme Court of Canada said that it is virtually impossible to distinguish between collective bargaining expenses and political expenses. For example, if you're a public sector union and you spend money on legislation which affects your bargaining unit, is that collective bargaining? You're trying to protect your bargaining unit. Or is it political?

The Supreme Court of Canada says that's a fool's game. You cannot distinguish that way when you're dealing with unions in Canada. Unions in Canada are much different than the Americans. We should not be importing our labour laws from the United States, thank you.

Mr. Yussuff: In regard to the section that you referred to, Senator Baker, regarding political activities, it is my duty and responsibility to defend my members in every capacity that I can when they are faced with challenges, whether it's to improve the legislative framework that protects them in this country at the provincial and national levels; and similarly, in regard to government action, if my members are bargaining with an employer and the government is interfering in the free collective bargaining, it is my duty to defend my members in the political arena. That is my job because they derive an income by being able to negotiate with their employer. If a government interferes in that freedom for them to do so, yes, I will intervene by lobbying the minister and members in the opposition to say this is fundamentally flawed in labour relations in this country.

How can you tell me how much of my time I should report to you? One hundred per cent of my time will be devoted to defending my members in this country, regardless of whether the government should pass a law or not, because it's my duty.

Otherwise, basically what you're asking me to do is sit in my office and write nice letters to wonderful people like you thanking you for your kind service, even when you're screwing my members. That will not happen.

Senator Baker: Good for you. Now that's an answer.

[Translation]

Senator Dagenais: My first question is for Mr. Cavalluzzo. I read your document, and I saw, after having done some research, that in 2014, your office received over $400,000 from various unions.

I do apologize; I had not noticed that you were not hearing the interpretation. Do you understand me?

You have just stated that you are here as an independent witness, but please forgive me if I have some doubts about that. Your opinion might be independent, but I have seen invoices such as the $400,000 that was collected from the United Food and Commercial Workers Union, from the Association of Machinists, and from others. I see that you have worked for many of them, perhaps in the United States, as these are American tax documents. I do not know who is paying you to appear before us today, but regardless —

That being said, I imagine you must be aware of what happened in Quebec with the Charbonneau commission. If not, I can tell you. I hear that the report has not been tabled at the Charbonneau commission and that only employers have appeared.

However, I have seen many representatives of the FTQ-Construction present there who have been denounced by their members and who face criminal charges. In your opinion, what was done with membership dues, and what do you think of the quality of those union leaders?

I am a police officer myself, and I find it unfortunate that the Police Association of Ontario is the subject of an investigation by the Royal Canadian Mounted Police. One of its advisers was dismissed, while the president and the vice-president are suspended, because they "dipped into" members' money. I would like to hear your point of view on the quality of union leaders.

While I have the floor, I would also like to talk to you about transparency and specify that it is the employer who collects union dues. When it is insinuated that the employer does not know what happens in the pockets of unions, let me tell you that every 15 days, when I was vice-president of finances for my union, I received a cheque from the employer. The employer knew that every year he transferred $4.8 million in union dues to me, and he knew the financial statements of the unions.

What is your opinion on the transparency of the bill? Currently, I think that the government, as much as the unions, requires transparency. That comes into play, and now, it is the unions' turn to show transparency.

[English]

Mr. Cavalluzzo: First of all, I didn't come here to be insulted.

[Translation]

Senator Dagenais: I am not insulting you, dear sir, I am asking you a question.

[English]

Mr. Cavalluzzo: I am here on my own. I am not being paid by anyone. It took me a week to produce this brief. I didn't get one cent in legal fees for that, so just dealing with the first point.

The second point, many institutions, even this chamber, have members that are charged criminally. The fact that certain people are charged criminally does not mean that the whole institution is evil or wrong. What is going on in Quebec —

[Translation]

Senator Dagenais: But rules are changed, for example.

