[Recorded by Electronic Apparatus]
Tuesday, May 2, 1995
.1109 
[English]
The Chair: We will bring the meeting to order.
Today we have a change of business, which is rather invigorating. We begin our examination of a private member's bill, Bill C-224. The sponsor is John Bryden, MP. Mr. Bryden is our first witness.
After we have heard from Mr. Bryden we will be hearing from Revenue Canada. I suppose a bill of this kind has some revenue implications so we want to hear from that agency or department of government. Then we will hear from the Canadian Centre for Philanthropy.
.1110
Off the top, colleagues, I just want to say that Mr. Bryden finds himself in a rather unusual position of appearing before his own committee. As you know, he is a colleague of ours and has been for the last few weeks, so he has this unusual situation of appearing before his own committee.
Mr. Bryden also has a great sense of propriety and he wants it understood that he will be recusing himself from the deliberations. He will appear as a witness and from then on he will be replaced by whomever. Today it is Mr. Shepherd.
I want that understood. It is only out of a sense of fairness that Mr. Bryden should do that.
We will hear from Mr. Bryden now. Then we will resort to our usual rounds of interrogation. That is what we do around here, Mr. Bryden; we interrogate. Go ahead.
Mr. John Bryden, MP (Hamilton - Wentworth): Mr. Chairman, everyone here understands the spirit of the proposed legislation. We are looking for a first step in public accountability for charities and non-profit organizations.
I say a first step because this piece of legislation addresses only the salaries and benefits of senior paid officers. It is acknowledged now that the entire not for profit sector is long overdue for a general review, but that is a process that could take several years.
This piece of legislation, I like to think, is in response to a growing public demand for accountability and openness in government; not only in government but in all institutions.
One of the theories behind this piece of legislation is that charities and non-profit organizations, because they have a special tax exempt status as a result of their legal status under Revenue Canada, are in effect subsidized one way or another by the taxpayer. Consequently the taxpayer is a shareholder in the not for profit sector and is entitled to know some basic information, in this instance the remuneration of executive officers.
This is a principle that would find and does find very wide support among the Canadian public to the tune of more than 90%. We could even say that it is almost universally understood that the taxpayer ought to or does have a right to know how organizations the taxpayers are directly or indirectly subsidizing conduct themselves.
I would also like to make a point that I feel I have the broad support of the House of Commons. This passed second reading with the unanimous consent of the House. In conversations I have also received the encouragement of several ministers, including the revenue minister.
That being said, I have to add that the process of legislation as a back-bench MP is quite a daunting prospect. I have learned as I have gone along.
One of the things I have learned is what constitutes the process. The legislation is put before the House; it is introduced. Then it goes to second reading and it is approved in principle, as is the case here.
However, this does not mean, Mr. Chairman, that the bill I present before you is complete or perfect. I come before this committee with the earnest plea that you consider the bill before you very carefully and in your wisdom make such amendments as are necessary to create an effective law in terms of the spirit with which it is intended, that is the spirit of disclosure in the case of the remuneration of executive officers.
I am in the awkward position of having to go through and poke holes in my own legislation to show where as a result of consultation, particularly that which occurred in the House of Commons when my colleagues not only from the Liberal party but also from the Bloc and Reform parties addressed the bill and pointed out some deficiencies, we can make substantial improvement.
.1115
I would like to begin with clause 2. Clause 2 describes the various charitable foundations and non-profit organizations to be covered by the legislation. The member for Anjou - Rivière-des-Prairies made the point that there is a line there concerning any organization that receives directly or indirectly any payment from the public funds of Canada.
His point was that this line ``directly or indirectly'' seemed to make the bill very broad in the sense that it would capture not just organizations receiving direct transfers, direct grants, but it would also catch organizations that are in effect indirectly receiving government money by virtue of their ability to issue tax receipts or their tax exempt status.
This concern, this confusion or this ambiguity, if you will, was reflected in the remarks of the member for Mission - Coquitlam who made an excellent presentation and the member for Mississauga West. Each of these three members approached this line in quite different ways.
My intent in this legislation is to capture all charities and all non-profit organizations currently required to fill out information returns. In the case of charities a section of those information returns is open to the public. In the case of non-profit organizations this information is still closed.
As I see it, the intention of the bill would be to require non-profit organizations to disclose the remuneration, the salary and benefits, of their executive officers in the same sense as the officers of charities. That is an area that requires clarification possibly through an amendment. One way of doing it very neatly would be to modify that clause in such a way that the requirement for disclosure of salary and remuneration touches those organizations that are already filing returns, either the charity return or the non-profit return.
There is an advantage to doing that. These returns are already being filled out. It would be inexpensive for government to make this act work through existing infrastructure. I would wish you to look at this very carefully. Perhaps you can query Revenue Canada officials on this point when they appear before you. I am sure they will have something to say.
Before I leave this clause I would like to point to another deficiency, in my opinion. I draw your attention to paragraph 3(1)(b):
- (b) a non-profit organization within the meaning of section 149(1)(l) of the Income Tax Act.
I am sorry I did not think of it at the time, but that is what happens when you begin legislation and go through a process. I would like to see non-profit organizations also catch other categories of non-profits such as those that pertain to certain housing corporations, which would be paragraph 149(1)(i), and those that pertain to non-profit corporations engaged in scientific research, which would be paragraph 149(1)(j). The last is those non-profit organizations engaged in labour organization, which would be paragraph 149(1)(k).
.1120
I leave that with you, Mr. Chairman. I hope you will consider that as a possibility for this committee.
In that clause there may be just a small amount of text, but there is a lot to be said about it.
Moving further, on page 2 of your copy under subclause 3(5) it states: ``The Minister may make regulations''. This is a very important section of the bill because at the outset it was very clear that in trying to design legislation like this one could not be too precise or define too absolutely what one requires in terms of definitions of senior officer or remuneration and benefits.
Here we leave it to the minister to define senior officers. In his wisdom he may make a distinction between senior paid administrators and directors who are receiving honorariums and that kind of thing.
It is my intention, however, to capture specifically the chief paid administrators, so that what we are looking at is not the board of governors. We are most concerned about the top paid staff. We see in paragraph 5(5)(c) below: ``defining remuneration and benefits for the purposes of subsection (1)''.
I would like to put on record in this committee that the public is interested when it comes to salary and benefits and the specific salaries and benefits. It would not be sufficient simply to give ranges of salaries as is commonly the practice in the civil service. I would hope to see the minister give the specific salaries of the top three administrators. The minister in his wisdom again might require them to indicate such benefits they receive, not only their pensions but also perhaps a free car or that kind of thing.
We have to leave it to the minister and the staff after the legislation is passed to spell out the specific requirements and types of information the minister wishes to obtain. You might have some thoughts about that later.
Finally, I would say that clause 4 is in some ways the most important clause in this piece of legislation. It is the clause that provides or attempts to provide penalty.
In great degree this legislation comes from the reality of the current charity information return, the public return. In an examination of the returns - I have some samples here which members of the committee are welcome to see - the practice consistently among charities has been that the information with respect to remuneration is required on the current form.
I draw your attention to the two lines that pertain to remuneration. On line 135 it requires the total remuneration including benefits of any kind paid to employees who are executive officers, directors or trustees of the charity. You will see that line is blank on this form.
The next line indicates the number of individuals for whom remuneration appears on line 135. It is also blank.
This is a common problem with respect to the charity information returns. I have a list of 100 charity information returns one of my staff drew up yesterday from my files, of which 48 failed to fill in the remuneration line.
.1125
Here we have a situation where theoretically, at least on the charity information return, the type of information we wish is required. It is not required very precisely, not as precisely as I think we need. Information is asked for but it is not obtained and it is not answered.
Revenue Canada will tell you, if you ask, that there are no effective means of obtaining compliance when these returns are returned to Revenue Canada and these lines are left blank. What I wish my bill to do is to provide an adequate penalty, a practical penalty, for the failure of organizations to comply with the information we wish of them, the information pertaining to executive remuneration.
The bill as you see it before you proposes an organization that fails to comply and supply this information, be it a non-profit organization or a charity, would be guilty of an offence and liable to a summary conviction and a fine not exceeding 50% of whatever it receives in payments from government.
On reflection and as a result of consultations I submit that this form of penalty may be difficult to enforce. Basically it sends the revenue minister and his staff to the courts, and we know the courts are an expensive and sometimes difficult way to get compliance, particularly when you are dealing with organizations in the tens of thousands.
