Proceedings of the Standing Senate Committee on
Legal and Constitutional Affairs

Issue 29, Evidence - April 23, 2015


OTTAWA, Thursday, April 23, 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 10:32 a.m. to give consideration to the bill.

Senator Bob Runciman (Chair) in the chair.

[English]

The Chair: Good day. Welcome, colleagues, invited guests and members of the general public who are following today's proceedings of the Standing Senate Committee on Legal and Constitutional Affairs.

We are continuing our deliberations on Bill C-377, An Act to amend the Income Tax Act (requirements for labour organizations). 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, we welcome, representing the Government of Manitoba, the Honourable Erna Braun, M.L.A., Minister of Labour and Immigration, via video conference from Winnipeg. From the Canadian Bar Association, we have Michael Mazzuca, Past Chair, National Pensions and Benefits Law Section; and Noah Arshinoff, Staff Lawyer, Legislation and Law Reform. And appearing as an individual, we have with us the Honourable Michel Bastarache, former Justice of the Supreme Court of Canada. Welcome all.

Perhaps, Minister Braun, we can begin with your opening statement, and then we will move along with the other witnesses. The floor is yours.

Hon. Erna Braun, M.L.A., Minister of Labour and Immigration, Government of Manitoba: Thank you. Good morning and greetings from Manitoba. Before I begin, I want to thank you for providing me with this opportunity to express Manitoba's concerns about Bill C-377, An Act to amend the Income Tax Act (requirements for labour organizations).

As you know, my name is Erna Braun. I'm Manitoba's Minister of Labour, and I speak on behalf of the Government of Manitoba in expressing serious concerns about the bill as presented. Many of you may have heard these concerns expressed the last time this bill came forward, from my deputy minister, Jeff Parr. For that reason I will be brief today.

Our view is that this bill is unnecessary and that it infringes on provincial jurisdiction. Responsibility for labour relations in Canada rests with provincial governments. Under 10 per cent of workers in Canada work in federally regulated workplaces. Otherwise, the provincial governments throughout the country can and do independently set their own legislative priorities in the area of labour.

In Manitoba, provincial statutes appropriately require unions to provide their members, at no cost, with the union's financial statement for its previous fiscal year. The financial statement must set out its income and expenditures for the fiscal year in sufficient detail to disclose accurately the union's financial condition and operation and the nature of its income and expenditures.

As well, unions elect their leadership, who are accountable to their members. They have constitutions, elected executives and membership delegate conventions. Leaders are elected by their membership and serve at the pleasure of those members. Financial statements are audited and reported. Our Labour Relations Act contains provisions to ensure that unions fairly represent the interests of employees in their bargaining units.

In short, the provinces have been working with employers and employees for decades and are already doing a good job of regulating labour relations.

I am also very concerned that this bill would disrupt labour relations between employers and employees, which would adversely affect the collective bargaining process.

Over the past decade in Manitoba, employers, unions and government have worked together cooperatively to build a stable labour environment. Maintaining that stability and the balance is good for employers, good for workers, good for communities and good for the economy as a whole.

Our government has passed over 20 pieces of labour legislation unanimously in the provincial legislature. We have done this by engaging partners in discussion and working together.

This bill takes the opposite track. It has not come about as a result of meaningful dialogue between employers and labour. In fact, it singles out unions for special treatment, while imposing no new transparency requirements on professional bodies like lawyers, engineers or doctors. Nor does it target transparency for employer groups or on industry advocates.

In conclusion, it is Manitoba's position that this bill should not be passed in its current form. Thank you.

The Chair: Thank you, minister.

We will move to the witness table, beginning with Justice Bastarache.

Hon. Michel Bastarache, former Justice of the Supreme Court of Canada, as an individual: Good morning. I would like to begin by telling you why I am here as an individual and what issues I intend to address.

I'm counsel for the firm of Gall Legge Grant & Munroe in Vancouver. Merit Canada is a client of that firm, and it asked Peter Gall to provide an opinion on the constitutionality of Bill C-377. Mr. Gall asked me if I would prepare that opinion for the firm.

In all cases, Mr. Gall asked for my objective opinion and gave me no particular perspective to be favoured. I did not know anyone at Merit, nor did I speak to any representative of Merit before I prepared my opinion and sent it to Mr. Gall. I note that that was in June of 2013. I was contacted again about the bill just a few weeks ago by Mr. Peter Gall, who simply asked whether I would testify before this committee.

What I want to talk about is the single issue of constitutionality. There are legal principles to govern an examination of this issue, and I think they must be respected if the decision is not to be arbitrary.

First, one must determine the pith and substance of the bill. The bill refers to a power assigned to Parliament or to a provincial legislature. This bill amends the Income Tax Act, and that act is obviously within the federal powers. So the second question is to establish whether the act is effectively relative to taxation or colourable legislation that should be held to apply to another head of power.

The bill is said to provide for transparency and public accountability with respect to tax benefits afforded to labour organizations. Those organizations are exempt from tax under section 149 of the Income Tax Act, and dues received may be deducted from a taxpayer's income pursuant to section 8. I see no reason to question the substance of the act as being in relation to "the raising of money" under section 91(3) of the Constitution.

Labour relations are not a specific head of power, and I do not believe this bill can be defined as one relative to labour relations as a component of the power over civil rights. It may be that labour organizations are affected, but the ancillary powers doctrine provides that as long as the bill is sufficiently integrated into the federal scheme, it is constitutional.

The fact that transparency and accountability provisions apply to other organizations is a strong factor favouring this interpretation. Furthermore, the bill is merely providing for disclosure of financial information and does not attempt to regulate any activities of labour organizations. Therefore, I see no serious encroachment on provincial powers. The object of the bill is rationally and functionally related to tax.

Some commentators questioned the validity of the bill with regard to the Charter of Rights, but I see no problem there. There is no disclosure affecting personal or political beliefs related to privacy interests. While some might question the disclosure of compensation, a court is required to interpret that provision so as to favour constitutionality. If the court was of the view that there was a problem with individualized disclosure, it would simply order generalized disclosure. It's not because an argument can be raised that a law can be set aside. One must take account of the fact that interpretation will most often resolve the issues. This is reinforced, of course, by the presumption of constitutionality.

With regard to the right of association, I see no problem. One must understand the limits of that right and distinguish what is constitutionally protected and what depends on legislation.

The right of association is a procedural right, and it does not protect activities. It protects the ability to unite, to make representations and to receive an answer in good faith. The Supreme Court ruled on this in Dunmore and Health Services and in Fraser.

The bill does not regulate the activities of labour unions or determine how they can spend their money. Even if an extremely wide definition of the right was adopted, the government would, in my view, be able to justify an infringement under section 1 of the Charter because of the important public goals of transparency and accountability and the fact that there is minimal interference with actual rights.

Those are my views. I will be happy to answer any questions.

The Chair: Thank you, sir.

Mr. Mazzuca.

Michael Mazzuca, Past Chair, National Pensions and Benefits Law Section, Canadian Bar Association: I'll let my colleague Mr. Arshinoff begin.

Noah Arshinoff, Staff Lawyer, Legislation and Law Reform, Canadian Bar Association: Thank you, Mr. Chair, honourable senators. We're pleased to be here today on behalf of the Canadian Bar Association in response to Bill C- 377.

The CBA is a national association representing approximately 36,000 members of the legal profession. Our primary objectives include improvements in the law and the administration of justice, and it's through that lens that we have examined the bill.

Our submission has been jointly prepared by the Privacy and Access Law Section, the Constitutional and Human Rights Law Section and the Pensions and Benefits Law Section of the CBA.

We've expressed a number of concerns with the bill since it was first introduced. We've appeared before the House of Commons Finance Committee as well as the Standing Senate Committee on Banking, Trade and Commerce to articulate our reservations with the bill.

In June 2013, the Senate sent an amended version of Bill C-377 back to the House of Commons for its consideration. These amendments changed the face and scope of the bill, and from our perspective made significant improvements. However, the Senate amendments died when Parliament was prorogued.

Our concerns with the bill can be placed in three main categories: the first deals with privacy; the second concerns constitutional aspects; and the third its application to various funds and pensions.

My colleague Mike Mazzuca is past chair of the CBA's Pensions and Benefits Law Section, and I will turn it over to him to discuss the substance of our submissions.

Mr. Mazzuca: Thank you for the opportunity to be here and once again state the Canadian Bar Association's position on Bill C-377. As my colleague Mr. Arshinoff has indicated, the Canadian Bar Association remains of the opinion that Bill C-377 is fundamentally flawed and triggers serious concerns from a privacy, constitutional and benefit law perspective.

With respect to the first, the privacy concerns, the Canadian Bar Association is concerned that the disclosure of salaries and wages of employees and contractors of independently governed organizations required by Bill C-377 goes well beyond what has previously existed in Canadian law and is inconsistent with the privacy protections embodied in the numerous privacy laws and constitutional jurisprudence in Canada.