[English]

Mr. Cavalluzzo: What is going on in Quebec, we will have to wait and see. What is going on in Ontario, in respect of the Ontario Provincial Police Association, I think that you people, senators, had better be very careful. These three individuals are under criminal charges, and our Charter of Rights presumes people to be innocent, and I don't think that politicians should be discussing the guilt or innocence of these people who haven't even been charged yet. This is what the Charter of Rights is all about: due process.

In terms of the quality of labour leaders, I think this country has the finest labour leaders in the world.

Some Hon. Senators: Hear, hear.

Mr. Cavalluzzo: I would have thought that as a senator of this country you would be proud of the labour movement. Unfortunately, you're not.

[Translation]

Senator Dagenais: I am not talking about guilt, I am talking about transparency.

[English]

Senator Ringuette: My questions are for Mr. Johnston. Thank you for your presentation. You put a lot of emphasis on the issue of balance as a hallmark in labour-impacting legislation. Do you not find that in order to achieve that balance, Bill C-377 would also have to request transparency and all the other items in regard to the Income Tax Act so that there would be balance between negotiating parties? Don't you believe that?

Mr. Johnston: In my labour relations experience, there is imbalance now. These are the rules; this is the game that we play. Unions have substantial information about the employer, about who is paid what, what the benefits look like, what the salaries look like, very substantial information. In some institutions, universities and others, it's an open book.

Senator Ringuette: I'm sorry. I was referring to Bill C-377 in regard to the public disclosure on the Canada Revenue Agency website, the transparency of expenses of $5,000 and more for employers.

Mr. Johnston: Well, if you, Senator Ringuette, go to the Nova Scotia provincial government website, you will find the names and the compensation of every person in Nova Scotia who is employed by a university, a school board, a health authority and the government in excess of $100,000.

Senator Ringuette: Maybe I'm not clear, chair, in my question. My question is this: In regard to this bill and your strong promotion of balance, and the fact that this bill will have every expense of $5,000 and more of every particular union in this country public on the Canada Revenue Agency website, in order to achieve this balance that you are hoping for, do you not think, then, that the employers that are in negotiation should also have all those $5,000 expenditures public on the Canada Revenue Agency website? Employers also have tax credits.

Mr. Johnston: It's a little hard to answer the question because I know that this bill is confined to labour organizations. I do know in labour relations that employers are expected and in fact disclose anything that is relevant to collective bargaining, so that disclosure happens.

Senator Ringuette: But not in public.

Mr. Johnston: And I can assure you that this disclosure is often made public by unions, not inappropriately, and I must say that I agree with Mr. Cavalluzzo's defence of the labour movement in Canada as well. So not inappropriately, but it does happen. We're focused on this particular bill. It's my experience that this is not going to create any imbalance. It is not going to undermine effective Canadian labour relations.

Senator Ringuette: With all your experience in representing employers in labour relations, you are certainly aware of the division of power between the federal and the provincial government in regard to this issue. What do you think this bill will produce in regard to jurisdiction?

Mr. Johnston: I think this bill will produce probably litigation. I read former Supreme Court of Canada justice Michel Bastarache's opinion where he was saying that, in fact, in his view, in his experience, this bill is perfectly constitutional. Having said that, I respect very much Mr. Cavalluzzo's view, and he has a lot of experience in constitutional matters.

Senator Ringuette: But in your experience as a labour lawyer, you've dealt, certainly, with the provincial jurisdiction and labour codes and the federal jurisdiction and the federal labour code, so where do you see Bill C-377 in regard to jurisdiction?

Mr. Johnston: I will confess to you that I was satisfied that this bill — I'm not a constitutional lawyer — I believed that it was constitutional. It deals with transparency and accountability in relation to the tax-exempt status of labour unions and the tax deductibility of union dues, and the quid pro quo or the balance is, well, you've got to be transparent in relation to where those monies go. That was my sense of it, and that sense gets applied I understand to an extent to charities and to sports organizations in the context of the Income Tax Act, but don't take my word for it. I'm not a constitutional lawyer.