I would propose to my colleagues here that you consider an alternate way of imposing a penalty. Perhaps at a later time one of my colleagues on either side of this table, for that matter, could propose a suitable motion. A suitable and practical penalty would be something to the effect that an entity, be it a charity or non-profit organization, that fails to comply with the previous clauses of the bill in supplying the information we wish should be deemed to have lost its charitable or tax exempt status for the current taxation year. The penalty then would be technically automatic: if you fail to do what is required, your charitable or tax exempt status would be immediately forfeit.
I would hope, Mr. Chairman, that you and my colleagues would consider that possibility as you go through the bill. I do not have much more to add.
It is a very important piece of legislation. I find myself in a unique position in that I have submitted a private member's bill that I feel is very important to the Canadian public, but I have to appeal to members of this committee on all sides of the table to examine the bill very carefully and make amendments as they see fit. In order to address or achieve what I see as a very important target, that is the openness and first step in disclosure with charities and non-profit organizations, the bill needs a great deal of your attention and your ability to polish it up and make it into practical legislation.
In the end what you have before you will not be just a private member's bill but a bill I would hope to be a private members' bill.
The Chair: Before we get to the first round of questioning - the first question goes to the Bloc, as usual - the Chairman has a question.
When I listen to you I get the impression that what drives this bill is a great sense of altruism and a commitment to democracy, which is fine with me. However I suspect - and I have not talked to you about this and this is why I am asking - there are some very human elements behind the bill, too. May I just offer some conjecture or speculation.
.1130
I would assume that in your travels and experience you have come across what you might think to be some abuse of the current privileges of non-disclosure. In your opinion perhaps some people have been at the trough, to use the vernacular.
Is that true? Have you come across evidence that some people who work for organizations of this kind are paying themselves or are being paid wages, salaries or remunerations that you think are excessive? If so, can you share some of that with us?
Mr. Bryden: Yes, Mr. Chairman, certainly I have encountered that. I did a special interest report that revealed some of it. I can say, for example, that very recent research has disclosed small charities in which there are only three employees and the total payment to the employees is around only $180,000. Yet the chief executive, who would really be an officer-manager of two staff, pays himself $128,000.
The difficulty is that many organizations leave the line blank and you cannot get an adequate grip on what abuses may be out there.
My central theme and what is driving the bill is the sense that the highest court of the land is the court of public opinion. In the case of members of Parliament or governments ultimately it is the public that decides whether or not we are performing adequately. We are voted out if they deem our performance is not up to snuff.
The same principle should apply to the not for profit sector, a huge sector engaging about $120 billion a year that has not been open to adequate public scrutiny. However I would add, I hope with some force, that it is not my intention and never has been by introducing this kind of legislation to condemn the not for profit sector.
The not for profit sector has been outside public scrutiny for a long time. Revenue Canada has tracked it as best it can but the ultimate test of whether or not salaries, for example, are inflated is the test of public opinion, the opinion of those who donate to charities.
On the other hand I believe we will find that the majority of charities and non-profit organizations are conducting themselves in a proper manner. If we can eliminate the abuse, which may be widespread, in the end we will have more money for organizations that are using donations and government funds wisely.
The Chair: We will go to the Bloc now. Let's see if we can keep the answers as short as possible because we are really pressed for time.
Mr. Bryden: Yes. I am sorry that was a long answer.
The Chair: I will give it some thought as we go into the first round but we will have to modify our usual rounds of questioning.
[Translation]
Mr. Deshaies (Abitibi): I want to thank Mr. Bryden for his bill. I think it will be very useful to the Canadian public.
I can see two or three points that can create a problem for the Bloc québécois. You mentioned them. It is about the groups which receive public funds directly or indirectly from the Canadian government. In the next meetings, we could propose an amendment specifying the content and significance of your bill.
I have a more specific question to ask. In the bill, all the charitable and non-profit organizations are concerned. Having worked a lot with this sector, I perfectly know that a lot of small businesses can collect amounts between $1,000 and $50,000 without having any support staff. Most people working for these organizations are spending money out of their own pocket.
You suggested an amendment which would make the Income Tax Act to apply to the concerned people.
.1135
Do you think it is enough to mention the Income Tax Act? Right now, only the non-profit organizations as well as, I suppose, charities receiving over $10,000 in return on investments or assets worth over $200,000 are concerned by the Income Tax Act. Do you think this would be enough to spare the red tape to small organizations giving time and money to help people?
[English]
Mr. Bryden: Yes, I would think so. I would like to see the modifications made a requirement of non-profit organizations, the same organizations that are currently required to supply the non-profit organization information return.
Mr. Epp (Elk Island): I begin by commending my colleague for this bill. The more openness we get as to the expenditure of public money, the better off we are all going to be. It is a move in the right direction.
I have a few questions. First, you held up some forms. How did you get those forms? Are they publicly available and what were they specifically? Is the one you held up from a non-profit organization or charitable organization?
Mr. Bryden: These are charity information returns. They are only available for charities. It is important for members of the committee to know that non-profit organizations information forms are not available to the public. The legislation has to make the point that the information regarding the remuneration, in a more elaborate form, I hope, supplied by non-profit organizations will be available to the public.
Mr. Epp: Not for profit organizations and not for profit corporations pay no income tax. Is that right?
Mr. Bryden: That is correct, yes.
Mr. Epp: Do we also have not for profit organizations being able to issue income tax receipts?
Mr. Bryden: No. Questions such as that are probably better asked of the Revenue Canada officials, but my understanding is no. Charitable organizations are entitled to issue tax receipts. The chief advantage of non-profit organizations is their tax exempt status.
Mr. Epp: Let's go to some specifics here.
I would like to ask about subclause 3(4). You have indicated here that this should ``not apply to a payment made for goods or services provided pursuant to a contract between the organization and the government''.
I do not know whether or not there is a possibility of this, but it occurred to me that there could be not for organizations that enter into these contracts and are then able to assign one of their management people to look after it and make it a sort of subset of the whole organization. Thereby they would end up being able to give their managers a great deal of money that would now be shielded. Why would you put that in there?
Mr. Bryden: The original intention of that was to make the legislation separate from what we might like to do at another time with the whole issue of contracting out. That was what I was looking at there, but I do take your point.
I do not think we can expect to cover all bases with the legislation before us. It is a first step but we will require in subsequent years and subsequent legislation a much higher order of disclosure from both the charities and the non-profit sector.
I have to acknowledge on behalf of Revenue Canada that this is a whole new area for it as well, in the sense that only in the last few years has it begun collecting the basic financial information on non-profit organizations. We need to give it a year or two to examine the information it collects and to consider it. We will see where we go from there in terms of what kinds of further disclosure we wish.
Mr. Epp: I was really surprised to find out that back in my own riding the YMCA is administering part of the UI program. That just blew me away.
.1140
It turned up because one of my constituents had a problem with them. Basically they are entering into these contracts with government to raise money for their organization and they do not have any real authority of government in resolving disputes and so on.
If we have things like that happening and individuals in the organization are being paid a very good salary because of the fact that they have entered into this contract, I would dislike for this clause to be able to shield that group or any other group that is similarly involved.
Mr. Bryden: It is a matter of practicality. I think it would be difficult or possibly unfair to the government, if I may say things like being unfair to my own government, to try to bring something in with this legislation at this time that would impose a financial penalty on the government.
Right now if we required compliance through the current infrastructure, the current charity information return, the non-profit return, we could do something that is relatively inexpensive. It will not have additional costs. I am very sympathetic to what you are suggesting. Obviously I am. However I think the committee would have to consider very carefully adding something to the bill that might substantially increase the costs of administration.
I would like to comment very briefly, Mr. Chairman, on something else you said. One of the central themes running through what we are trying to accomplish is the fact that many charitable organizations and non-profit organizations, to use an expression coined by my colleague here, have been seized by their administrations. Often the paid staff are on a financial course giving benefits to their staff. That is not known by the directors of the organizations or the volunteers. I hope this bill by adjusting the issue of salaries will disclose that type of abuse, and I think it is an abuse.
Mr. Epp: Especially because I spoke to this bill and so it became known. Several people have contacted me and talked to me about it.
I have one question again I suppose because of the circles I walk in. Do you intend with this legislation to capture all religious organizations and churches? Will it now be required that churches declare the salaries of their pastors and their executive assistants and so on? Is this intended?
Mr. Bryden: Yes. I don't think religious organizations should be exempt, but my very superficial, shall we say, examination of that sector in this context has disclosed in the majority of cases that the salaries of ministers and priests are public knowledge anyway in their congregations.
In religious organizations there is a very high level of accountability. I would not expect the majority of them to be affected by this legislation whatsoever.
Mr. Epp: I have one last question, if I may, Mr. Chairman. We all know that in these tough economic times many organizations have established a foundation separate from the organization. The technical institute where I worked for 27 years before coming here has done that. It now has a foundation whose only role is to raise money for the institute. I wonder how far you expect this legislation to go in disclosing salaries in a university, college, technical institute or that type of organization.