Amendments were made to the bill in the house, and those amendments seem to make it clear that the disclosure required by Bill C-377 is particularized disclosure and not cumulative disclosure, which is required of some other entities. To the extent that the bill would require particularized disclosure, it obliges disclosure of personal information, which is normally considered amongst the most sensitive, such as financial information and information about political activities and political beliefs.

Also, as lawyers, the Canadian Bar Association is concerned that the bill does not make appropriate provisions for information that is subject to solicitor-client privilege. Solicitor-client privilege has been called a fundamental civil right, one that the Supreme Court of Canada has said must be protected by stringent norms in order that it remain as close to absolute as possible.

Again, there were amendments to the bill in the house to ostensibly address documents protected by solicitor-client privilege, but those amendments only apply to two small subsections of the bill. It is the position of the Canadian Bar Association that the entire bill should be subject to protection of solicitor-client privilege and should not allow for disclosure of any such documents.

Further, without clarity on the underlying problem that the bill is intended to address, the bill lacks an appropriate balance between any legitimate public goals and respect for private interests protected by law.

As a result of these many privacy law concerns, we believe that the bill will, in most likelihood, be subject to a challenge under the Canadian Charter of Rights and Freedoms, and that brings us to what I'll call the constitutional law concerns of the Canadian Bar Association.

In our view, the bill is likely to be challenged under both section 2(b), freedom of expression, and section 2(d), freedom of association, of the Charter. In regards to both, in recent years there really has been a landscape change of what is protected in regards to section 2(b) and 2(d) of the Charter. In very recent case law, the Supreme Court of Canada has taken on a much more purposeful and generous approach to the type of labour relations matters that are protected by 2(b) and 2(d).

In the case of Alberta (Information and Privacy Commissioner) v. United Food and Commercial Workers, a 2013 decision of the Supreme Court of Canada, the Supreme Court unanimously affirmed that section 2(b) of the Charter protects a union's ability to communicate and persuade the public of its cause and that impairing its ability to freely express itself as it sees appropriate would be an unjustified infringement of section 2(b). Just as the Supreme Court of Canada has affirmed that section 2(b) of the Charter protects a union's freedom of expression, the CBA believes that it may also protect its freedom not to express.

In two even more recent decisions rendered in January of this year, the Supreme Court of Canada confirmed that the freedom of association under section 2(d) of the Charter seeks to preserve employee autonomy against the superior power of management in order to allow for a meaningful process of collective bargaining.

The Supreme Court of Canada in those cases protected the union's right to collectively bargain and also to strike. Under the bill, the requirements that a labour organization file a statement detailing its disbursements for political activities, lobbying activities, organizing activities and collective bargaining activities could be found to be unconstitutional under section 2(d) as it would certainly place the union in a different position than the parties sitting across the table at the collective bargaining sessions.

The Chair: Mr. Mazzuca, I'm going to have to ask you to sum up.

Mr. Mazzuca: Let me sum up, then, with respect to the benefit law issues. The bill applies not only to labour organizations but also to labour trusts. Our concern with respect to labour trusts is that it's an extremely broad definition and seems to include any fund that has union members participating in it. That would include any funds such as charities, non-profit organizations or training. On broad enough reading, you could even include mutual funds, which seem to have union members participating in them.

We've taken the position in the past that the bill should not at all apply to labour trusts, and if it does, we've provided in our submissions a much more carefully crafted exemption that would exempt a number of funds from the purview of the bill.

Once again, thank you.

The Chair: Thank you, all.

We will begin the questions with the committee's deputy chair, Senator Baker.

Senator Baker: Thank you, Mr. Chairman, and thank you to the witnesses here today for your very excellent presentations.

I'll ask just one question, primarily directed toward Mr. Bastarache. He gave a very interesting presentation. Either of the other witnesses may wish to comment as well. It regards the constitutionality of the bill.

I and other members of this committee have been concerned with certain words in this bill, keeping in mind that the words should be read in their grammatical, ordinary sense, harmoniously with the scheme of the act. I think everybody would agree with that. Here are the words of the statement:

. . . 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, this applies to all unions in Canada, not just the large unions, but it applies to the municipal workers' union in Gander, Newfoundland, where I'm from. If you're the president of the union in your local, the shop steward, you are a person in the position of authority as defined by subparagraph (vii) who has to then provide a statement on your political and non-labour relations activities in the previous year. Ordinary Canadians would say, "That's none of your business. I'm just living in a small community, trying to do my best for the workers in the municipal garage and collecting garbage and so on. Why should I have to provide this?"

So my question is this: As to over-breadth or overreaching, which is a different issue, or vagueness, which is another issue, have you examined the constitutionality of those specific words, Mr. Bastarache? Or is your opinion perhaps based on the mainly jurisdictional question regarding the bill as a whole?

Mr. Bastarache: I think what you raise is really a policy issue and a problem that has a political dimension but not a constitutional one.

What is the constitutional right that would be challenged by the terms that you have mention? The Constitution protects your right of expression, of course, but there is nothing in the act that prevents the union from expressing its views.

With regard to association, as I said, the right of association is a procedural right. There is nothing preventing people from creating a union, from determining its functions or from conducting any kind of activity.

The only obligation that I see is one of transparency, and that, to me, is directly related to the purpose of the act, as you say, in general an act with regard to taxation and all other features of the legislation that are part of the scheme. The scheme, of course, is to determine what the activities are and how they are to be examined with regard to the benefits afforded to unions under the Income Tax Act.

So I think there may be a problem, as you say, but it would be with regard to privacy considerations, and that is not the constitutional issue that I think would have to be raised.

Mr. Mazzuca: I simply add that the Canadian Bar Association has been concerned from the beginning about the possible impact that such disclosure would have on the ability of the freedom of association for trade unions and how they can interact and whether that impairs their ability. I think our concern has been accentuated in particular by the three recent Supreme Court of Canada cases that I referenced in my earlier submissions that really seem to elevate that right of freedom of association.

[Translation]

Senator Dagenais: Thank you, Mr. Chair. I have two questions, one for Ms. Braun and the other for Mr. Bastarache.

Ms. Braun, for the benefit of those who are following our proceedings, could you tell us what job you held before you were elected?

[English]

Ms. Braun: My previous job was a teacher. I was a junior and high school teacher in the province of Manitoba, and I was also President of the Winnipeg Teachers' Association.

[Translation]

Senator Dagenais: Provinces have well-established powers in terms of labour. But would you say that the federal government also has a role to play in labour relations? If it does not, then why have the Canadian Labour Relations Board?

[English]

Ms. Braun: As I had indicated earlier in my presentation, given that 92 per cent of workers fall under provincial jurisdiction, I think it is an area that is the purview of the province. Certainly with the Manitoba Labour Board, the establishment of the oversight of the different organizations is part of our responsibility, and the Manitoba Labour Board is the organization that oversees any issues that may arise.

[Translation]

Senator Dagenais: Thank you, Ms. Braun. My second question is for Mr. Bastarache. Thank you for being here. Just so you know, I was president of the Association des policières et policiers provinciaux du Québec, which is a union.

To shed some light on the matter, could you provide some examples from constitutional law in the matter of unions, and how the government can ask for a certain amount of transparency? This transparency seems to rankle the labour congresses.

Mr. Bastarache: I believe that the government has the right to demand transparency of all entities, associations and corporations subject to the Income Tax Act. It matters little whether a union is provincial or federal, because the bill does not regulate labour relations, but rather income tax. In that sense, the nature of the union is secondary. However, one must determine if the federal government has the power to legislate in this matter under the section in the Constitution that allows for taxation.

If the determination cannot be made that this is an indirect attempt to control the unions, then the presumption of constitutionality applies and the bill is therefore valid. Anyone has the right to contest it, but those who do must prove that the true intent of the legislation is to control union activity.

I see in this bill no attempt to control union activity. According to my colleague, becoming more transparent will lead to inconveniences, but inconveniences do not unconstitutionality make, so to speak.

Senator Dagenais: I have a question for Mr. Mazzuca. You provided an expanded interpretation of subclause 2b). You spoke of the right not to answer, which you tied to your freedom of expression — a freedom I do not deny, by the way. However, if we take into account the actions of certain union leaders in recent years, tell me why you would not be subject to the transparency requirement under Bill C-377 without creating a conflict with your right to pursue union activities?

[English]

Mr. Mazzuca: The CBA certainly supports transparency and our view is that there are numerous bills, as the honourable minister has indicated, provincially, which require disclosure of financial information by trade unions, primarily to ministries of labour and their members. Those types of statutes are already in place.

Our concern with respect to freedom of expression is not with respect to specific individuals, but how that would impact the trade union itself and its ability to carry out effectively its representation of its members. And our view is to the extent that the disclosure somehow places it at some kind of disadvantage, then that could trigger freedom of association concerns.

Senator Jaffer: My first question is to the minister. I understand that Manitoba already has a Labour Relations Act, and in that act you do require disclosure of financial information. Am I correct?

Ms. Braun: Yes, you are.

Senator Jaffer: And what else does it require in that act? What other things does that act require?