Senator Batters: Thank you for being here today. First of all, Mr. Johnston, thank you very much for your testimony here today. You were called to the Nova Scotia bar in 1981. This year is 20 years since I was called to the Saskatchewan bar, and you've been practising labour law pretty much exclusively for 14 years in addition to that. That's quite an accomplishment. You have a significant labour relations legal background, and I can only imagine how many cases Senator Baker would have pulled up in the case law jurisprudence that you have handled.

You had limited opportunity to deliver your opening statement here today. I found it to be helpful and concise, but your time was limited, so I wanted to give you an additional opportunity to tell our committee more about — though you've just said you're not a constitutional lawyer, at the same time, you are very familiar with the trilogy and you've spoken significantly about some of the recent case law that's happened and its impact on labour relations law in Canada. I wanted to give you an opportunity to tell us more about your considered legal opinion that this bill does not violate the Canadian Charter of Rights and Freedoms and instead is constitutional.

Mr. Johnston: Very briefly, then.

Senator Baker, in your research of Mr. Cavalluzzo and me, you would probably have found a case he and I did together about 30 years ago. He won and I lost, and it was the only time that we've met.

Mr. Cavalluzzo: I don't even remember that.

Mr. Johnston: It still pains me.

I've read Michel Bastarache's opinion, and it's his view that the legislation contemplates disclosure and doesn't contemplate regulation. It's his view that there are analogous intrusions, such as charities and athletic associations.

In terms of the volunteerism of unions, we do hear that from time to time, and that's not true, with the greatest respect. I negotiate collective agreements; if you're a union, you have a statutory right to bargain against my employer client, and I have to recognize you. You will tell me, "Put in the collective agreement that all of your employees have to be union members," and I will tell you that I will do that every time. There's no percentage in an employer saying no, so why say no?

They start off voluntary, but they're not. The CLC is a different organization. The CLC is an umbrella organization of unions, and truly the unions there are voluntary members. They decide to join the CLC or some other organization.

Senator Batters: I just wanted to ask Mr. Cavalluzzo briefly, with respect to your argument that this bill violates the constitutional division of powers, I'm not sure if you're aware of this, but last week there was an article in iPolitics reported by Andrea Gunn where former Supreme Court Justice Michel Bastarache recently made some comments about this particular bill. I'll read a couple of quotes from that:

Mr. Bastarache maintains the substance of this bill deals with taxation, not labour, as it only requires disclosure.

There's a further quote:

"Federal tax power over taxation is unfettered by anything the provinces do," he said. "I think there's very little chance it will ever get to the Supreme Court with that kind of argument," Bastarache said. "The possibility of winning on that basis is so weak that it wouldn't even get plea."

You have expressed an opinion contrary to that, and I'm wondering if you are confident that your evaluation of this bill's constitutionality is superior to that of former Supreme Court justice Michel Bastarache.

Mr. Cavalluzzo: Thank you for the question. In terms of former Supreme Court of Canada judges and opinions, you should recall that former Supreme Court judge Ian Binnie advised the federal government that their appointment of Justice Nadon to the Supreme Court of Canada was legal. He was wrong, clearly wrong, to the embarrassment of the government. I think that Justice Bastarache is wrong, too.

But lawyers like climate change; you will have lawyers saying everything. That's why I brought forward this document here, because in my research, I found that in the Supreme Court Act there is a provision, section 54, that permits this group, the Senate, to refer a private member's bill to the Supreme Court of Canada. Let's do that. We've got opinions on both sides. Let the rule of law prevail. What I recommend you do is submit it to the Supreme Court of Canada. You have that power, that constitutional power. It makes sense because it's a private member's bill, and they're not going to get the same kind of rigorous scrutiny as a bill introduced by the minister, which under the Constitution requires the minister to assess it in terms of the Charter of Rights. That doesn't apply to a private member's bill.

Senator Jaffer: Thank you for your presentations. I'll start with you, Mr. Cavalluzzo.

You spoke about the Charter of Rights, sections 2(b) and 2(d), freedom of expression and freedom of speech. I know you had very little time to present. I'd like you to elaborate exactly what would be prevented under this legislation. How would people be stopped under freedom of expression?