A person who is in charge of the foundation is only one small part of it. You have the whole administrative staff of the college or university who in some cases draw exorbitant salaries while they are crying for more government money and trying to raise money through charitable donations, which are income tax receiptable from the federal government.
Mr. Bryden: In the type of amendments I have been proposing and in the legislation as you see before you I would want the salaries of paid staff at foundations to be picked up by this bill. In some instances - and I have examined a number of foundation returns - you will find with the foundations that they are all volunteers so there is a real nil at the remuneration line. You will also find, which is fascinating, some foundations in which there is a very considerable remuneration. There is no consistency and this is certainly an area the bill will address and address positively.
.1145
Coming to your point about where you put the limits on the salaries and benefits that you wish disclosed, I come back to paragraphs 3(5)(b) and (c). As the legislation stands now, we leave it to the minister to decide how far he wants to go with a particular type of organization.
The Chair: Or she.
Mr. Bryden: Or she. I stand corrected on that.
The Chair: Are you finished? Thank you.
I had to make an executive decision because of time, so I will take the next government round, which is eight minutes, and divide it into two four-minute rounds with four minutes to Mr. Duhamel and four minutes to Mr. Bellemare.
After this round I will invite Revenue Canada and the Centre for Philanthropy to make their presentations. I hope their opening remarks are not as long as yours, Mr. Bryden. Then we will have a free-for-all and we will give my colleagues the opportunity to put questions to all three entities.
Mr. Bellemare (Carleton - Gloucester): Mr. Chairman, I find the proposal for this private member's bill interesting and I have read the reports of the member of Parliament, Mr. Bryden.
I have to be honest with both Mr. Bryden and the organizations that are either charitable or non-profit. Is this some kind of witch-hunt or is it strictly someone being curious? There is always the neighbour who wants to know what colour your bedroom is, how much money you make, and what kind of deductions you have. Some people are always inquisitive. I wonder if that is because of Mr. Bryden.
There are all kinds of charities and some of them can defend themselves very well but some cannot. They do not have the wherewithal or the expertise that you seem to assume some of them or most of them have.
Why did not you focus exclusively on organizations that receive grants, for example? Then they are accountable to the government that receives tax and gives it to non-profit organizations.
Why did you not concentrate on those organizations that are privately run and promote a cause but perhaps are no more than a self-serving business sharing part of the donations?
We have heard of such organizations in a neighbouring country, for example, where a well-to-do person has started a charitable organization for an extremely popular cause. This person hires marketing experts, raises a great deal of funds and gives money to an organization. It could well be a cancer activity, for example, which is extremely popular. However there is a bottom line and it really is a business, a business of promoting a charitable cause and making big money out of it.
Maybe there are no such organizations in Canada, but since you have been doing great deal of research on your own, and I commend you for it, have you found that maybe there are groups like this and, if so, why did you not concentrate on them?
Mr. Bryden: With great respect, you have characterized my bill as being some kind of attack requiring a defence when in fact all I require in my bill is the same standard of disclosure that is currently required, at least in Ontario, by publicly traded companies. The theory is that with publicly traded companies shareholders have the right to know the remuneration of the senior officers of the company and with good reason. This will address the second part of your question.
.1150
The level of remuneration, be it a for profit or not for profit organization, surely is a reflection at least in the opinion of the shareholders of the sense of responsibility the company officers have to the company and to the shareholders. If you have a case where the remuneration is excessive in the eyes of the shareholders, be they taxpayers or be they holders of shares, the shareholders will react in some negative way and certainly deliver a message to the administration of the organization that they are out of line.
In the case of non-profit organizations where I suspect the abuse will exist - and this is your third point - a non-profit organization by law is required not to show a profit. If it abuses its non-profit status it still cannot show a profit. We suspect it will express this abuse by inflating the salaries of its top paid staff.
There will be other areas of potential abuse in non-profit organizations but they are not addressed in this bill. Certainly, in the case of organizations that have adopted non-profit status to raise money for personal gain, you will see it reflected in the salaries of the chief officers. That is central to the theme of this legislation.
Mr. Duhamel (St. Boniface): Mr. Bryden, I have a comment and then three rapid questions.
I believe one of my concerns has been addressed. I really thought the penalties were Draconian and inappropriate.
Mr. Bryden: Yes.
Mr. Duhamel: That is about to be addressed.
I have three concerns. One is a philosophical one related to fairness. It seems to me that if we are to move in this direction all organizations that derive benefits from all sources of government funding should be subject to the same practice. I understand that is not necessarily so and I wonder why that would be. If I get some government funding for whatever purpose, should I not be subject to the same reporting procedure mechanism? That is one point I would like you to address.
Another one is the whole notion of non-profit organizations per se. There are, accordingly to some research I have seen, about 150,000 and perhaps 30,000 receive funding from government. I do not know how accurate that is but I think it is probably ballpark correct. Is it fair to distinguish one group from another? You can address that.
Another point is that I would be concerned we may be subject to acting in a discriminatory kind of way. I would like your commentary on that.
The last one is the whole notion of probably restructuring systems to respond to this new bill. Clearly there are procedures in place. I was wondering if you had looked at that, if you had quantified the costs, and whether or not you could share your insights with us. How much will this cost and what purpose will have been obtained?
Those are my comments. If you can't answer them all now, perhaps during the course of events you can do so.
Mr. Bryden: I will try to anser them very briefly.
All charities and all non-profit organization that have to file information returns should be the ones captured by the bill. That is what I would like to see.
That gets you away from the discrimination problem. It also gets you away from having to make the distinction between those who receive grants or those wo do not. It becomes immaterial.
In my view, and this is where directly and indirectly comes in, if one issues tax receipts or has tax exempt status one is automatically being subsidized by the taxpayer, being supported by the taxpayer, and so disclosure is appropriate.
Finally, when it comes to restructuring - and this is the reflection after the bill was written and as a result of the debate and consultations with Revenue Canada - I believe we can do it without major cost if the bill is piggybacked on the current information returns that are now required from non-profit organizations and charities. I think the cost would be minimal.
Mr. Duhamel: As a clarification, you do not have specific costs to share with us, do you,Mr. Bryden?
Mr. Bryden: I think that is a question to ask Revenue Canada officials.
Mr. Duhamel: Finally, unless I missed something, did you address the notion of having all organizations that receive government assistance make the same disclosures?
.1155
Mr. Bryden: Yes.
Mr. Duhamel: Did you address the difference between a non-profit receiving grants and a non-profit not receiving grants?
Mr. Bryden: Yes. If you peg the disclosure to the non-profit information returns and the charity returns that are already required, it becomes immaterial whether or not the organization in question is receiving a direct transfer or not. It is still required to disclose, and I think rightly so.
Mr. Duhamel: I guess I am saying it very poorly.
As I understand it, in society today lots of organizations are getting government assistance, quite apart from non-profit organizations.
Mr. Bryden: Oh, I see.
Mr. Duhamel: What about them? They may be a lot larger and use a lot more government money. I have not had a chance to look, but that is the point I was trying to make.
Mr. Bryden: That is outside the theme of this legislation which deals with charities, the not for profit sector. You are talking about the for profit sector which has to be addressed in another context. With legislation that is this long we can't address that broad a spectrum, at least I do not think so.
The Chair: I just have one observation here, Mr. Bryden. I think it was first raised byMr. Bellemare.
Mr. Bellemare may have been on to something when he was suggesting that consideration be given to considering only those charities or non-profit organizations that receive direct grants from government. The reason I make that observation is as a result of not only what Mr. Bellemare said but something you said in reply to Mr. Duhamel.
You were suggesting that if an organization was given tax exempt status it wa a form of assistance from the government. If you use that argument you will open up a can of worms. I can't imagine anyone, corporate, individual or otherwise, who does not get some kind of assistance from the government in one form or another. For example, farmers and small business people still have a $500,000 capital gains exemption, something some corporations and others do not have.
I want you to respond to that question. If an organization does not get any, what I would chose to call, direct assistance from the government, what business is it of ours to know what it is paying an individual or individuals?
Mr. Bryden: The rationale of the bill deals with the not for profit sector. When I say that the public is entitled to know certain things about charities and non-profit organizations, it is because these organizations are constituted with a tax exempt status or a tax receiptable status. It is something the taxpayer gives to these groups that identifies them financially in terms of their organization and, I would submit, their responsibility to the taxpayer at large.
The issue of for profit organizations receiving some type of government grant is not within the scope of the legislation. I return to the point that by its very title, the Charitable and Non-profit Organization Director Remuneration Disclosure Act, the target is the not for profit sector.