Ms. Braun: The Labour Relations Act affects all working relationships. It has requirements for the collective bargaining process. It outlines how that would take place, so it's a very thorough overview of the entire labour relations environment.

Senator Jaffer: My next question is to the representatives of the Canadian Bar Association. When I looked at this bill, in the drafting, if it's not in its intent, it had serious — in my view and the majority of witnesses have also said this — fatal flaws as to the constitutional violation of sections 92 and 91 of the British North America Act. Peter Hogg discusses the issue of pith and substance. I would like you to explain to us, does this bill meet the test of pith and substance?

Mr. Mazzuca: I think my colleague explained a little bit about the process and the organization of the Canadian Bar Association. We agree that the test would be a pith and substance test to determine whether it falls within the jurisdiction of the federal government or the provinces, but as you've seen from our submissions, the Canadian Bar Association has not taken any position on that issue, so I'm really not in a position to answer that question.

Senator Jaffer: Senator Baker raised this issue, but there are many issues in this bill that I have a concern with. The one thing I have a great concern with is subparagraph (vii.1) on page 3 of the bill. It talks about making a statement with a reasonable estimate of percentage of time dedicated by persons referred. It also talks about setting out times on other non-labour relations activities. I have a great concern about why somebody would have to tell what Boy Scout activities or mosque activities they would do, and to have this is really intruding in people's lives. I would like your opinion on that.

Mr. Mazzuca: As I indicated earlier, we have serious concerns about the overreaching on the privacy issues here. Again, other organizations are subject to disclosure obligations, but they are much more on an aggregate basis, not so much particularized as to specific individuals and specific activity as this bill seems to be focused.

Also, much of the disclosure that may be required of other entities would be disclosure to government organizations. This bill is quite clear that it goes beyond that and requires that this kind of particularized information not only be disclosed to government agencies but that it then be posted on a public website in a searchable format. That really goes beyond and seems to be an affront to the many privacy statutes that we have in this country.

Senator Plett: Thank you, witnesses. I will be brief. I would like to ask one question of the CBA and then one question of Minister of Labour for Manitoba.

In 2013, Privacy Commissioner Jennifer Stoddart stated at the Banking Committee that nothing in Bill C-377 would violate the Privacy Act. How do you respond to that?

Mr. Mazzuca: Well, if we're talking about the federal Privacy Act, PIPEDA, I believe it has a provision in it that exempts information that has to be disclosed by statute. So if there's a statute that requires a disclosure, then it would not be a violation of PIPEDA. What we're referring to in our submissions is more the general tone of where these privacy laws are going, and this seems to be counter to the type of protection that's provided in other statutes. However, I do agree that there's an exemption in the federal privacy statute for statutorily required information.

Senator Plett: Minister, thank you for being here. I'm from Manitoba, of course, and I watched with interest a few weeks ago the leadership race for your party in Manitoba. It is my opinion that your boss would not be your boss today had it not been for the influence of some very powerful union officials.

Senator Baker: Hear, hear.

Senator Plett: So if unions have the power to elect a premier, as they did in Manitoba, do you not think that disclosure requirements, like those in Bill C-377, are even more important? And please don't tell me that we have some legislation, because we do not have any legislation in Manitoba that in any way mirrors Bill C-377. So would you not agree that disclosure is very important in situations like that?

Ms. Braun: Thank you, Senator Plett. I would think that the leadership contest is something that is totally outside the discussion that we are having today on Bill C-377. So I think that is not relevant in the discussion we're having here over what seems to be an issue of transparency and something that, to me, seems to be also an issue of treating equally all members who are involved in the issue of collective bargaining.

Senator Plett: I would certainly disagree that it is not relevant. We are discussing transparency issues. We are discussing involvement of unions, whether it be in political activity or other activity, using tax dollars, and they aren't transparent.

Minister, I will ask you the same question, and please don't give me the same answer. Do you not think it is important to have transparency from unions when they are, in fact, capable of electing a premier of a province?

Ms. Braun: Thank you. And if there's a real concern about transparency for organizations enjoying tax benefits under the Income Tax Act, a much better approach I think would be to engage the affected sectors and organizations in a dialogue leading to changes that treat them all in a similar manner. In the absence of a broader approach to transparency under the Income Tax Act, it would be advisable not to single out unions for special treatment, especially, as I said earlier, that 92 per cent of the labour force, labour relations and regulation of labour matters are provincial responsibilities.

Senator Plett: Thank you.

Senator Joyal: Minister, I would like to come back to your letter of April 21, especially the first bullet, which states that Bill C-377:

clearly delves into the realm of labour relations, which under the Constitution is an area of regulation falling within provincial and territorial jurisdiction;

Before writing that paragraph of your letter, did you get the advice of the Justice Department of the Government of Manitoba to contend that this bill is clearly within the realm of the provincial jurisdiction?

Ms. Braun: As I stated earlier, 8 per cent of workers in Canada are federally regulated. The other portions are the responsibility of the provinces, and all the provinces, in their own manner, have their legislation that affects their other working relationship. That indicates —

Senator Joyal: I don't dispute that fact, Madam Minister. I want to know if you requested a legal opinion from the Justice Department — one of your colleagues in the cabinet — to state the fact that this bill is in the area of provincial jurisdiction. That's essentially the question I'm asking you. I'm not disputing the fact that a large number of workers fall under provincial jurisdiction. Everyone will recognize that. I'm trying to understand the legal basis under which you state: "clearly . . . the realm of labour relations, which under the Constitution is an area of regulation falling within provincial and territorial jurisdiction; . . ."

You have certainly analyzed Bill C-377 in relation to its impact to labour relations. That's essentially what I want to know: Which legal analysis did you make of the Bill C-377 to conclude in that regard that it falls under provincial jurisdiction?

Ms. Braun: It is the position of Manitoba that we are competent in the area of labour relations and that this is an area that is within our jurisdiction. That is the position that we are taking. It is Manitoba's responsibility, and we assert our position that this is the area that we are competent to deal with.

Senator Joyal: I would like to come back with the issue of the pith and substance point, Mr. Bastarache. It seems to me that your reading of the pith and substance issue in relation to this bill is very narrow, in fact too narrow, to be constitutionally sustainable. I will explain to you why I arrive at that conclusion.

When you read the bill and you want to measure the impact, of course you check the heading of the Constitution. You check the heading of the bill. At first sight, there is a prima facie conclusion that it falls under the Income Tax Act.

But you have to go a step further, the step further being to ask: How far does it go in its regulation of the activities that is contemplated in the bill? In this bill, we're dealing with labour unions; we're not dealing with charitable organizations. We are dealing with a body in our labour relations that has an autonomous existence and that is benefitting of rights. The last two decisions of the Supreme Court in January are clearly, in my opinion, expressive of the special status of unions in Canada.

This bill, in my opinion, fails the pith and substance test, and I'll tell you why: It tilts the balance in favour of the employers at the expense of the union by not balancing the obligations that it imposes on the union versus what the employers will continue to have as advantages under the general legislation.

So to compare with charities the obligation that the unions will have under this bill, in my opinion we have to go beyond that because the labour unions are bodies of their own and have rights of their own. The recent decisions of the Supreme Court, in my opinion, have been well expanded.

Yesterday when we heard witnesses, I asked a specific question: What will be the impact of this bill on the future of labour relations between employers and unions? The union representatives and the other witnesses who were there were of the opinion that it tilts the balance.

It is in that regard that it is not just a tax measure. It is one that has an impact on the exercise of the responsibilities of unions to negotiate fair conditions for their members. That's where I think the test of pith and substance that you have proposed is too limited.

Mr. Bastarache: Well, I disagree with that, because fundamentally I think what you're saying is that it's not good legislation; that it shouldn't be there because it affects, as you say, the balance between unions and employers indirectly.

But all this is basically an indirect consequence, because the legislation is still not about unions; it's about taxation and about transparency. It doesn't say unions can't do this or can't do that, or that it can't spend its money in any other way, so it doesn't affect, basically, the functioning of unions.

If it were to have that effect, then, of course, you could say the legislation is colourable. But basically it's about tax benefits and the fact that you can establish all sorts of conditions on people for obtaining a benefit. To me, it's clearly legislation about taxation, and that is a constitutional issue.

The other issue that you raised to me is a policy issue, and it's just to say it's bad legislation because of the effects that it will have.

Senator Fraser: Welcome to all of you. Thank you for being here.

I'm still puzzled about the privacy implications of this bill. Senator Baker referred to subparagraphs (vii) and (vii.1), which refer to officers, directors, trustees and employees of unions. I'm going to ask about subparagraphs (viii) and (viii.1), which refer to employees and contractors and require a statement with a reasonable estimate of the percentage of time dedicated by these persons to each of political activities, lobbying activities and other non-labour relations activities.

I'm particularly concerned about contractors, because contractors frequently would not be working full time for the union. Sometimes they would be on contract. Frequently they wouldn't be, such as a lawyer on retainer or an accountant with many clients including the union. This bill does not limit the requirements for this kind of disclosure to the time paid for by the union. It just says "the percentage of time." I'm not a lawyer, but I find that to be a massive intrusion into my privacy if I'm affected by the bill, which I'm not. If that's not an intrusion in privacy, what is?