Mr. Cavalluzzo: Section 2(b) is freedom of expression. The core of political expression, freedom of expression, is political debate. Therefore, it is my view that the government has no business finding out or asking how much money a union is spending on political activities. That's expressive activity protected by section 2(b).

In terms of section 2(d), freedom of association, it guarantees that workers can get together and combine to promote their interest. It seems to me that when you give such an unfair advantage to the employer by asking, "How much does the union have in the bank? How much are they spending on this and that? I bet they can't afford to strike; therefore, I'm going to take a very hard position on bargaining," it will substantially interfere with the collective bargaining process, which the Supreme Court of Canada, as Mr. Johnston said a few months ago, found is a violation of section 2(d).

Senator Jaffer: I have a question for you, Mr. Yussuff. I am very concerned about asking any Canadians how many hours they spend on non-labour relations activities. As somebody that heads a powerful union, I'd like to hear from you. Your members spend a lot of time, I'm sure, in church, in scouting activities, in all kinds of volunteer activities. The sponsor of the bill said CRA will interpret what non-labour relations activities are. I don't accept that. The sponsor should be explaining to us what he means, but he decided not to.

So I ask you: How do you think your members are going to react if tomorrow they have to say how many hours they spent building their church or their mosque?

Mr. Yussuff: I think that's the essence of what's wrong with this bill. It is so fundamentally flawed, in such a profound way; what is required of this body to give this bill passage for it to become law of the country is the most fundamental attack on the most basic freedoms of our country.

My members volunteer every single way in Canadian society. They volunteer to the degree where almost $300 million in this country is raised by the United Way's agencies through volunteers. My workers would talk to their members: "Could you please sign this form to contribute to the United Way campaign?" My members volunteer every day in soccer leagues because they value their community. Why should that have anything to do with what we do as a labour movement?

On the political side, I've spent a great deal of time with Senator Runciman's friend Kellie Leitch, who is the Minister of Labour. I talk to her on a regular basis to solve many problems that affect the country in the labour relations field. Why? Because she is the Minister of Labour. It is my responsibility to engage her.

The reality is that she has a job to do and so do I. Why is that something I have to disclose on a website to the government? What business of the government is it to interfere in such a basic and fundamental principle of our society?

For that matter, we have 25,000 local unions across this country. Are you telling me the CRA has the time to sort through whether we complied or didn't comply with a law as to other activities we're involved in? Maybe Mr. Russ Hiebert has some understanding of what we do with our time. We do a lot of things. We are citizens of our country, and fundamentally our Constitution guarantees the right for us to perform those responsibilities and be involved in any activity we choose to be at the end of the day.

If the government thinks we shouldn't do it, then bring forward a law to legislate it, and we'll test it in the Supreme Court.

Senator Plett: Mr. Cavalluzzo, you made a couple of statements. In one of them you suggested that trade unions were voluntary. Mr. Johnston already spoke to that, but I also want to.

I was in construction all my life prior to being in the Senate. Trade unions are a lot of things, but voluntary is definitely not one of them. And I would challenge you on that, anytime, anywhere. Trade unions are not voluntary.

You also commented — no, that was not a question. That was a comment. You also commented on this institution when you responded to Senator Dagenais with your non-answer. You used this institution as an example to counter his argument. This institution is transparent. Quarterly you can go on the website and check every dollar I spend. Canadians deserve that. They deserve nothing less than to know where their tax dollars are going. They know exactly where my tax dollars are going.

People are in court not because Canadians don't know where their tax dollars went, because they in fact do know where they went. That's why they're in court.

My first question to you is this: Do you think the government has the right to know how charities spend their money?

Mr. Cavalluzzo: Let me deal first with trade unions being voluntary. Every provincial and federal labour code in this country gives a union and the employees an opportunity, every two or three years, to vote the union out. Every two or three years that is guaranteed in labour legislation. It's called certification and decertification.

Senator Plett: When I want to work for company X, I either join the union or company X does not allow me to work for them. That's not voluntary.

Mr. Cavalluzzo: If you want to join —

Senator Plett: That wasn't my question.