I do not know what to say further, other than the fact that this is about charities and non-profit organizations. It is not about for profit organizations, just as it is not about organizations and contracting out.
The Chair: I really do not want to belabour it but it is just that we provide assistance to for profit organizations one way or the other. Yet in some cases we do not poke our noses into what salaries they are getting. You suggest leaving that in place but when it comes to non-profit we should find what they are being paid, even though they do not get any direct grants.
Mr. Bryden: That is because there is some public accountability on the for profit sector. If the government is giving a grant to or entering into a contract with a public company, you can get a financial statement. That public company is required to comply with certain disclosure rules set by the regulatory authorities in Ontario or the federal government. When you are dealing with these organizations you have an opportunity to get information.
.1200
The problem with the not for profit sector is that there is no régime of accountability comparable to the for profit sector. I am proposing in this bill, and it is only a beginning, a level of disclosure that begins to approach the for profit sector. We have a long way to go. I think the entire not for profit sector needs to be reviewed and brought up to date with the same levels of disclosure as the for profit sector.
The Chair: Let's invite Revenue Canada to make its presentation, following which we will hear from the Centre for Philanthropy and then get back to questions.
We have three representatives from Revenue Canada. Who is going to be the lead spokesperson? Why don't you identify yourselves and then we will go from there?
[Translation]
Mr. Denis Lefebvre (Acting Assistant Deputy Minister, Policy and Legislation Branch, Revenue Canada): I am accompanied by Ms Lucy Brickman, Officer at the Tax Policy Branch, Department of Finance, and Mr. Robert D'Aurelio, who is Director of the Policy and Legislation Division, Revenue Canada.
Mr. Chairman, I thank you for having invited us to appear in front of the committee today. Yesterday, we distributed introductory notes to the members of the committee. These comments indicate that we have certain concerns about this bill. We would also like to clarify, for the members of the committee, the obligation that certain organizations, charitable and non-profit organizations alike, have to file an annual return. Lastly, we would like to point out to the committee one or two options which maybe could contribute to reach the bill's objectives at a lower cost.
[English]
Bill C-224 seeks information about charitable and non-profit organizations that is available to the public. Both charitable and not for profit organizations are already subject to various federal and provincial laws.
The provinces have certain responsibilities with respect to all those organizations within their jurisdiction. Donors in the case of charities and members in the case of not for profit organizations monitor to a certain extent the activities of those organizations. Because both charitable and non-profit organizations have some tax privileges they are under some obligation to provide Revenue Canada with information with respect to their activities.
[Translation]
Charitable organizations provide our society with an essential support and get a double tax benefit in exchange. First, they are tax exempt; second they can submit tax receipts to their donors. Since 1967, there is a structure in place according to which charitable organizations have to be registered with Revenue Canada which then monitors their activities to make sure they do not abuse of their tax privilege. To be registered, these organizations must prove that their objectives are truly charitable objectives and that their activities are charitable activities.
In 1993, Canadians donated approximately $8.2 billion to charitable organizations.
.1205
For that year, 5.5 million Canadians made charitable donations and claimed tax credits for $3.5 billion. Presently, there are some 72,000 registered charitable organizations that must file an annual return, part of which can be publicly examined.
[English]
As for non-profit organizations defined within paragraph 149(1)(l) of the Income Tax Act, although they are exempt from taxation they are not registered. These organizations include any club, society or organization that is not a charity but was organized and is operated exclusively for social welfare, civic improvement, pleasure, recreation, or for any other purpose except profit.
Until 1993 these organizations did not have to file returns with Revenue Canada. However, at that time the Income Tax Act was amended to require non-profit organizations that received investment income of $10,000 or more or had assets of $200,000 or more to file information returns with Revenue Canada. The purpose of this threshold was to avoid imposing an additional and unnecessary burden on very small organizations.
Bill C-224 appears to be an attempt to increase the accountability of charitable and non-profit organizations. This is not something we disagree with. However, we have some concerns with the bill as presently drafted that we wish to bring to your attention. We also wish to draw to your attention an alternative way perhaps to achieve the purposes of the bill.
[Translation]
The bill provides that any charitable organization or non-profit organization that receives direct or indirect payments from public funds must file with our Department a public information return stating the total remuneration and benefits given to each one of their directors and senior officers.
According to the bill, the Minister would have to file with Parliament a list of all organizations that would not do so.
The bill also provides that an organization that would not abide by the disclosure requirements would be found guilty and could be imposed a fine not exceeding 50% of the total public funds of Canada that are received.
We have some comments to make on the bill, some of which have already been dealt with some moments ago by this committee.
[English]
On indirect funding, the bill imposes an obligation under penalty of law on charitable and non-profit organizations to send an annual information return to Revenue Canada if they have received directly or indirectly any payment from the public funds of Canada.
It is assumed that recipient organizations would readily be aware of the funds that they have received directly from the government. However, in our view a major difficulty would arise with respect to funds that might have been received indirectly, because it would be difficult to ascertain that the Government of Canada might have been the initial source of the funds. This would be difficult for the organizations to know and it would be quasi-impossible for us to enforce.
[Translation]
Another of our concerns with this bill deals with sanctions. The bill states that any organization that does not conform to the provisions dealing with the return is guilty of an offense and liable on summary conviction to a fine not exceeding 50% of the total of federal funds received. This sanction translates the fact that you have not filed a return into an offense. This is contrary to the present government policy which aims at decriminalizing violations to statutory regulations.
.1210
Moreover, we can expect that, given the great number of charities and non-profit organizations, hundreds, if not thousands, of legal proceedings would be necessary to follow up on the sanctions provided in the bill. This would undoubtedly entail huge additional costs for the legal system.
In addition, requiring that Revenue Canada try to recover through legal proceedings 50% of the amounts received by charities and non-profit organizations, once the sums have been spent, could be an almost impossible task for the Department.
The bill also raises some concerns about privacy. It is of course up to the committee to make a decision, but as Mr. Bryden mentioned in his statement, one could think of giving a wage bracket rather than the exact salary; this would have the advantage of better protecting the officers' privacy.
The bill as written would be very costly for Revenue Canada: the Department would have to set in place audit and return systems that would parallel the existing ones. It would also be costly for the organizations that would have to file additional reports and also for the legal system, as I mentioned a moment ago.
[English]
I will attempt to describe very briefly to you the current reporting requirements for charities and not for profit organizations.
Registered charities are required to file with Revenue Canada an annual information return, as Mr. Bryden has mentioned. Part of that return is public. Within the public portion of the return organizations are required to divulge the total remuneration of their senior executives, directors and trustees. They also have to indicate the number of their senior executive officers, directors and trustees.
Charities that fail to send in their annual information returns are revoked. Over the last three years we have revoked some 4,000 charities for failing to file information returns.
[Translation]
Since 1993, non-profit organizations must also file a return with Revenue Canada, but for the Department's purpose only. These returns are not made public and, as previously mentioned, only those organizations which have more than $10,000 in investment income and more than $200,000 in assets must produce the return.
[English]
As I said earlier, there may be alternative ways that current reporting requirements for charitable and non-profit organizations could be improved to achieve the goals of the bill at a lesser cost to the government and without increasing the paper burden of these organizations.
[Translation]
Instead of aiming only at charitable organizations that receive directly or indirectly Canadian public funds, the goals of the bill could be achieved by modifying the annual return that all charitable organizations must presently file.
.1215
There is an obvious advantage in improving the present return rather than creating another one. This could reduce the cost for the Department and avoid imposing on charitable organizations the filing of two annual returns rather than one.
[English]
Similarly the existing reporting requirements to non-profit organizations could be enhanced as follows.
Non-profit organizations could be required to add to the annual returns they are already providing information with respect to the remuneration and benefits of their officers. That portion of the return could be made available to the public. Presently the information returns provided by non-profit organizations do not include the remuneration of the senior officers. They include salaries and remuneration paid to all employees at large.
I have a final point on the bill. We agree that it would probably be necessary, as the bill now reads, to leave some of the definitions and other issues to be fixed by regulations. Our department is at the disposal of the committee if you require any assistance.
[Translation]
I will be happy to answer your questions. Thank you.
[English]
The Chair: We will turn to the Centre for Philanthropy first and then we will go to questions.
I understand we have two gentlemen, Patrick Johnston, incoming president and chief executive officer, and Michael Hall, director of research. Which of the two of you will begin?
Mr. Patrick Johnston (Incoming President and Chief Executive Officer, Canadian Centre for Philanthropy): Mr. Chairman, my name is Patrick Johnston and I have with meDr. Michael Hall, director of research at the Centre for Philanthropy.