Any of you or all of you, I would like to hear your views.

Mr. Mazzuca: As I said earlier, I think the bill goes much further than any other bill we're aware of in intruding on the privacy of private entities. You're correct. Because the bill requires such particularized disclosure in the subsections that you highlighted, as well as others, the disclosure mandated is not simply an intrusion on what are defined in the bill as union organizations but also an intrusion on the privacy of entities with which they interact.

As I mentioned earlier, the bill requires particularized disclosure. It requires the disclosure of each transaction, including the identity of the payor and the payee. It certainly goes beyond any other bill that we're aware of in requiring disclosure of very particular information, which would be of concern not just to the trade unions, which seems to be the focus of the bill, but any entity that interacts with them. That's why, from the Canadian Bar Association's perspective, we're particularly concerned about the impact on solicitor-client privilege.

Senator Fraser: Could it go as far down as people who are under contract to maintain the photocopying machines, for example?

Mr. Mazzuca: I absolutely would see it going that far. If the transaction is over $5,000 in the aggregate over a calendar year, then it would require the disclosure of the transaction with the photocopier company.

Senator Fraser: And the amount of time the photocopy technician spends on political activities?

Mr. Mazzuca: Yes.

Senator McInnis: Thank you for coming.

Justice Bastarache, I've always wanted to be in the position to be in the presence of a Supreme Court of Canada Justice, and I believe that you are "former" in that position, and to say that I agree with you. I'm flattered to be able to do that now, because this is a matter of taxation, which is federal and a matter of policy.

Oftentimes I find it takes a crisis to effect change in government. I saw this in Nova Scotia. It took the wrongful conviction of Donald Marshall Jr., who spent 11 years in jail for a crime he did not commit and a subsequent royal commission chaired by the former Chief Justice of Newfoundland, Alex Hickman, to bring about change, the prosecutorial side of the Attorney General's office being separated out from the administration of justice and policing. I draw that parallel.

In this instance, there are five or six union executives who allegedly have mismanaged members' funds. I watched the national news, and Peter Mansbridge and I think Terrence McKenna gave a report on the actions of certain people in the FTQ-Construction union, very serious situations. There are others, five or six, that now are out there in the public domain.

Transparency and accountability are indeed the hallmark of all that we do in government. Do you not agree that these two principles of transparency and accountability are important and that government should be doing it and be, where possible, proactive in doing it, not being drug in to do it? Because I see that happening here. It's going to take a crisis, and we as government should be proactive.

That question can go to the minister in Manitoba or whoever of you wishes to answer it.

Ms. Braun: If I may respond, as Minister of Labour for Manitoba, one of the things that we can be very proud of is that for many, many years we've had a very cooperative labour relations environment in Manitoba. The Manitoba Labour Board that oversees complaints in the area of transparency has had very few complaints. I think that the method by which we work cooperatively with employers and workers and government has been a very successful recipe for having a very stable labour relations environment in Manitoba. As I said earlier, we've had very few complaints on the issue of transparency going to the Manitoba Labour Board.

Mr. Mazzuca: As I said before, the Canadian Bar Association certainly supports transparency and openness. But as I mentioned earlier, we also support the privacy of individuals and entities, and there has to be a balance between the transparency concerns and the protection of personal, private information as well. In that regard, we're concerned that this bill overreaches and tilts the balance on that scale.

Senator Cowan: Thank you for being here today, gentlemen.

I want to go back to the pith and substance issue that my colleague Senator Joyal mentioned in his discussion with Justice Bastarache. In his presentation, Justice Bastarache talked about pith and substance, and he talked about whether it being really colourable legislation, and while it might on the face of it be one thing, in essence it was something else, which to me is the essence of pith and substance. I perhaps would ask Mr. Mazzuca and Mr. Arshinoff whether they would agree with Senator Joyal, that Mr. Justice Bastarache's interpretation of that was rather too narrow and really we need to look beyond the title at what does the bill actually do. Is it, as Justice Bastarache suggests, enough to say that's just a question of policy, or is it correct to look at a bill like this and see what it really does? Apart from the fact that, on the face of it, it speaks about income tax, if in essence its real operation is to upset the balance that you've spoken about between employers and employees and to respect privacy rights and the freedom and access to information and transparency, don't we need to go that far in order to determine which side of the scale it ends up on?

Mr. Mazzuca: As I said earlier, the pith and substance test is one that comes down to a jurisdictional issue between the provinces and the federal government, and the Canadian Bar Association has taken no position on that particular issue.

I did mention our concerns with respect to the Charter. I mentioned earlier about the very recent January 2015 Supreme Court of Canada decisions. It is a quote from those decisions that the Charter seeks to preserve employee autonomy against the superior power of management in order to allow for a meaningful process of collective bargaining.

To the extent that this bill tilts that balance, which the Supreme Court has said is protected under section 2(b), then, yes, it would be open to challenge under the Charter.

The Chair: We have roughly five minutes left, so keep that in mind. I'm sorry, sir, we're going to run out of time here.

[Translation]

Senator McIntyre: Thank you for your presentations. Mr. Justice Bastarache, there are those who fear or suggest that Bill C-377 will force unions to disclose information that is protected by attorney-client privilege. Do you share this concern?

Mr. Bastarache: I have only studied the constitutionality of the bill. The point you raise chiefly concerns my colleagues from the privacy side of the issue. It is wholly outside the purview of a constitutional analysis, and is better suited to an examination of whether or not the bill contravenes any provisions of privacy legislation, and so on. Department officials and officials from the Office of the Privacy Commissioner have said that the bill does not violate legislation, but that they were nonetheless concerned. Thus, the legislation should be changed if we wish to be rid of an undesired effect. That said, the issue is not of a constitutional nature.

Senator McIntyre: For me that is not a concern, because if a lawyer provides legal advice, that is a legal service. But if a lawyer lobbies for a labour organization, then that is not a legal service.

[English]

Senator Batters: Thank you. First of all, just briefly to Minister Braun, who is speaking in the background with you? Earlier Senator Jaffer posed a question to you and then so did Liberal Senator Joyal. It looked to us like there was someone off-screen because we can only see you on the screen. So it looks like somebody is providing you with answers to rather probing questions. I'm wondering if you could briefly answer that.

I have another question for Justice Bastarache. It's pretty clear with the answers you gave to Senator Joyal about the legal opinion that you either didn't receive a legal opinion or seek one on Bill C-377's constitutionality or you received one that wasn't favourable to your minister's Attorney General.

Ms. Braun: Thank you. I do have staff with me here today, including my deputy minister. This is certainly an issue that has been ongoing since the introduction of this bill. There has been a lot of discussion and dialogue on this, so it behooves me also to check information with my deputy minister since I've been in this position for slightly over a year. I think that discussion and interaction is something that any minister would do with their staff.

Senator Batters: You can understand where we're coming from because we can only see you on the screen and there was a voice coming from afar and we didn't know who that was, so thanks for that answer.

Mr. Justice Bastarache, thank you for being here. You have an esteemed legal background, and I wanted you to give you an opportunity to briefly get on the record what your particular background is exactly.

Also, I wanted to let members of this committee know that we received a legal opinion letter dated April 9, 2015, from Larry Seiferling, a very experienced labour relations lawyer from Saskatchewan, from the law firm McDougall Gauley. He helped this committee with Bill C-525. He's not able to be with us, but in his opinion letter, he concluded with:

I have reviewed the legal opinion [of] former Supreme Court Justice Michel Bastarache on the constitutionality of C-377. To the extent my work over the years has involved constitutional and Charter matters, I concur with the opinion of this expert and highly esteemed jurist.

He also says:

I would therefore endorse this Bill in its present form and encourage that it be passed to provide fairness to the taxpayers of Canada, the dissident dues payers of unions as well as the general public.

Could you briefly get your background on the record for us, sir, and also comment on your section 1 analysis?

The Chair: We'll have the abbreviated version of background, and then we're going to have to wrap up.

Mr. Bastarache: I was a law teacher, teaching constitutional law for 10 years, and I practiced in that area for 12 years. I sat as a judge for 14 years. In the Supreme Court of Canada, I guess, about 17 to 20 per cent of all cases would be constitutional.

Senator Batters: Thank you very much. How long did you serve on the Supreme Court?

Mr. Bastarache: Eleven years.

The Chair: On behalf of the committee, I want to thank all of our witnesses for appearing today and assisting us with our deliberations on this legislation.

For our second panel, I'd like to welcome from the Association of Justice Counsel, Len MacKay, President. Appearing as individuals, Marc Roumy is with us by video conference from Toronto and Ken Pereira. Gentlemen, welcome.

Mr. MacKay, perhaps we shall begin with you, followed by Mr. Roumy and Mr. Pereira.

Len MacKay, President, Association of Justice Counsel: Thank you, chair and honourable senators, for the opportunity to provide comment from the perspective of the federal public service.

