[Recorded by Electronic Apparatus]
Tuesday, May 16, 1995
.1130 
[English]
The Chairman: Order.
My apologies to our witnesses for our late start today. This is one of the hazards of parliamentary life; there are other callings that we face. In this particular case, we had a vote to attend to. It's now out of the way and, barring further interruptions, we should be able to resume examination of Bill C-224 for at least the next 90 minutes.
Today we have the privilege of hearing from the Canadian Hospital Association, the Canadian Conference of the Arts and B'nai Brith Canada. Representatives of the organizations are lined up in front of us. I understand that we'll be hearing from the Canadian Hospital Association first, followed by the Canadian Conference of the Arts, and then from B'nai Brith. I think it's understood that each representative will spend about five minutes on opening remarks, and then we'll go to the usual rounds of interrogation.
We will start with Laurent Isabelle from the Canadian Hospital Association. Good morning.
[Translation]
Mr. Laurent Isabelle (Canadian Hospital Association Board member and Vice-Chairman, Ontario Hospital Association): Thank you, Mr. Chairman. My name is Laurent Isabelle. I would like to introduce Carol Clemenhagen, President of the Canadian Hospital Association. I represent the board of which I am a member.
The mission of the Canadian Hospital Association is to promote humanitarian care within a Canadian health system where services are integrated, efficient and of the highest quality and, thus, to improve health services in Canada by their leadership, by developing broad policies and by providing educational services to its members.
[English]
The rationale for Bill C-224 appears to be the concern that charities and not-for-profit organizations are not sufficiently accountable, that they compete unfairly with for-profit organizations, and that the actions of their directors and officers may be self-serving in terms of remuneration and other benefits.
.1135
The Canadian Hospital Association shares your concerns for ensuring the appropriate use of limited public funds by tax-funded agencies. Indeed, both the philosophy and practice of health services governance have long been anchored in the responsibility of boards of trustees, hospitals, hospital foundations, and health service agencies to ensure that the hospital or health services agency is delivering quality care, is properly managed, is safeguarding the organization's assets - financial and non-financial - and is discharging its liabilities - be they financial, legal or professional.
Many health service agency boards have already formulated policies to provide for the public disclosure of executive salary ranges. It is the view of the Canadian Hospital Association that the decisions to disclose and the process for disclosure are most appropriately dealt with by boards of trustees of hospitals or health services agencies.
In 1992, for example, the Ontario Hospital Association - and I happen to be its vice-chair at the moment - CHA's largest member, established guidelines for Ontario hospitals on the subject of disclosure of senior management salaries. In the intense heat of the downsizing environment affecting hospitals at that time, there was great union, and in particular municipal government political pressure to release salary information on hospital administrators. The media not only reflected that pressure but intensified it.
There seemed to be an atmosphere of workers wanting to make sure everyone in the hospital, including senior management, was ``sharing the pain'' of downsizing. In our view, management salary disclosure was a lightning-rod issue.
The Ontario Hospital Association guidelines of 1992 are still very relevant: (1) boards of trustees were encouraged to establish an institution-specific policy on confidentiality of compensation levels; (2) information on salary ranges should be released in response to specific requests that are supported by the consent of the individuals concerned.
At a time when Treasury Board is making considerable progress in reducing red tape and ineffective regulation with such innovative and useful legislation as Bill C-62, the Regulatory Efficiency Act, Bill C-224 is proposing an imposition of a new regulatory burden, the benefit of which is unclear.
As CHA understands the code of regulatory fairness that is endorsed by government and guides Treasury Board's review of all regulation, both proposed and existing, there must be a clear benefit to each piece of regulation that outweighs the cost of its imposition, and that is not achievable through other means except by regulation. In the view of the Canadian Hospital Association, Bill C-224 does not meet these criteria.
Regulations requiring supplementary reporting of information to the Minister of National Revenue by the over 1,000 hospitals and health facilities in Canada that are registered charities, in addition to existing financial reporting requirements such as audited financial statements and the annual Revenue Canada Charities Information Return, will impose an additional administrative burden on these health service agencies at a time when health transfers from both the federal and provincial governments are being severely cut back.
In the view of the Canadian Hospital Association, every dollar possible must be used for direct patient care and should not be redirected unnecessarily to meet an additional regulatory burden. The proposed new burden on government inherent in Bill C-224 to collect and maintain new information and monitor regulatory compliance seems out of step with current government efforts to reduce the regulatory burden in Canada and to cut government spending.
.1140
If indeed there is some valid rationale - and perhaps we've missed it - for salary information of directors of charities to be collected by government, it can certainly be achieved more efficiently and probably more effectively through the simple addition of a question on salary ranges on the annual Revenue Canada charities return.
[Translation]
We thank you, Mr. Chairman and members of the committee, for your attention.
[English]
The Chairman: We'll move on now to the representatives of the Canadian Conference of the Arts and Keith Kelly, the national director.