In the first instance I should indicate that I am here in my capacity as a private citizen and a volunteer using my lunch hour. In the second instance I am here in my capacity as incoming president and CEO of the Canadian Centre for Philanthropy, a position I do not take up until June 1. However I wanted to get a headstart, which is why I am here today.
I will call on Dr. Hall to make a few short comments and then I will make a few short comments. We will try to keep them brief so that we can then get into discussion.
Dr. Michael Hall (Director of Research, Canadian Centre for Philanthropy):Mr. Chairman, today I would like to take this opportunity to share with you and your committee some of the research we have been conducting at the Canadian Centre for Philanthropy about the non-profit sector. We hope it will provide some context for your deliberations on Bill C-224.
There are close to 175,000 non-profit organizations in this country. Some of them are registered charities; many of them are not. Unfortunately no one appears to know very much about non-profit organizations that are not registered charities. We do not know how much they receive in revenues. We do not know how much they receive in funding from the government. Nor do we know the level of remuneration given to their senior executives. In short, we have almost no information that can be applied to develop policy about this part of the voluntary sector.
We do, however, have quite a bit of information about registered charities because the Centre for Philanthropy has been conducting a program of research examining this group of non-profits. Much of the research has been published by the centre in a report entitled A Portrait of Canada's Charities.
As you have heard, there are some 72,000 registered charities in the country. This large number has been offered as evidence of the need for the type of extensive regulation proposed in Bill C-224. However, as I hope to show you, most of these organizations operate on only modest revenues and receive only small amounts of government funding. They operate with few staff and provide only moderate levels of remuneration to the senior executives.
I would like to start by showing you a bit about the distribution of charities.
.1220
According to our estimates the charitable sector had total revenues of approximately $84 billion in 1993.
The Chair: Is that $84 billion?
Dr. Hall: Yes. However 64% of charities operate on revenues of less than $100,000, as the graph before you shows, and 80% operate on revenues of less than $250,000. It is important to understand that most of the revenues that accrue to the sector go to a small number of large organizations.
Let us turn for a moment to the question of government funding of charities. First, let me point out that about one-third of the charities in the country receive direct government funding. Sixty per cent of these, or 13,000, have modest revenue bases of less than $250,000 yearly. Second, together those 13,000 charities account for less than 5% of all government funding to the sector. The amount of government funding that goes to most charities is quite minimal.
Third, I would like to talk about staff size. One would expect that with the majority of charities having relatively modest annual revenues they would not have large numbers of paid staff. Our research confirms this.
According to a survey we have conducted at the centre, 38% of charities are run without any paid full-time staff. Another 21% are run with only one full-time paid staff person. This means that 60% of the charities employ either no one or only one full-time staff person.
What do we know about executive compensation in this sector? Like most other topics of interest regarding the non-profit sector there is precious little available information. However, as part of our research we did ask charities what the salary level of their most senior executive was.
I would like to caution you that the response rate for this survey means that we should view these results as tentative but, as you can see before you, the results indicate that 76% of senior executives earned less than $50,000 in 1993. These results beg the question: Where is the evidence for the abuse of compensation?
In conclusion, it is important to understand four key features about this sector. First, most charities operate from a modest revenue base; almost two-thirds have revenues of less than $100,000 a year.
Second, although many smaller charities receive some government funding, their share of the funding pie is quite small; 60% of those funded together account for only 5% of all government funding.
Third, the majority of charities employ no more than a single employee.
Fourth, the only sector-wide information available about the salaries of senior executives indicates they are in no way excessive.
I hope this provides some useful context for your deliberations about the bill before you today.I would like to turn the conversation over to Patrick Johnston.
The Chair: Before we hear from Mr. Johnston I just want to go back to you, Dr. Hall. I am absolutely stunned by this figure of $84 billion. I find it hard to believe when I think that the federal government with its elaborate system of taxation is collecting money under the law of penalty. Last year we collected about $130 billion. Our costs are about $160 billion because of the debt.
.1225
Are you saying that on a voluntary basis the charitable sector raises 75% or 80% of what the federal government does on a compulsory basis?
Dr. Hall: According to our estimates $48 billion is coming from government already. The public provides $10 billion in terms of voluntary contributions and the remainder comes from earned income from the organizations themselves. Organizations sell products, charge fees for belonging, etc.
The Chair: I am sorry to pursue this, but I am looking at Revenue Canada's statement which says that last year Canadians gave a total of $8.2 billion to charities and you come along and say that it is 10 times that.
Dr. Hall: No, I believe I said that individuals gave $10 billion. We have slightly different sources of estimates on this.
I should also point out many people do not understand that the charitable sector includes almost all hospitals and universities in the country. A significant amount of the funding we are talking about is transfers to fund those major institutions in the country. There are many types of charities.
The Chair: When I think of a charity I do not think of the Health Sciences Centre in the city of Winnipeg.
Dr. Hall: I am certain that it would be, actually.
The Chair: You have perhaps straightened me out. I am glad I asked the question.
Go ahead, Mr. Johnston. I am sorry.
Mr. Johnston: No, that clarification was important.
What I would like to do in the short time I have is essentially try to identify some of the issues, concerns and questions that some of my colleagues in the charitable and voluntary sectors have about some of the provisions in the proposed legislation. This is not and can't be a comprehensive analysis. I won't suggest or pretend that it represents a full consensus at all. It is simply a reflection of some of the sentiment of the people I have had some contact with.
I want first to talk about the issue of accountability. In his comments Mr. Bryden indicated this is a sector that has not been subject to very much public scrutiny. It may be the case that it has not been subject to as much federal government scrutiny, but that does not say it has not been subject to public scrutiny. Please keep in mind that the kinds of organizations the Centre for Philanthropy is involved with, charitable and voluntary organizations, are very dependent on the public for individual donations. By and large they are run by volunteer boards of directors that are very concerned about accountability.
In your own communities think about the kinds of organizations we are talking about here: Big Brothers and Big Sisters organizations, the CNIB, the Heart and Stroke Foundation, the YM-YWCAs and the United Way organizations. Think about your own communities and the people involved as volunteers. If you talk to them they very much feel a real sense of accountability. They have to, because increasingly charitable and voluntary organizations will be more dependent, not less dependent, on individuals and corporations for support. The issue of accountability is very much of concern.
I should tell you that there are some discussions under way within the sector about self-regulation that would and could potentially get at some issues like disclosure. That is the first point I wanted to make.
With respect to some of the specific provisions in the bill, a number have been raised and I will not talk about them again except simply to identify them. A number of people were concerned about the reference to indirect payments, simply because nobody knew what it meant or what it did not mean or include. That comment has been raised.
There is another point I want to spend a bit of time on because it is vitally important that everybody understand it. There is more confusion than anything on all sides and there is no blame to be assigned. The bill refers to remuneration and benefits received from the organization by each of their directors and senior officers. In very many charitable organizations by law the directors and senior officers are members of the volunteer board of directors. That terminology in many cases does not include paid senior staff.
.1230
This may explain why some of the organizations left that form blank when they were filling out T-3010 forms. I assume the assumption of many of those organizations is that Revenue Canada wants to know whether the volunteer boards of directors, which are the officers, the directors, the president, the treasurer, and the other directors or trustees who are the other members of the board, are getting any compensation. Of course they are not supposed be; they are volunteers. That is the essence of a charitable organization.
The problem may be with the question, but the question does not get at the issue of staff. As I say, I think there may be some real confusion on the part of charities that believe they are answering the question accurately. The question has to do more with those people who in their bylaws which are approved by the federal government are identified as officers, directors and trustees.
I should point out that I speak from personal experience. I was a former executive director of the Canadian Council on Social Development and we revised our bylaws during my tenure there. I was not an officer. I was not a director. I was not a trustee of the corporation. All those positions stated in our bylaws and approved now by Industry Canada and then bu Consumer and Corporate Affairs were volunteers. They were the voluntary members of the board who did not receive any remuneration.
There is some real lack of clarity on all sides about who we are really getting at here.
There are one or two other points I want to make. It would appear that the bill would require - and I think Mr. Bryden confirmed this in his comments - that the precise salaries be revealed. Let's assume the reference is intended to be senior staff, the executive staff. It strikes a number of people in the voluntary and charitable sector that it is not consistent with the standards of accountability applied to other recipients of public funds.
In this instance let's talk briefly about the public sector. In Canada the government in its wisdom has balanced the right of the public to information with the right of individual citizens to privacy and confidentiality. Ironically - and I am now a public servant for another week or two - the public does not have the right to know what my individual salary is. They have the right to know the range within which I am paid. If I leave in three weeks, as I am going to do, to go into the charitable and voluntary sector and if the proposed legislation were in place, all of a sudden my right to privacy is lost because I am a member of a charitable organization, an employee of a charitable organization as opposed to the public sector.