The Association of Justice Counsel is the exclusive bargaining agent for approximately 2,600 lawyers employed by the Government of Canada. They work for the Department of Justice and the Public Prosecution Service of Canada, and they provide in-house legal services to various federal agencies, tribunals and courts across the country.

We are one of 17 core federal public service bargaining agents and the only one invited to speak to this committee. While there is the possibility of further witnesses, I may, in fact, be speaking largely in their stead. There are written submissions from a number of these groups, I understand. A number of groups certainly have expressed that they support my position today: the foreign service officers unit — PAFSO — the professional employees at CAPE, and the financial officers at ACFO.

I understand the point has been made that it's unclear what issue or perceived problem this bill is meant to address; but the objections come from all corners. As you are likely aware, a private member's bill will follow the same legislative process as any government bill. However, the consideration and time allocated are restricted. As well, it doesn't have the scrutiny required of government bills, which for all intents and purposes Bill C-377 is, we would argue. Such bills do not benefit from the expertise of Department of Justice lawyers and government apparatus to review their legality throughout the drafting phase.

I would suggest that it falls mostly on senators to thoroughly review and analyze what we would describe as the invasive measures set forth in Bill C-377. Obviously from the name of the committee, we expect that this committee is concerned mostly with the legality and constitutionality of the bill, but we also want to comment on other severe aspects of the proposed legislation.

From a legal perspective, the first point I want to make is about solicitor-client privilege, which has been touched on by others, including the CBA just before this session. There is some protection in this bill of the disclosure required to protect solicitor-client privilege, but it doesn't cover all such information that may be protected by privilege otherwise, including expenditures related to collective bargaining or labour relations. This type of information, even if it's provided under privilege, is reported to the Minister of Finance and is made public under this bill.

Solicitor-client privilege is the cornerstone of our legal system. Any breach of this privilege for ideological purposes can only serve to undermine our legal system and the basic rights of Canadians.

I should also point out, and this may be something that people missed, that it's not just the scope of the disclosure that's required here. It's the fact that anything done by a lawyer that is being disclosed is in fact a breach of privilege. Just the fact that you've retained counsel, for any purpose at all, is privileged information that will have to be disclosed under this bill.

The second point I wanted to raise is in relation to privacy, which has been already talked about here this morning. There are significant privacy interests at stake with this bill. The extent of the public disclosure required is disproportionate to any conceived goal, including accountability to taxpayers. Union accountability is primarily owed to its members, which I can't emphasize enough. Even with public accountability argued from the tax subsidies angle, the intrusion on privacy in this bill is disproportionate. Such privacy concerns do not limit themselves to union members and employees but also extend to individuals entering into commercial transactions with such bargaining agents, such as anyone offering simple services like snow removal or janitorial services. These are not, in any way, affiliated with the union, but they will be disclosed. It's been estimated that the privacy of 12 million Canadians could be affected by this bill if it's enacted into law. This is a number that comes from comments made by former Senator Hugh Segal.

The next point I want to make is about the broad scope of the bill. Many organizations not so-called "targeted" by the bill, if we see this as an anti-union bill, could be caught up in this as well. Doctors Nova Scotia made a submission about their being potentially caught up in this bill. The Investment Funds Institute of Canada talks about mutual funds being caught up in this bill, as well as pension funds. This particular issue clearly illustrates, I would suggest, how blunt this instrument is.

Constitutionality is being argued in a couple of ways. First of all, that this bill is ultra vires and that labour relations is mostly provincial jurisdiction. I haven't come here to provide a legal opinion on that point. I'm not a labour relations lawyer. I'm a criminal lawyer, but I'll leave it to the other submissions that have been made. To be honest, it is something that is perhaps outside my mandate as a federal union. So I can't really suggest to this group that it is a strong argument I'm making for my people, but I would suggest it is a valid argument that — if you listen to other people speaking — more than 90 per cent of the impact of this bill will be on provincial unions.

I would also add that this is not income tax legislation, notwithstanding that the Income Tax Act is being amended.

I won't get into the nitty-gritty of the pith and substance argument, but it has been made. I would suggest that, clearly, the pith and substance here is labour relations and not tax.

The Chair: I'm afraid you're not going to get through all of this. I'm going to ask you to sum up.

Mr. MacKay: Okay.

I want to mention that the main point from the union perspective is the impact on Charter rights 2(b) and 2(d), freedom of expression and freedom of association. It can easily be seen that provisions of the bill would significantly interfere with the internal administration and the operation of unions to a degree that would amount to the infringement of the freedom of association of their members. As my colleagues from the CBA pointed out, it is unclear from the bill what the justification for such an infringement might be. This has been clearly shown to be an elevated freedom from the recent Supreme Court of Canada cases.

The Chair: That's all we have time for, I'm afraid. We'll move to Mr. Roumy.

Marc Roumy, as an individual: Thank you, Mr. Chair. As I did before the Senate Banking Committee, I urge you to adopt this much-needed legislation.

I am a flight attendant with Air Canada and a CUPE member for over 17 years. I regularly attend my local's union meetings and have attended CUPE national conventions. I have been a secretary-treasurer. Currently, I'm in my fourth term as a component trustee of CUPE.

One of my letters to a national newspaper was read in the House of Commons the day before this bill was passed to the Senate. The letter was called "Union Secrecy Firsthand."

Current legislation has insufficient requirements for union financial disclosure. This results in union leaders interpreting what is sufficient. Bill C-377 fixes this serious problem.

As an active union member, I will address some of the concerns used by opponents of Bill C-377 and how those concerns are unwarranted, even misguided.

Some say employers will know how much unions have in their strike fund. My union discloses their national strike fund amount on their website, which is already available to the public. I pointed this out to a senator in 2013 after one prominent union leader claimed it would be detrimental for unions if the employers were aware of this amount.

In 2013, Nova Scotia's then-NDP Minister of Labour was asked if his party received donations from unions. He stated, "No, the law does not allow it." This is correct. However, my union provided financial assistance as a guarantor for a loan made by a financial institution to the Nova Scotia NDP for the provincial elections of that year.

These are just some of the many red herrings tossed out by union leaders to maintain their status quo. Union leaders might be worried if their members and the general public knew how much is not spent on collective bargaining and grievances but on other non-related issues.

By getting a little closer to the inside track, as I have been able to do, I have learned a lot. For example, in 2012, CUPE funded the Ottawa Folk Festival to the tune of over $40,000. It has funded campaigns against bottled water and numerous other causes that do not directly benefit union members.

According to the Income Tax Act of Canada, tax deductible dues are to be used for "ordinary operating expenses." Canadians need to be aware that tax deductible dues are going to campaigns that are far from the ordinary operating expenses of unions so that there can be real enforcement of the law as written. Union leaders are worried about their members and the public being more informed. There would be new problems for them and their wide-open spending abilities.

Freedom of association was mentioned many times by opponents. They claim Bill C-377 will harm their Charter right to association. I ask, freedom of association for whom? Big labour leaders and the NDP, or the individual worker? What about my freedom of association to not associate with a political party?

To conclude, it has been said many times by opponents of this bill that C-377 is a solution in search of a problem. The real problem is the support for a partisan political party that CUPE financially assists and any of the organizations and activities on which union dues are spent, which is in violation of the Income Tax Act of Canada as written, and nothing is being done about that.

These are not deductible dues, and with public pressure and eventually real enforcement, CUPE would have a much harder time continuing to spend money on their ideological campaigns and not more on me, my colleagues and my work environment. Why? Because they would have to get me to pay dues that are not deductible. My expectation as a worker, but also as a taxpayer overall, is that all forced dues be spent solely on the enforcement and improvement of collective agreements and unionized workplaces.

I urge you all, honourable senators, to pass Bill C-377. Contrary to what other union leaders have said, transparency does lead to accountability, and accountability results in trust.

Thank you, and I look forward to answering any of your questions.

The Chair: Thank you.

Mr. Pereira.

Ken Pereira, as an individual: Thank you, Mr. Chair.

I am a unionized worker. I am a union leader. I was a business manager of Local 1981 Millwrights of FTQ- Construction. I saw things that shocked me. I thought I could change them from within, and I was wrong.

Today, they say I'm a whistle-blower. I was a so-called "star witness" about union corruption at Quebec's Charbonneau commission. I no longer work in my beloved home province of Quebec. I live there with my wife and our two kids, now young adults, but I have to work elsewhere.

My life was threatened. No one should have to do what I did to ensure financial activities are lawful. I am a big union believer, but there are things in this country that must change. This necessary disclosure bill is a start.

All Canadians, not just unionized Canadian, need detailed online financial disclosure of all tax exempt union organizations to put an end to the abuse of tax deductible union dues.

Let me tell you what I found below the surface, to make a very long and difficult period of my life very short.

I became a leader in the FTQ-Construction union, Quebec's largest union. I exposed FTQ Director Jocelyn Dupuis, now guilty of fraud and sentenced to one year in prison for falsifying financial records.