Mr. Cavalluzzo: My own union —

Senator Plett: My question to you was about charities.

Mr. Cavalluzzo: My own union, the Law Society of Upper Canada —

Senator Plett: Would you answer question about charities?

Mr. Cavalluzzo: The Law Society of Upper Canada forces me to be a member.

Senator Plett: Would you answer my question about charities?

Mr. Cavalluzzo: Why doesn't Bill C-377 demand the same requirements of the Law Society of Upper Canada?

Senator Plett: I asked you a question, sir.

Mr. Cavalluzzo: And the question? You made several comments. Your last question was what?

Senator Plett: There was only one question. Do you believe that charities should be transparent and disclose how they spend their money?

Mr. Cavalluzzo: There is a huge difference between the reporting requirements of charities and trade unions.

Senator Plett: Yes or no?

Mr. Cavalluzzo: The demands of Bill C-377 are so extensive; if you compare those to the charities, requirements for charities are limited compared to what Bill C-377 requires of trade unions. If you're aping or reflecting that it's charities we're trying to compare it to, why aren't their requirements the same? Why do you create a criminal offence for trade unions but not charities, if you want to compare them? So the answer —

Senator Plett: In the words of Senator Vern White a few weeks ago when we had a witness, thank you very much for coming, but I consider your time and my time to have been wasted with you here today not answering my questions.

Mr. Cavalluzzo: What an insult. What an unbelievable insult from supposedly a public servant. You're a public servant?

The Chair: This has gone a little overboard. Senator Plett, perhaps as well I think you may want to reconsider that comment. I don't think that adds anything to the proceedings at all.

I will move on to our next questioner, Senator Joyal.

Senator Joyal: I would like to come back to the issue on which the gentlemen have been invited here this afternoon, which is the constitutionality of this bill. We have been asked to concentrate our reflection on that very aspect of the bill.

I have been impressed by the last three decisions of the Supreme Court of Canada in relation to unions in Canada. In fact, I should say that I was surprised that they went that far. Maybe I'm not the only Canadian who was surprised that way.

I am tempted to read Bill C-377 in the context of those last three decisions, because if you say we should expect that this bill is going to be challenged constitutionally, the same Supreme Court that we have now, more or less, will have to adjudicate on this bill on the basis of the principles that they have enshrined in their last three decisions.

Am I right in stating that they will of course look into the bill, the impact that the bill will have in relation to the unions per se, within the confines of union activities, but they will also evaluate the impact of this bill in the overall context of the balance that should exist in the rapport between the employers and the employees? Then they would have a much broader analysis of the bill than just comparing it to charities that are included in the Income Tax Act?

A charity doesn't have a social mandate on the same level or at par with the union. A union has a very specific right to exist that the court has recognized, as you know, in those three decisions. So it is my contention that the court will try to seize the nature of this bill in its overall impact and social consequences in the negotiation of a collective agreement between an employer and employee.

Do you think I'm stretching the reflection in relation to the constitutionality of this bill?

Mr. Cavalluzzo: Absolutely not. You've hit the nail on the head. Because you're right; a trade union is not the same as a charity. A trade union is constitutionally guaranteed. That's section 2(d) of the Charter. Charities are not constitutionally guaranteed, so you can't compare them.

In terms of the division-of-powers question, is it provincial or not, the Supreme Court will look at the law and see, is it a tax law or does it deal with trade unions? I think the answer is obvious, listening to Mr. Hiebert, who introduced the legislation. They will go under and they will say just because the government says it's a tax law, they'd look at it. Is it a colourable attempt to intrude on provincial jurisdiction? In my respectful submission, they will find so.

Senator Joyal: Yes, sir.

Mr. Yussuff: Very briefly, to subscribe to all the points that Paul has made in his response but, in addition, this bill essentially tilts the balance in favour of the employer. All unions are not the same. They're not the same in size, in resources or in their ability and how they undertake collective bargaining.

If a union is putting aside money for an organizing campaign in their finances, why should that become public knowledge so that the employers can now resist the resources unions have set aside for organizing? I think it's simply unfair. Why should the employer have access to that information only to use it of course to their advantage?