The issue of parity with respect to access or provisions for privacy and confidentiality between people in the charitable sector and people in the public sector strikes a number of people. It is a puzzlement. Let me put it that way.
It would appear, again without anyone knowing for certain, that it would almost inevitably entail a significant increase in the number of civil servants and the cost to monitor compliance with the provisions of the legislation. Some of the amendments that have been proposed may reduce the total number of organizations affected. However there are still a potential 175,000 organizations that could be affected by the provisions of the bill.
It seems to us that the extent of the amount of money and the number of civil servants that would have to be required to monitor the bill would have to entail a significant increase in public expenditures at a time when government departments are cutting back in major ways to deal with the issues of debt and deficit.
Let me suggest a number of possible alternatives. Some have been mentioned as well. On the issue of simply changing some of the questions on the T-3010 form which affects all charitable and voluntary organizations and specifying that the question relates to senior staff, avoiding the confusion about the terms officer and trustees, it could be simply done by asking people to fill out a grid in a sense that would have salary ranges and would ask people to identify where and how many staff within those salary ranges. That is a way of getting at that kind of information.
.1235
A number of other amendments could be made. There is a proposed exemption right now for what is termed contract and Treasury Board has legal definitions for contract. I would suggest, as a number of people in the sector have suggested, that you also include in the exemption what is called a contribution. Treasury Board guidelines are quite clear about a contribution. It is defined as a conditional transfer payment for a specific purpose. It is subject to being accounted for and audited according to the terms of the contribution agreement.
In many ways government departments will actually contract with charitable and voluntary organizations to provide them with a service. This could be arranging a symposium or it could be doing a piece of research. They do it by a contribution and it is very clear in terms of Treasury Board guidelines that it is subject to auditing and subject to accountability.
I do not think that is the intent. Perhaps it is but I am not sure what purpose is served. That would distinguish it, if we included that amendment, from a straight grant which in a sense has no strings attached.
I will just wrap up by making a few general comments. Then I will be happy to field any questions now or at any subsequent time.
I emphasize the point that many people involved in charitable and voluntary organizations - and you know a number of these people in your own communities - are increasingly very concerned about accountability. They are the stewards of both public and private funds. They are the stewards of trust and faith in the provision of services that very much enrich all our communities. I do not think there is any question about that. I do not know for certain but I do not believe many people in the charitable and voluntary sectors would have any objection in principle to the concept of disclosure of salaries from public sources.
First, if those people were here today they would say that in principle it is fine, but let's make sure that any legislative or regulatory requirements required or imposed by the federal government are commensurate with the extent of the problem.
Second, let's make sure they do not impose excessive bureaucratic red tape requirements that effectively mean the important work of charitable and voluntary organizations in all of our communities can't be done because they are filling out more forms from the government.
Third, I think people would say that disclosure is fine, but let's make sure that there is a balance between the right of the public to information and the right of individuals to privacy and confidentiality, which, as I say, the government has recognized and applied in the public sector.
Fourth, and perhaps most important, we would hope any provisions at all, either through amendments to the legislation or through changes in T-30, would be proposed and done in the spirit of trying to support and strengthen the charitable and voluntary sectors rather than suggesting or implying there are major problems that have to be attended to.
I will just wrap up by saying that last item or issue should be of concern to parliamentarians in particular. As governments at all levels are reducing their expenditures, they are reducing the kinds of services often supported by public funds but provided by charitable and voluntary organizations. In the future we will all be far more dependent on charitable and voluntary organizations to deliver the kind and range of public services that in the past may have been provided directly by public servants. We all have an important stake in supporting the charitable and voluntary sectors. I will leave my comments at that.
The Chair: I hope you can answer this with a short answer. Do you think the provisions of the bill would lead to some unfortunate reactions? Some people make themselves out to be instant experts on many issues and some of the issues are of their own making.
I can imagine situations where upon disclosure of salary some people would say that person is paid too much, that he is not worth it, and that the organization involved is profligate in its spending. The person who has suddenly become an expert and very critical may withdraw his or her support without knowing the market situation in which the organization finds itself, the competitive situation in which the organization finds itself, or the inner workings of the organization. Can you imagine that kind of unfortunate reaction coming about?
.1240
Mr. Johnston: I must admit - and the empirical evidence we seem to have to date suggests it - that actually the salary ranges for staff in charitable and voluntary organizations are really very modest by any stretch of the imagination. I suspect that is why most representatives of the voluntary and charitable sectors in principle do not have a problem with disclosure. There is a general feeling that most Canadians would not believe the salaries paid to charitable and voluntary organizations are excessive. There may be some instances but for the majority, I do not think so.
[Translation]
Mr. Deshaies: I have a question for Mr. Lefebvre. First, you have good ideas to restrict red tape at the control level. Do you consider that this legislation concerns public funds in general or only those provided by the federal government? You mention this twice in your brief, but I am still not sure. Does this concern the voluntary organization to which I make a donation or only those who receive federal funds?
Mr. Lefebvre: The present requirement to prepare annual reports applies to all charitable and voluntary organizations and to some non-profit organizations whose investment income or assets are in excess of a certain amount. There is no conection between this obligation to report to the Revenue Department and the funds they may have received from the federal government.
We could improve upon the annual reports that those organizations must produce. I have proposed that no connection be made any more with the funds received from the federal government. To make this connection, we would need a scheme wherely all departments - a hundred or so departments and agencies make contributions each year - would submit a report and wherely which we could act follow up on them. We suggest that annual reports be improved by eliminating the connection with the funds received.
Mr. Deshaies: I also believe this connection is unnecessary. Whether an organization receives funds or not, we want to know how much money goes to the administration. If your forms were modified, you could give the best information possible to a citizen who would make a request pursuant to the Access to Information Act. Is this what you suggest?
Mr. Lefebvre: Yes.
Mr. Deshaies: Fine. I also have another question for Mr. Johnston or Mr. Lefebvre. I am sure that most organizations do not have many payed employees. What Mr. Bryden wants is to identify those organizations that collect from Canadians money they use in most part to pay salaries rather than to help people.
For example, someone can collect $100,000 from the public, pay himself or herself a $80,000 salary and leave $20,000 for advertizing or other things. Mr. Lefebvre's proposal could answer this concern, since review of such an organization would show revenues of $100,000 and salaries of $80,000, which is an absurdity for a non-profit organization. Mr. Johnston may want to make a comment.
Mr. Johnston: One has to know that many non-profit organizations are very
[English]
labour intensive in the nature of the work and the service they provide. Think of a shelter for abused children and women, for example. The nature of the services provided is essentially often the work of paid staff so the total proportion of an operating budget for salaries may be quite extensive relative to other expenditures.
.1245
Within the staff complement of any organization, however, there are often ways to ensure equity in terms of the salaries for individuals; the executive director relative to other program staff, for example.
My own case was an example. It was a unionized organization, the issue of compensation was very much subject to discussions and collective bargaining.
Many charitable organizations have boards of directors that are undertaking and performing their responsibilities. They will ensure fairness and equity in terms of the salaries provided to staff. That is information almost all boards of directors could and should have access to. If they do not, there is some dereliction of duty and responsibility.
However there is no evidence to suggest the vast majority of voluntary board members do not have access to or do not ask for and demand that kind of information from the paid staff.
[Translation]
Mr. Deshaies: I think people can judge if an organization is performing and is making an efficient use of the moneys it receives. You speak of an organization which provides humanitarian services and has paid employees. I think people are able to see if these moneys are used efficiently. So, your objection makes sense but it is not valid per se... If people had doubts about such a business, they could use a form like the one Mr. Lefebvre mentioned to assess revenues and spending.
Of course, the Privacy Act would protect the human rights.
[English]
Mr. Epp: I want to ask a question of numbers of the government people here from Revenue Canada.
On the first page of your presentation, and you have also said this in words, you state: ``Canadians gave a total of $8.2 billion to charities'', which is close to the number the other group said, and ``$3.5 billion was claimed as a charitable tax credit''.
There is a problem with the numbers here. Is this $3.5 billion that was claimed to gain a tax credit which would come to around $1 billion? That was the number. Otherwise you would need more than about $12 billion for charities to have that.
Mr. Lefebvre: You are right. For 1993 we estimated $850 million, the actual tax advantage of donors, but the tax receipts were $3.5 billion claimed. The number of tax receipts issued was much higher but not everyone claimed them with their returns.
Mr. Epp: Yes. This is one of the things Revenue Canada people have always missed. I do not even know if they still have it but there was the $100 base charitable donation that everybody could claim. That was an error because whoever can't come up with more than $100 worth of receipts is probably the kind of a Scrooge that does not give anything. You should never have given them that.