I had only looked at a six-month period of his 11 years on top and found over $125,000 of false claims: trips to California and Vegas; per diem claims for kilometres in California, even if the car was a rental; restaurant bills for $3,000 a shot; monthly claims of over $20,000 for just one restaurant alone; and many non-union activities — all under the "watchful eye" of the executive board, who to this day has never claimed the money back for the members or the Canadian taxpayers. The union brass went to court on his behalf and told the judge that the money was used for miscellaneous purposes, lame excuses like buying lumber for strikes.

Today every director who approved those expenses is in a higher position at the FTQ Construction Council.

Opération Diligence, an RCMP and SQ task force, found many things, like when Jocelyn Dupuis gave over $70,000 to Local 791 to help re-elect Eric Boisjoli, one of his understudies. Today Eric Boisjoli is Assistant Director of FTQ Construction — the same person who set up a meeting between me and a notorious gangster related to the Mafia.

On tape, Yves Mercure and Yves Ouellet told me that $70,000 went missing through a boxing gala scheme; $140,000 was used to buy boxing event tickets sponsored by the FTQ.

Today, Yves Ouellet is Director General of FTQ-Construction. Yves Ouellet also approved Jocelyn Dupuis' expenses for two years while he was financial secretary. Ten and a half years of Jocelyn Dupuis' expenses have gone missing from the FTQ-Construction archives. It will be the same at many other unions across Canada.

The union leaders above me lied to protect their interests. So have other prominent leaders, like former CAW President Ken Lewenza and former CEP President Dave Coles. Together, in a national publication they state:

Most jurisdictions in Canada require annual financial statements to be filed by unions, where they can be inspected by the public.

This is not true. No labour board, no other government body anywhere in Canada keeps any such statements for public access.

It is clear that some union leaders will say almost anything to hide this reality from Canadians, including the unionized ones. Those who speak against this bill, let alone who want to find a way to stop it, would enable this terrible reality to continue. I challenge you to look me in the eye and tell me why anyone should have to be where I am today. Only full public disclosure will create more pressure on the labour movement.

It is the Income Tax Act that makes dues deductible, that makes all union revenue tax free, and that ensures there is no real disclosure and reviews of the books of the national unions. I opened up Pandora's Box. It is your turn to close it for the good of unions and for the working class. Thank you.

The Chair: Thank you.

We will begin questions with Senator Baker, deputy chair of the committee.

Senator Baker: Thank you to the three witnesses before the committee today. You've made very interesting and informative presentations, and we assure Mr. MacKay that we have his written brief here and all of this will be considered by the committee.

Mr. MacKay, perhaps I could ask you one question about our constitutionally protected privacy rights in this country as they relate to the bill. You've spoken about over-breadth, about overreaching and about vagueness. All persons in positions of authority in unions across the country, no matter how big or small the union, public or private, for the first time will have to provide an annual statement on their non-labour relations activities and on their political activities. Since there's no definition of "non-labour relations activities," would you give your opinion as to what those activities could include? In your opinion, does it include all non-labour relations activities? Labour relations activities is defined, but not "non," and their political activities. Those two phrases will require, for the first time in North America, all persons associated with unions, even small unions, to make that declaration in every tiny community in the nation, whereas in the United States it's restricted to unions that have an income of over $250,000 a year — a completely different context — and only the private sector, not the public sector. Could you give your opinion on the definition of "non-labour relations activities"?

Mr. MacKay: I can quickly suggest that what I think of as my mandate in relation to labour relations is twofold. One is in relation to bargaining and the other in relation to representation services. Those are two broad mandates we have within our union. Outside of that would be things that are non-labour relations. It would be difficult for me to provide much of a list outside of the person who plows your parking lot, the person who does your bookkeeping, the person who cleans your office — the list would be endless.

The main thrust of my privacy argument here is that $5,000 is a low threshold for disclosing information and will affect the privacy of millions of Canadians by disclosing any activity, any service they provide to a union.

If we're really going after political activity in particular, which seems to be expressly noted here, I want to point out one thing in relation to my union. We use a democratic system in our unions, and we are controlled by our members. We have bylaws and policies in place right now at the Association of Justice Counsel that bar us from any political activity. It's expressly noted in our bylaws and policies that are created through a democratic process in our union. That's where this should remain, as a democratic process within unions to make these decisions.

Senator Baker: So you will be required to do something under this bill that you're not allowed to do anyway, but you'll also be required now to give an annual list of your non-labour relations activities, every single person in a union, big or small, whether there's $5,000 involved or not, because persons in authority have to provide this. Is this definition overly broad, vague and overreaching, in your opinion?

Mr. MacKay: Well, it certainly is. The privacy aspect I think is a difficult one to wrestle with sometimes. We're less concerned, for example, about people who make large amounts of money. We're more concerned about the breadth as it relates to smaller services that are provided and how the impact will affect millions of Canadians.

What's ironic is that a bill presented recently wanted to have mandatory disclosure of federal government employees and Crown corporation employees making over $188,000. That was amended up to $444,000. The number is odd perhaps to the public, but those are salaries of DMs. That bill was defeated because the amender suggested that they needed to raise these amounts because of the bureaucratic headache in providing that type of disclosure. Ultimately, those are the people that are accountable to the taxpayers, the ones who pay their entire salaries. That bill didn't go any further. It's ironic that we're here now arguing about disclosing tiny amounts of money in relation to unions and only to unions.

[Translation]

Senator Dagenais: Thank you to our three witnesses. My question is for Mr. Pereira.

First of all, as a former union boss, allow me to congratulate you for your courage. I have closely followed everything that has been happening, particularly at FTQ-Construction. Knowing how these things happen internally, within the unions, I can tell you that it requires a lot of courage to do what you have done. I congratulate you for that.

That said, in your opinion, the mafia has a real presence in some unions, as I believe was noticed during the Charbonneau commission. Is it that the union leaders are hanging around with the mafia or, on the contrary, is it that the mafia wants to infiltrate itself into union affairs?

Mr. Pereira: One the one hand, it could be that the mafia wants something and is hanging around the union leaders, and on the other hand, sometimes the union leaders want the prestige of gravitating around these people.

I would like to add some comments about something I heard today. We were talking about $5,000 and less. Often people suggest that this is not important or that it is ambiguous. In my experience in the construction industry in Quebec, do you know who takes care of snow removal, photocopiers, and household maintenance? Often it is the wife, the cousin, the sister or the brother of the business manager, but the workers do not know that. This bill was not created for the Senate or for the government, but for workers.

Senator Dagenais: Could you tell us how the union executives can use members' money for political ends, and if they do so, what column would that spending appear in?

Mr. Pereira: I have been part of the two most important unions in Quebec: the CPQMCI, which was the International Brotherhood, and FTQ-Construction, which was the largest. This spending was listed under the "miscellaneous" column. Without getting into a big debate on the subject, I would say that the Italians and the Portuguese in Quebec tend to favour the Liberals, and no one really voted for the Conservative Party. In the unions, there was a push toward the PQ, but people did not really listen to what the workers wanted. People would listen to the director general, who took the money from the union dues without any explanation, and would decide to give $2,000 or $3,000 or even to provide manpower to help win an election in a given region, as happened with the NDP and the PQ.

To me, this is irrelevant. You can vote for anyone you want, that is perfectly normal, but you do not have the right to give the members' money to a particular political party.

Senator Dagenais: Senator Baker will correct me if I am wrong, but I believe he asked Mr. MacKay if the term "labour trust" had been defined in the bill. I would encourage you to look at the first page, the third paragraph, section 149.01. That is where the definition is. That was simply for information purposes. Thank you, Mr. Chair.

[English]

Senator Plett: I'll be brief. Mr. Pereira, I want to simply echo what Senator Dagenais said and thank you for the work that you have been doing on this. I watched yesterday for the first time the video of the interview that I think CBC had done with you, and I was astounded at the pressures that you were under and what you have all done, so thank you very much for that.

My question to you is this: You say you now have to work in Cold Lake, Alberta, and your family is in Quebec. Do you still feel unsafe living in your home province, even though you are working in Alberta? How about your family? Do you have concerns over their safety with what you've done?

Mr. Pereira: Right now, I don't think so, but one of the reasons why I feel pretty safe is because there was a disclosure. There was a media disclosure, which goes almost with the bill. You need a disclosure to take that pressure off you and to take the pressure off the simple worker, the guy who takes all his change to go up to the microphone and talk to the business leader and tell him, "Listen, I need to know how much money you spent on restaurant bills," or whatever.

Right now in Quebec, so you understand also, les registres des entreprises du Québec, there's more money in the sports associations which are affiliated to the local than to the strike funds. That says it all.

Senator Plett: Thank you.

Mr. Roumy, do you feel under pressure by your local in any way that would discourage you or encourage you from doing what you're doing?

Mr. Roumy: No pressure, but I think there is a bit of irritation. It's more resistance when I ask questions. I've been attending local meetings for over a decade, and sometimes when union leaders would be different, presidents would allow us to walk out of a union meeting with financial statements, sometimes not. When they didn't, they would be resistant in allowing you to take the financial statements with you.