There's never been an even field. The employer has far more resources.

Senator Joyal: A level playing field.

Mr. Yussuff: Exactly. I think there's been a long history in the federal jurisdiction that the Canada Labour Code should be a balanced piece of legislation. Both employers that our movement worked with, FETCO and ourselves have recognized me to take care of that relationship, because it goes beyond one set of collective bargaining. When one side seeks to tilt it in one way, you create disruption in the harmony that exists in the labour relations field, and this bill tilts that balance.

Senator Joyal: Anything to add, Mr. Johnston?

Mr. Johnston: I believe that this bill will not tilt any labour relations balance. In my experience, unions often announce their intent to organize, announce the extent of the monies that they are going to devote to organize an activity.

The AFL-CIO, as I recall at their last convention, announced X number of dollars associated with union organizing. It's not normally a big secret. In my view again, there is no tilting of balance.

If there was a tilting of balance, and I say this finally, the case that Mr. Cavalluzzo won before the Supreme Court of Canada, he won that case and there were employers opposing. There were employers opposing on the other side of that.

With respect to this bill, if this bill was so employer-friendly, where are all the employers? Where's the FETCO and others saying, "Hey, let's give it to them again"? I think it's meaningless. I think it has no impact on labour relations. That's my view.

Senator McIntyre: Thank you, gentlemen, for your presentations.

Section 2(b), guarantee of freedom of expression, and section 2(d), guarantee of freedom of association, have been raised and their potential infringement guaranteed in the Charter. Assuming there is a potential infringement of Charter rights under those sections, do you think any infringement of those rights can be justified under section 1 of the Charter? Let me explain.

My understanding is that the bill is calling for public disclosure. According to the sponsor of the bill, there is no attempt to regulate the activities of labour organizations or to determine how their money is spent. Bearing that in mind, one could always argue that it does not constitute a limit on freedom of association under section 2(d) of the Charter.

Furthermore, on top of this, since the bill seeks to increase transparency and accountability with respect to organizations that receive tax benefits, don't you think that it may be possible to justify an infringement of Charter rights under section 1 by emphasizing the importance of this goal?

Mr. Cavalluzzo: That's a very good question, with respect.

Senator McIntyre: Thank you, sir.

Mr. Cavalluzzo: The Supreme Court of Canada is very careful and gives rigorous scrutiny under section 1 when a constitutional right is violated. The first question that the Supreme Court asks itself is whether there is a pressing and substantial objective to the legislation. The Supreme Court would look at this: What's the problem? What mischief is Bill C-377 trying to eradicate? They would look at what studies have been done to determine that more transparency is needed. I understand nothing; really, nothing is done. So there would be a debate about that. Is there a pressing and substantial objective? My view is that there isn't.

The second question will be this: If there is a pressing and substantial objective, are the means adopted? Is the legislation proportionate to the problem? I would suggest it isn't because, for example, if you're trying to compare to charities, the reporting requirements for charities are much less than they are for the trade unions. So if you impose these requirements on the charities and make them more transparent, then you should do the same thing with trade unions. Why are the reporting requirements so much more extensive for trade unions? Why do you create a criminal penalty for the trade union but not the charity if you're concerned about transparency? So the fighting ground would be under section 1. I've given you my view. Others will disagree, obviously. That's why I think you should, as a senator, refer to the Supreme Court of Canada through that mechanism of section 54, and let's get an authoritative answer to that very important question.

The Chair: Do you want Mr. Yussuff's input on this as well? You have time, and he wants to respond.

Mr. Yussuff: I will be brief. I listened very attentively to Russ Hiebert and his presentation. What Mr. Hiebert has never said, in regard to his presentation, is this: What problem are we trying to fix? What problem are we trying to address? Mr. Hiebert, of course, discovered American legislation that exists that provides for disclosure in the United States. I don't live in the United States. Provincial law currently, in many jurisdictions, and in the federal jurisdiction right now, provides for members to receive financial information. If we weren't doing our job, the level of complaints at the provincial boards and at the federal board would be quite substantial. No argument has ever been made where members have made a request for financial disclosure that has not been met. Fundamentally, that should be the starting point. We are a private organization. Our members belong to our organization. They have a right to information and financial disclosure.