Mr. Lefebvre: It is gone.
Mr. Epp: With that little clarification I now want to ask a question of the people from the Centre for Philanthropy.
Quite clearly you have a large organization. This is big business. We are dealing with hundreds of millions of dollars in total across the country. I am wondering if you have any comment on the fact that there should be full disclosure.
It is the people of Canada who are giving you the money directly. It is the people of Canada who are giving it to you via the government, whether it is a direct grant or a tax credit.
I almost got the impression from you that you were a little defensive and that you did not want to have full disclosure.
Mr. Johnston: Mr. Chairman, I think what I tried to indicate in my closing remarks is that I do not believe - and again I can't pretend to speak on behalf of every person in the charitable and voluntary sectors - in principle a lot of my colleagues are necessarily opposed to the principle of disclosure.
I think some concerns have been voiced about some of the provisions of the legislation in terms of the effect and the specific rules that apply which would require disclosure.
.1250
As I mentioned before, there appear to be some inconsistencies. We just wonder why it is a particular standard would be applied to public servants who derive 100% of their salaries from the public purse. They are treated in one way while the executive director of a charitable organization who may receive 1% of his or her salary from the public purse is treated in a very different and, some would argue, more onerous fashion.
I understand Mr. Bryden's comments earlier about the intent of the legislation being to apply it to the charitable, voluntary and non-profit sectors. If you are making the argument that the public has a right to disclosure of salaries for any charitable and voluntary organization that receives tax assistance or a tax benefit, does it not also follow that you might want to apply the same standard to private sector companies that derive a tax benefit by writing off entertainment expenses or the hiring of government relations consultants to lobby you? I guess it is that issue we wonder about.
I do not mean to seem defensive, but that there are some people in the sector who believe this is an attempt to single out one whole sector of society and to treat it very differently from other people. We wonder why. We wonder where the evidence is of a problem.
I won't suggest for a minute that there are not some ineffective voluntary and charitable organizations that are derelict in their responsibilities. It would be foolish of me to say that. There is a concern though that the bill assumes the majority or a large number of organizations are in that position.
In the same way I think it may very well be the case that there are some individual members of Parliament who are derelict in their duties. I suspect that if there are any they are a very small number. In the same fashion there may very well be some charitable and voluntary organizations that are derelict in their responsibilities, but it will also be a small number.
I guess the final point I would like to make is that I think a number of people in our sector believe it is important not to develop public policy and legislation on the basis of the exceptions to the rule.
Mr. Epp: Mr. Chairman, I want the record to show that I am in favour of disclosure. I was in favour of disclosure of fees for lobbyists, and that is on the record. I sometimes think it is ironic that in my previous life I was a college instructor and was paid by the public sector. Anybody who wanted to could find out from the record that my salary was $53,304 a year. That is the salary I left whenI became a member of Parliament and came to the publicly known salary of $64,400 per year. Everybody knows that.
I sometimes think it is ironic that we sit here in the presence of government officials and the same taxpayers are paying their salaries but we do not know what they make. I have a suspicion that all of them make twice what I do. If it is not true we should know the truth, and if it is true maybe we should know the truth as well so that we can start correcting the error. We really need to open it up because it is taxpayers' money and there should be accountability.
In your graph you were emphasizing the large percentage of people who make less than $50,000 and the large percentage of people who make less than $75,000. However 6.4% of these people make $75,000 per year or more. I can see no reason in the world why those individuals should not have to stand and account for it. If they are in a charitable organization or if they are using taxpayers' money, it really is equivalent. They are using someone else's money, as I guess we all do in a sense. They should be able to say what they make and that it is wonderful for the organization.
If there is an organization where the chief executive officer gets $150,000 a year and people say it is excessive and they are not going to support it any more, so be it. The whole point of the exercise is to be able to shut down abuse for private gain. This is what we are talking about in government. MPs and others are not supposed to use their positions for private gain. They are using their positions for private gain and trying to hide behind the cloak of secrecy.
I think I have made my statement. It was not a question, but you can respond to it if you want to. That is where I stand on it.
The Chair: I think we have to be a little careful when we are using analogies. It is true, Mr. Epp, that we know what members of Parliament make and, according to your own statement, people knew what you were making when you worked at the college back in Alberta. However they did not know how you spent your money. For example, you did not tell the public how much money you were spending on babysitters and how much you paid your babysitters.
.1255
In this case we know how much money is going to the organization. Right now we are not asking them questions on how they spend their money so I think your analogy might be a little flawed.
Mr. Bélair (Cochrane - Superior): Many of my questions have been answered. You made it very clear, Mr. Johnston, that you are not willing to disclose your salary. Am I right?
Mr. Johnston: Well, currently as a public servant.
Mr. Bélair: You have said the organization you are working for receives some government funding.
Mr. Johnston: I am just about to start in a new position. I personally would not have any problem with disclosing my salary, within a certain range.
Mr. Bélair: Within a certain range.
Mr. Johnston: That is right, the same as applies to me now as a public servant.
Mr. Bélair: Mr. Chairman, I would like to make my point very briefly to give my colleagues a chance to ask questions.
My basic question is: What would be the difference between any organization in Canada non-profit or charitable that receives dollars from the federal government and a business that receives a grant to upgrade and operate?
Under this bill would there be different standards for the non-profit charitable organizations and businesses receiving grants? The bottom line is that it is taxpayers' money that is being given out whether through charitable tax deductions or outright grants.
My question would be to Revenue Canada. Have you sought a legal opinion on this bill from the privacy commissioner as to what standard or what guidelines we should follow to make sure we are fair to everybody?
Mr. Lefebvre: We have very informally conducted consultations with the commissioner's staff. We did not pursue it very much because we thought if the commissioner had some concerns about privacy issues he might ask to be invited before this committee. We did not detect a major concern. Again, for you this is hearsay, but the concern that was expressed by Mr. Johnston was something the commissioner might have expressed. However we did not detect any serious concern from a privacy point of view.
If I might add, in our discussions with a certain number of our kind in the charity sector, the concerns very often arose depending on how the remuneration of individuals was fixed.
Mr. Bélair: Are you saying that there should be different standards?
Mr. Lefebvre: I am only saying that there might be arguments in favour of disclosing the range, as opposed to how the remuneration of an individual was pinpointed within a range, because it can go to the boss' evaluation of his performance as opposed to the next person.
There are some arguments. Certainly if it was left to regulations to decide whether we should identify the specific remuneration or whether we should prescribe by regulation the ranges within which the top people are paid, we would probably look at how the remuneration is set within the sector to see what should be protected as private information, as opposed to what would achieve the purpose of the bill, which is basically to disclose the amount of money paid to senior officers as opposed to how they fare within their organization.
Mr. Bélair: Therefore, Mr. Chairman, I think it boils down to the fact that we absolutely need a definition from the privacy commissioner or from Revenue Canada to make a clear distinction between a senior officer and, as in Mr. Johnston's case, a senior employee, as to whether or not the salary should be disclosed.
.1300
The Chair: Mr. Bélair, how is that related to the privacy commissioner?
Mr. Bélair: I am seeking an opinion from him or her to establish this distinction because we are dealing here with private and confidential matters.
In Mr. Johnston's case I would say that he does not have to disclose his salary. He is an employee of the Canadian Centre for Philanthropy that has a board of directors or whatever its structure is. There is a big distinction. He is an employee and they are not employees.
The Chair: I know Mr. Bryden wants to say something.
Before we go to you, Mr. Bryden, I think Mr. Bélair has another comment.
Mr. Bélair: Mr. Chairman, I am looking for an opinion here. Are you going to seek it?
The Chair: Certainly. If I sense no objection we will seek the opinion you are looking for from the privacy commissioner.
Before we get to you, Mr. Bryden, I think Mr. Murray wants to say something.
Mr. Murray (Lanark - Carleton): Mr. Chairman, I have a few quick questions forMr. Lefebvre.
I was intrigued by Mr. Bryden's demonstration of the number of forms that do not have the remuneration section filled in. Is that something that has caused concern at Revenue Canada, or is the answer to that something along the lines of what we heard from the other witnesses?
Mr. Lefebvre: Now 72,000 registered charities have to send in their forms annually. The public information return, the part that is available to the public, is not published but is available to anyone who calls or writes in. It includes the total remuneration of officers.
The purpose of that public portion is basically a service to donors. It is to let people who want to give to an organization have some financial information about the organization, including the total remuneration. If someone writes in and asks for that information and the form is blank, we go back to the organization to obtain it. If an organization were to refuse, we would mention to it that we have to take steps to revoke its registration because this is prescribed information.
Mr. Murray: That seems to cause a lot more paperwork for Revenue Canada than just requiring all of them to fill in the blanks when they are originally filing the information.