I haven't had major pressure, but there's been resistance to disclosing the salaries of my national president or the financial statements, but nothing to the extent of Mr. Pereira.

Senator Plett: Thank you.

I have one quick question for Mr. MacKay. Mr. MacKay, in your presentation you list a number of organizations, including registered charities, not-for-profits, political contributions, and you're drawing a correlation there. Give me your opinion on registered charities. Should they have full disclosure?

Mr. MacKay: There are a couple of different things going on here. One is accountability to the taxpayer and one is accountability to union members. I think the thrust of my argument here today is that what we're talking about is a labour relations issue. I don't want to get into the nitty-gritty of who should be disclosing things to the taxpayer or not. I want to suggest to this group that union members have a right to disclosure about union business, and the taxpayer doesn't, just because union dues are deductible.

Senator Plett: Even though it's their tax dollars?

The Chair: We'll have to move on.

Senator Joyal.

Senator Joyal: Thank you, Mr. Chair.

[Translation]

Senator Joyal: Mr. Pereira, with your experience in unions in Quebec, do you believe that the laws governing unions are not sufficient to prevent the abuses that you described in your presentation?

Mr. Pereira: I won a case under the first Law 135, which has to do with discrimination and bullying on construction sites. The contractor received the minimum fine of $5,000. The laws exist, and they need to be applied. That is what I believe. Quebec is perhaps a slightly different jurisdiction than the others, but it needs an ombudsman.

Unions need to have the opportunity to show that they are clean. They preach labour values to everyone else, but then they say that they control themselves, that they manage themselves, and that they do not want anyone to look at their books. In my opinion, that is completely absurd.

Senator Joyal: When you say that there should be an ombudsman, could you tell us a little bit more about what you envision?

Mr. Pereira: I was the director general. But for a mere worker who wants to look at the books to be able to get some tax information, if he is not one of the executive members, he should be given a voice. But he does not have a voice. We have an executive, but in general the executive is made up of the eight best paid men or women at the local branch. That is usually who it is.

In the construction industry, once you end up sitting in the comfortable chair of the union leaders, at a certain point, after having been there for a certain period of time, it is the worker, and not the others who become your enemy. You end up saying, "Why are you asking so many questions? Why are you asking me this? Why do you want that?" when in fact it is perfectly normal for workers to want to know how the money is being spent.

The money belongs to the workers and no one else. We represent the workers, and we should defend them as best we can, wherever we are. I am the only director who is not also a financial secretary according to the rules. In Quebec, that is not done. All of the directors general are financial secretaries, which means that they have two jobs, one within the executive and one as director general. As for the placements, they decide if on a given day they are going to make $50,000 or $20,000, by saying, "Please ask the right question."

Senator Joyal: As you mentioned, your experience is mainly in the construction industry, which, if I am not mistaken, has a very tumultuous history that dates back to the Dubois brothers, in a past generation. Does your knowledge of other union industries resemble what you saw in the construction industry? Would you say that all of the unions in Quebec face the same problematic history that the construction industry faces?

Mr. Pereira: I will give an example. I made a photocopy and a CD of all of the receipts related to the $125,000 and I gave them to the president of the FTQ, my director, to get his support. Then, I made photocopies which I distributed to all of the local affiliates of the FTQ, all 20. I never got a call back from anyone. When you talk about finances, you are really touching a nerve in the unions. They feel they have the right to waste all the money they want, but no one has the right to disclose it. It is essential to understand this.

Among other locals, not one called me to say, "Listen Ken, what you spoke out about is good, or it is not good." Not a single person. It was omerta, the law of total silence. In addition, it was underneath the FTQ. The International Brotherhood ostracized me. The CSD, the CSN, no one supported me. We are talking about 500,000 FTQ workers and over a million union members.

My point of view is simple. When you have nothing to hide — and I understand the concept of "big brother" and the point of view that you do not want to impinge on anyone's privacy — a union has the right, through the federal tax code, to have certain expenses which are not tax deductible. However, in my opinion, when that is the case, unions need to be more transparent, because transparency ensures that unions will be much closer to their members.

Senator Joyal: Would you also say that the development fund managed by the FTQ operates under the same opaque conditions and the inability to have access to how operations and decisions are evolving?

Mr. Pereira: You are speaking of the Fonds de solidarité?

Senator Joyal: Yes.

Mr. Pereira: It is very delicate for me to give you information about the Fonds de solidarité. I am not an expert on the subject. The fund administrators always said that they had nothing to hide, but after the Charbonneau commission, they changed their rules. I think that that change greatly improved conditions.

Senator McIntyre: Mr. Pereira, I understand that you are a former labour organizer and a former director of the Association nationale des mécaniciens industriels, which is affiliated with FTQ-Construction. People say that you are not afraid of anything. Furthermore, you proved it by testifying courageously over the past years before the Charbonneau commission, a commission that sought to investigate and shed light on the construction industry in Quebec.

Furthermore, I would add that, if the commission learned a great deal about the construction industry and some anti-union practices, it did so in large part due to your testimony and to electronic surveillance. I know what I am talking about because I followed the commission proceedings religiously on television.

That being said, Bill C-377 proposes the public disclosure of the financial statements of workers' organizations under the Income Tax Act. Without question, the federal tax system offers advantages to unions. I understand that, in your opinion, it is fair for the public to know how unions are spending public funds. Members of workers' unions are also part of the general public; do they share your opinion?

Mr. Pereira: I came here representing the union. I want to defend the union movement, and by defending it, sometimes, Pandora's Box gets opened.

Senator McIntyre: In general, they support you?

Mr. Pereira: Yes.

Senator McIntyre: Thank you, sir.

[English]

Senator Fraser: Thank you all very much for being here. My questions are basically for Mr. Pereira. I, too, congratulate you and thank you for your courage.

Mr. Pereira: Thank you.

Senator Fraser: I am also a Quebecer, and these things are not without importance.

I'm trying to square some circles in my mind in terms of this particular bill. To begin with, it seems to me that construction unions are, by their nature, different from most unions in that the nature of the work is inherently temporary. Every construction job finishes and every worker then has to find more work. The union plays a big role so that there is an imbalance of power within the union that does not necessarily exist in other unions where employees have job security once they get to that point. I don't know if you would think that that has an influence on the problems that you have discerned.

In that context, but also more generally, you talked in your presentation, and of course elsewhere, about false claims and fraud. People who are prepared to commit false claims and fraud are not really going to be captured by this bill, because they're prepared to lie and to steal. Given that we already have laws against that kind of thing, I'm not sure how this bill would solve that problem, but you obviously think it would. Can you clarify things for me?

Mr. Pereira: I'll try. Listen, when I found out about the six-month period, I didn't go see police; I didn't go see media. The first person I went to see is the president of the union branch, FTQ, Michel Arsenault, a man who was completely out of construction, was a union man but never was part of les métallos. So he didn't know anything about the construction union aspect of it, but he understood the fraud aspect.

To my surprise, he didn't steal anything, but he closed it up because it was going to be bad for the image of FTQ- Construction. It would have been bad for the QFL, the Quebec labour fund.

So to make something equal, in my opinion, the bill takes away the human factor in it. It puts in direct perspective what you spent, what you have, what it is. It doesn't say that, "Oh, well, it's that politically we shouldn't do this," or "We gave 20,000 to this party but do you understand he helped us out here, so we understand," or "We gave money for this labour strike and nobody was supposed to know that we were behind this."

I've seen it and I understand that point, but this bill will have to show somebody. And this is why I'm always towards the members. The members have to find out what the money is going for. There are too many people doing whatever they want with the money of the members. Some locals have $30 million.

At the Charbonneau commission we found out that he made 13 per cent. La FIPOE, Jean Lavallée was all happy. He says, "I made 13 per cent because I lent the money." It's not the point of lending the money. It's not the point of having 13 per cent. The point is you, with your governing board, with your eight executives, you decided to lend $500,000, $1 million to somebody. You bought une pourvoirie à Joncas with it. So it's that aspect that the members have to find out, and that's why I'm so for this bill.

Senator Batters: Thank you very much, Mr. Pereira. I'm also going to address my question to you. Thank you very much for your compelling opening statement, and I think that you really provided us today with a real face of why this bill is needed. We've been hearing a lot for the last two days about esoteric legal arguments like pith and substance and other constitutional matters. You provided us with some really realistic reasons why we need this bill. I wanted to allow you a bit of additional time to tell us more about why, given your very personal experience, Bill C-377 will improve the lives of unionized workers in Canada.

Mr. Pereira: Thank you very much. I am surely not a constitutional lawyer.

Senator Batters: That's okay; we have plenty.

Mr. Pereira: I just think the bill needs to be there because it's been too many years that unions — I'm speaking on behalf of — I'm a union man. I really do believe in unions. I believe that without unions, we wouldn't have a middle class.

But I still believe that men sitting in a chair with all that power and no accountability need to have "overview," somebody watching over them. This bill, this is what it is. It shows directly to the member, to the media, to everybody who wants to look at it, opens up the books, looks at it, goes to the website and sees and says, "Listen, we gave $20,000 to this." It's transparency. I believe it should be applied elsewhere also, but it's a start. I'm here just for my unions, and that's all.