The reality is that nobody has ever said yet what problem we are trying to fix. Or are we trying to create a problem? I think this bill is politically motivated and has little to do with disclosure and transparency.

Senator Fraser: I want to thank you all for being here. Far from being a waste of time, I have found this a most instructive part of our proceedings, and I'm grateful to all three of you. Mr. Cavalluzzo, I want to thank you, in particular, for your spirited explanation of the basis upon which you're here. I would note, for the public, that the Senate has a practice of paying the travel expenses of witnesses to be here so that all of our witnesses may be on a level playing field. People don't have to stay away because they can't afford to come.

Mr. Cavalluzzo, in your brief, you say on page 7 that Bill C-377 draws arbitrary and unreasonable classifications of union dues, which the Supreme Court of Canada and the Ontario Labour Relations Board have ruled to be burdensome and uncertain to apply.

Could you expand a bit on that, please?

Mr. Cavalluzzo: What I was referring to is that the Supreme Court of Canada, in a case called Lavigne, which dealt with union dues, says that you can't try to distinguish between collective bargaining expenses and political expenses. It's too difficult — this was raised before — particularly when you're dealing with public sector unions. Public sector unions may spend money on getting legislation changed. But the legislation applies to the bargaining unit, and they're doing it for bargaining purposes. The Supreme Court of Canada said that it's virtually impossible to distinguish between collective bargaining or "labour relations," as C-377 says, and political activities. I was referring to a case called General Motors, of the Ontario Labour Relations Board, where, in 1995, they were dealing with a political strike and said the same thing. They basically said that you can't distinguish between collective bargaining and political; they're so intermeshed. Particularly today when we have a lot of regulations dealing with workers and trade unions, the fact that you're engaged in political activity is always for your members. You're trying to advance the bargaining goals of the association of a bargaining unit. That's what the Supreme Court of Canada and the Labour Relations Board were talking about when they said that you can't distinguish that.

Senator Fraser: Just a quick supplementary: Did the Supreme Court get into a distinction between political and partisan activity?

Mr. Cavalluzzo: No. It was more general than that.

[Translation]

Senator Bellemare: We have talked about Quebec and the Charbonneau commission. In the wake of the debates at the Charbonneau commission, Quebec took charge of the issue of transparency in the construction industry.

There was Bill 33, which was tabled and passed unanimously by the National Assembly on December 2, 2011, and which is titled "An Act to eliminate union placement and improve the operation of the construction industry."

An amendment was made to this law regarding labour relations in the construction industry, Amendment 93. Section 93 of the R-20 Act that deals with labour relations in the construction industry was amended. This act now imposes an obligation on management associations related to construction and on union associations. I will cite an excerpt for you:

An association listed or described in any of paragraphs a, b, c or c.2 . . .

My question is the following: Given the significant amendments made to the construction industry's Labour Code, which requires the industry to publish information on the website on the financial statements and expenses of management and union associations, does that not create a jurisdictional conflict? Here we have a law that Quebec is about to implement, but Bill C-377 conflicts with this law.

I would like to know what you think about this information.

[English]

Mr. Cavalluzzo: I would agree. I agree that the provinces, Quebec in that case, have the jurisdiction to deal with unions. I have nothing against transparency. What I am concerned about is that the appropriate jurisdiction deal with it. If there is a problem, let's deal with it, but let it be the appropriate legislature. For example, as to the American law that Mr. Hiebert is relying on, the history of that is that the mafia was controlling pension funds. That's not the situation, fortunately, in Canada. So we have to be very careful but make sure it's the right legislature dealing with the problem.

The Chair: Do any other witnesses wish to respond briefly to that? No? Thank you all. We do very much appreciate your appearance and your testimony. We'll adjourn and reconvene tomorrow morning.

(The committee adjourned.)