Mr. Lefebvre: Mr. Bryden has been instrumental in this. We are now contacting all the organizations and asking them to be more diligent. We will do some of the clarification, but we would like them either to fill in the information or say not applicable on each line of the form.
Mr. Murray: I have gone through the section of your remarks entitled ``Comments on the Bill''. I have looked at the amendments Mr. Bryden suggested we might make. I think most of us would be agreeable to those.
Looking at Revenue Canada's concerns regarding indirect funding as voiced by you, that seems to be dealt with essentially. Sanctions seem to be dealt with. Cost implications perhaps will be dealt with by these amendments as well.
It essentially comes down to the question of privacy. That seems to be a concernand is kind of a tangential concern for Revenue Canada. It is not a concern one would normally expect Revenue Canada to have, but I can see perhaps the privacy commissioner having it.
Is that a fair comment by me, that most of your concerns have been addressed when you look at what Mr. Bryden and potentially the committee would be willing to bring in, in the form of amendments?
Mr. Lefebvre: Yes.
Mr. Murray: Is that fair?
Mr. Lefebvre: That is correct.
The Chair: Mr. Bryden, your bill has taken some hits. Perhaps we should give you an opportunity to say a couple of things.
Mr. Bryden: I have a few brief comments. With regard to the data shown here about the number of organizations and their levels of remuneration, I have to say from my experience in looking at several hundred charity information forms that at least one-third to a half leave the remuneration lines blank. I have to say to the gentlemen next to me that their data suggesting that very few organizations are paying salaries in excess of $75,000 or $100,000 are not very valid data when much of their information is not available. As I say, I have a list of 100 organizations of which 48 left the information line blank. I do not think we can very easily accept that as a judgment that there are not organizations paying excessive remuneration.
.1305
Second, there was a comment concerning some confusion about filling in this line. I will show it to you again. It is blank on this form. Perhaps people thought that the information was being asked of volunteer directors. However I point out that the line says very clearly: ``total remuneration paid to employees who are executive officers'', etc.
I do not think there is much doubt that the organizations filling out these forms and leaving this information blank are aware of what they are doing.
Finally, on the point of remuneration versus salary ranges, the civil service gives salary ranges because it has tens of thousands of employees. It is an instrument for getting some sort of equity across the system in terms of specific job categories.
It is certainly my intention as the author of the bill to get specific information with respect to remuneration and benefits. While I would be happy to leave this to the discretion of the minister as it is in the bill now, I would certainly like to go on record that precise information of the line I am required to supply as an MP is the type of information the public is entitled to hear.
Mr. Shepherd: I would like to quickly comment on the aspect of salary ranges. I do not see why we do not do what private industry does. For publicly traded corporations we basically take the top five or ten highest paid executives, and that is the payment. You can easily divide ten into that number to get an average range. That is a possible solution.
What I wanted to talk about was the cost on both the government side and the public sector side.
What Dr. Hall is telling us is that over 62% of those organizations are already filing T-4 slips. They are already required to file a T-4 slip once a year and a T-4 summary. I can't understand why we think there will be so much more cost in taking that information from the T-4 slip and putting it on a form.
I do not know, Mr. Lefebvre, if you can tell me why that will cost the government an inordinate amount of money.
Mr. Lefebvre: To improve the current reporting requirements for not for profit organizations and charities I have mentioned to provide the information you are suggesting, more precise information about the remuneration and benefits of senior officers. To make that information public would not be costly to either the government or the organizations. It is just amending a current reporting form.
Mr. Shepherd: You mentioned in your dissertation that for non-profit organizations possibly we would disclose the salary aspect and not the rest of the form itself. Once again in view ofMr. Hall's comments that over 60% of the funding of these organizations is being received directly from government, why would we think of keeping the rest of that form private?
Mr. Lefebvre: This is what Bill C-224 is about. The bill is about the disclosure of remuneration so our response is how we could best accommodate this requirement for the least cost.
Mr. Shepherd: Getting back to the least cost, I think back to the days of the GST. If there is one lesson governments learned it was that to make exemptions throughout the system created costs for the government. Wouldn't it be a lot simpler for you to turn over the existing form you have rather than to try to take information off it and display it differently?
Mr. Lefebvre: I am not sure there is a question of cost there. Right now in the charities environment we have a public return and a private return which cause no problems or additional costs. We could easily organize the not for profit returns in the same manner. I do not see any additional costs in the procedure.
The Chair: Mr. Duhamel, on a clarification.
Mr. Duhamel: It is just a clarification. Because we are running late I will raise the points and they can be answered some other time.
.1310
It seems to me that it might be wise - and I will leave that to the committee's judgment - to get a statement from the privacy commissioner on two points: first, that this piece of legislation does not infringe on a particular right that individuals now enjoy or, if it does, how; and, second, that it is not discriminatory toward other groups. I am still quite concerned that we are treating some groups that receive government financial assistance differently from others.
Also I think it would be very useful if we could get an estimate of cost if this bill were to go through. What are we talking about? It is not sufficiently precise for me today. Are we adding significant additional costs to government?
The Chair: Are you talking about the cost of collecting this information?
Mr. Duhamel: The implications of this bill.
My final point is that there was some reference made to knowing the salaries of various priests, pastors and perhaps other members of congregations. I want to know if this bill would necessitate that. I leave those questions to be answered at some future date because we are running late.
The Chair: Did you want to reply?
Mr. Lefebvre: I think I can reply on the cost issue. The bill as currently drafted would mean a substantial cost to government and probably to the organizations and to the justice system. The proposal we have been discussing in this meeting, which would be an enhancement of the current reporting system, would not result in substantial costs.
On the question of churches, just about all churches, if not all, are charities and they have to send in public information returns. That is not only at the aggregate level, that information is already divulged by each church. It would not be new.
Mr. Duhamel: You say almost all churches.
Mr. Lefebvre: Some churches may have chosen not to register as charities, but we have about 30,000 of them that are registered.
Mr. Duhamel: Two of those three points are answered. All we need now is the privacy commissioner.
The Chair: Speaking of the privacy commissioner, I have been looking at our schedule andI think on Tuesday, May 16, there would be an opening to receive the views of the privacy commissioner. I do not forsee that as a long presentation. I am going to ask my clerk to determine whether the privacy commissioner could come here on Tuesday morning, May 16.
I should remind my colleagues that we will have presentations from four organizations on Thursday of this week, May 4: the Canadian Society of Association Executives, Physicians for a Smoke-Free Canada, the Pearson-Shoyama Institute and the National Anti-Poverty Organization.
As I thank the witnesses let me just say in closing that I have found this first round an eye-opener. All of us feel very strongly about disclosure. However, after listening through the examination for the last two hours, one comes to the quick realization that implementation of disclosure is sometimes a difficult thing and it can raise some real problems.
Not to take away from the principle of disclosure, but implementation can be difficult. To some extent - and I am sure this does not come as a surprise to Mr. Bryden and others - we have our work cut out for us. I hope that somewhere in the process, maybe at the end after we have heard from all witnesses, you would be in a position to come back and answer some of the concerns of my colleagues.
Mr. Epp: I have a small point of order. Mr. Bryden indicated that he would not be participating in the committee on this bill. Is that a legal requirement? If not, I would like to see him here. He knows his stuff and he can help us. I do not see any reason why he has to absent himself from the committee during the work on this bill. That is my view. I do not know about the legality of it or the wishes of other members.
The Chair: To a great extent it is Mr. Bryden's choice. I think Mr. Bryden can be motivated by his own sense of propriety.
.1315
It is one thing for you to ask him as a colleague of the committee about his views on a particular matter, but to give Mr. Bryden the ability to interrogate is usually something witnesses do not have.
In terms of answering the question, I would not see any great problem there. To give Mr. Bryden the ability to question as do other colleagues might be a bit more difficult. How do you feel about that, Mr. Bryden? I am asking you a question now.
Mr. Bryden: I thank Mr. Epp for the offer. I feel that as I am the author of the bill I am like the government. I would certainly have information and a theme that I would want to be in a position to convey to members of the committee on an ongoing basis.
As to whether or not I would have voting status, that is something we could consider at a later time. I would like to be a part of the committee and if the committee members preferred not to question witnesses. I would like to be in a position to give my advice on the theme of the bill and the issues of the bill on an ongoing basis, if that were agreeable to members of the committee.
The Chair: I am sure you will be here throughout the whole examination. If anything comes up I am sure we can deal with it. On the question of voting I think that is pretty well closed; I do not think so.
Mr. Bryden: Yes, that is fair enough.
The Chair: I do not think you should be voting. I do not say that out of any spite; I just think it would make more sense.
The meeting is adjourned.