Senator Batters: Thank you. We're happy to have you in Western Canada, albeit I hope you can be reunited with your family soon.

Mr. Pereira: Thank you.

Senator McInnis: Thanks to all of you for coming.

Mr. MacKay, you talked about your union and how it's run democratically. I have no doubt about that. There are unions in this country that in fact operate totally above board and within the law and also are quite open.

However, what we've heard here today — and we've heard it in the past and I've read about it. In fact, a number of executives, apparently some allegedly, have in fact misused funds.

I guess my question is this: Do you believe this is systemic? Is it pervasive? Is this filtering through a number of unions across the country? Is this what we're getting to?

Mr. MacKay: Well, for what it's worth, I don't believe that's the case, no. I think it's dangerous to found legislation such as this on a situation that's probably somewhat isolated. The Quebec construction industry, I mean they set up an entire inquiry based on that scenario. If we want to file legislation on that basis, I think that's very dangerous.

From my own experience, I haven't seen anything of impropriety amongst the unions that I deal with, but that's beside the point. We need to address the purpose of this legislation and how it is we can fix the hole that's present. If we have a situation where Mr. Roumy's and Mr. Pereira's executive isn't accountable to them, it's not up to the Income Tax Act to fix that; that's for labour relations legislation.

I'm accountable to my members under the Public Service Labour Relations Act. I'm accountable under the act that incorporates our union to provide audited financial statements to my members at our annual meeting and upon request. Most other jurisdictions have the same setup. If there's a hole in that scheme, you should be amending that legislation, with accountability to the members and lobbying the provinces to do the same in their jurisdictions.

Senator McInnis: Mr. MacKay, with respect, this bill is not predicated solely on FTQ-Construction and the Charbonneau commission. It is not purely on that at all. I can highlight a number of situations where allegedly but in fact it was found there wasn't even bookkeeping taking place. Don't give the viewers or the people in this room the impression that that is the case.

I want the other two witnesses, if you would, to answer: Do you think it is systemic?

Mr. Pereira: We heard an expert at the Charbonneau commission talk about the mob in Ontario's construction industry, and they say it might even be worse than in Quebec.

I can't speak on behalf of our locals. I believe there are a lot of good men and women who are defending unions, but we need to pass this bill because I think it's Canada-wide.

Mr. Roumy: If I may comment, I think the majority of the union people I know all have good intentions, but I do think — and I'm aware — that in some extreme cases there are cases of fraud. To have a bill like this that requires disclosure, it will force unions to review their bylaws, to review their membership meetings and to review how their executive is accountable and how transparent they are by providing financial statements.

If I could clarify about what we were saying, it's not just about FTQ-Construction and Quebec. You had the CLC president appear before your committee yesterday. I saw a bit of the testimony. He explained that the CLC has 3.3 million members and they're accountable to them.

I'm a member of CUPE, and CUPE is a member of the CLC. I have never received the financial statements of the CLC. I called the labour board recently, and when I asked if I could have access to CLC's finances, which are not available online — there is nothing financial on their website — they told me that CUPE is a member of the CLC but a low worker like myself is not a member of the CLC. Therefore, I do not have access to the financial statements. I believe I've seen the statements correctly; CUPE pays millions to the CLC as a member. So if part of my dues goes to the CLC and CUPE is a member, then I would like to know what the CLC does for my money and those of my colleagues.

I just want to clarify that this bill is important because we are talking about Quebec, but just with the example of the CLC, they may say they disclose to CUPE and maybe CUPE has the financial statements, but do I have access? Do I know what the information is? I do not, and this bill will help correct that.

Senator White: Thanks to all of you for being here.

Mr. MacKay, just so I'm clear, you're concerned that if the bill was under labour law, it would be less. Is that what you're suggesting? Is it about being attached to taxation?

Mr. MacKay: I'm suggesting that it's a labour relations issue entirely and has to do with unions and their membership. Right now there is legislation in most jurisdictions that addresses the financial accountability. So if there are gaps in that legislation and in that labour relations area, there are statutes that can be amended or created.

Senator White: Thank you. I just want to be clear, though. If this legislation was Canadian labour law or Nova Scotia labour law, then you wouldn't be appearing having concerns about the legislation. Is that right?

Mr. MacKay: Well, then I suspect it would not be a —

Senator White: Under the Canada labour act.

Mr. MacKay: Right. Then I suspect we wouldn't be tying this in with taxpayer subsidies and allowing for disclosure to the general public. That's my concern.

It's not where we stick this legislation that's my concern; it's the fact that it should be labour relations legislation and therefore limited to the relationship between unionized members and the employer obviously, but not squeezing into a taxpayer situation where it now becomes "disclosable" to the public.

Senator White: While I appreciate that, your comment earlier about union dues not being a tax, they are for a union member; they're obligated to pay it. They feel like it's a tax, even though it doesn't meet the true definition. It does have an impact on taxpayers in Canada because it's taxable revenue not collected as a result since you can write it off on your income tax. So, really, the argument that it's not a tax directly might be true. It certainly has an impact on income tax in Canada. Wouldn't you agree?

Mr. MacKay: I would certainly agree, yes. Union dues are tax deductible and union revenue is —

Senator White: So drawing a connection to the Income Tax Act, whether you agree or not that it's drawn, certainly there can be an inference there's a connection to the Canadian Income Tax Act and on taxpayers in Canada as a result.

Mr. MacKay: Oh, easily there's a connection, but I'm not here to make the ultra vires argument, which is a pith and substance argument. A more than tenuous connection is probably not enough to put us in that ballpark.

[Translation]

Senator Dagenais: I listened to your testimony attentively, Mr. Pereira. For your information, for 28 years, I worked for the police union of the Sûreté du Québec, where I filled a number of positions, from steward to president. I can tell you that the danger within unions — and I think that you mentioned it quite clearly — occurs when people reach upper management positions, because millions of dollars pass through their hands, and often, they forget the main reason why they were elected, and the interests of their members.

We have duties to our clients and, often, we forget about them, as you clearly stated. Perhaps this bill will set things back on the right track?

Mr. Pereira: I think that we are on the same wavelength. Sometimes, the chair is very important, but it means that the members are forgotten. You feel very comfortable where you are, and sometimes sums of $1 million, $2 million or $20 million become difficult to manage, and it takes on too much importance, more importance than the cause.

[English]

Senator Joyal: Listening to your comments, Mr. Roumy and Mr. Pereira, I have the impression that the problem you want to solve would be much better addressed in labour relations than in tax legislation. It's more than just a tax issue. It's about the ethics within the labour union. It's about the capacity for a member to get answers from his representative. It's about how the report is made to the annual assembly of the members. It's about the democratic life within the union groups.

If that problem needs to be addressed — and I would hesitate, as a personal comment, to stretch the statements on unions to all unions across the country. I have some reluctance with that, Mr. Pereira, because I think that's unfair. We have don't have proof in front of us that all unions are as problematic as the construction industry has been in Quebec for generations, or might be per the nature of the industry. I close with that parenthesis. That proof is not before us. I can't label all the unions in Canada as being defective in relation to their members. It would be overdone to conclude that today, in my opinion. I'm not at that point so far.

Again, I come back to my point. The problem you have described is one that should be addressed within labour relations and not within the tax law of Canada. It seems to me that you have illustrated the comments that were made here yesterday that in fact we are outside the boundaries of tax law and we are exactly in the realm of labour relations.

Would it not be better to address that problem on the nature of what it is instead of trying to use the back door to solve it in a way that raises constitutional problems, will find its way to the court and for years be under legal challenges? As much as there are problems that need to be addressed, we are not taking the proper approach now.

The Chair: That was to Mr. Roumy. Did you hear that, sir?

Mr. Roumy: Was that a question to me?

The Chair: Yes, it was.

Mr. Roumy: Sorry, I thought it was for Mr. Pereira.

Unions and union leaders represent the members, and members have an expectation that their dues are there to enforce and improve their collective agreements. I pay both mandatory union dues, and through my taxes I fund a political party that I do not support. So if unions say that they represent me, why do they fund the Ottawa Folk Festival, a political party or send letters to the presidents of Colombia and Ecuador? This does not represent me and my colleagues. This does not improve my working conditions or help me with collective bargaining or grievances.

This bill is required because the issue is that my dues are tax deductible and unions are not-for-profit. Because my union dues are tax deductible and they should be used only for the union, grievances and collective agreements, then why is everything else — sorry, I can't hear you. I don't have the audio.

Senator Plett: Very briefly for the record, and Senator McInnis talked about it, in reference to what Mr. MacKay said about "reactionary" towards an issue in Quebec, this bill started four years ago and the Charbonneau commission started two years ago.

The Chair: We're going to have to adjourn on that note. Thank you, witnesses, very much. We appreciate your appearance here today. We will reconvene on this legislation next week.

(The committee adjourned.)