Mr. Keith Kelly (National Director, Canadian Conference of the Arts): I would like to thank the committee for the opportunity to express our thoughts on Bill C-224.
The Canadian Conference of the Arts is a non-profit, non-partisan organization representing the interests of Canadian artists and cultural workers. Our membership is composed of individuals and organizations. So the National Ballet of Canada, the symphony orchestras, art galleries, theatres, as well as individual artists are members and account for over 200,000 individuals who work in the arts and cultural industries in this country.
Our work over the last 50 years has primarily focused on federal policy development and providing information and support to our member organizations and individuals. We are not a charity, but our registered art service organization gives us the same privileges as a registered charity. This is an amendment made to the Income Tax Act as part of the status of the artist policy drive of a few years ago.
Through our daily work the paid staff of six persons address a wide variety of issues that directly benefit artists and cultural workers, such as copyright reforms, status of the artist legislation, taxation of artists and the arts, freedom of expression, national cultural institutions, broadcasting regulation and policy, new technologies such as the information highway, and direct-to-home satellites. We not only volunteer the views of our members in the policy arena, but we are often asked by government to provide specific advice on cultural policy issues and we participate in a wide range of public policy exercises such as this one, representing the views and aspirations of the Canadian cultural sector in the public policy discourse.
In our brief, the Canadian Conference of the Arts states that we fully support openness, transparency and accountability in the management of non-profit organizations and charities. In our case, and for the majority of similar organizations in the cultural sector, this is a standard that our membership demands as a matter of course. Every year the CCA prepares an annual report in which we provide audited financial statements, a list of all financial supporters, individuals, organizations and corporations.
Our board, which is elected by our membership, receives quarterly financial statements that many share with others in their area of interest. Without such accountability we would not enjoy the confidence and support of our membership, and without them we would not have an organization. The accountability to the membership of such organizations is a fundamental and prime area of responsibility. The membership has the strongest and ongoing capacity to ensure responsible management and it is a tool that the government need not replicate through new recording systems.
The notion that somehow organizations are not accountable simply does not square with reality. However, if this is the instrument the government chooses to adopt to bring further accountability, the CCA is eager to consider incorporating them into our existing reporting procedures. However, some elements in the proposed legislation cause some concern.
The onus of reporting should be on each organization and should not fall to Revenue Canada, or any other government department. The expansion of Revenue Canada's or any other government department's responsibilities will generate additional costs at a time when the federal government can least afford to absorb them. It is also the position of the CCA that only direct financial support should trigger this obligation.
Reporting of payments to directors and senior officers should reflect the range of compensation that each organization attaches to the position and the position's job description. Such disclosures fulfil the spirit of openness but still retain some margin of personal privacy on income. Such scales are widely used by the federal government and its agencies.
.1145
The development of independent non-profit organizations as autonomous entities adds much value to Canadian society. These organizations perform services at a faster and more cost-effective rate than most governments could achieve.
The political exploitation of such information may lead some to consider additional legislative directions on the limit and level of payments to directors and senior officers or other measures affecting the autonomy of non-profit charities, effectively removing the autonomy that these organizations must have. Members of your committee should assess the potential for real damage to these organizations that could result from political exploitation of such information.
Speaking for the arts and cultural industries, I'm confident that our sector will demonstrate once again our collective responsible management of resources in the area of payment for directors and senior officers and all other aspects of our operations. Thank you.
The Chairman: Thank you, Mr. Kelly. Now we'll turn to B'nai Brith Canada: Rubin Friedman, director.
Mr. Tom Gussman (National Vice-President, President of the Government Relations Committee, B'nai Brith Canada): Thank you, Mr. Chairman. I'm Tom Gussman, the national vice-president.
The Chairman: I'm sorry, sir.
Mr. Gussman: I'm going to give a short introduction and then Mr. Friedman will give a more substantive talk.
Mr. Chairman and members of the committee, thank you for the opportunity to address the Standing Committee on Government Operations in its review of Bill C-224.
By way of introduction, I will give a brief overview of B'nai Brith Canada and its role in voluntarism.
Our organization is a national voluntary membership organization that has been in Canada for over 120 years and is the country's senior Jewish organization. We are part of a 150-year-old international organization with a half million members in 54 countries.
In its origins B'nai Brith Canada is a fraternal service organization serving the Jewish and broader communities. Through its over 60 local lodges in Canada and through regional offices, B'nai Brith Canada mobilizes volunteers for worthy causes, including Passover food baskets for the needy, support for youth activities and summer camps, outreach to the broader community through Christmas dinners for the elderly and so on.
B'nai Brith Canada and its lodges have taken a leadership role in fund-raising through membership fees, tribute dinners, charitable gaming, the B'nai Brith Foundation and other means. We continue to seek innovative ways to raise funds for charitable purposes.
B'nai Brith operates recreational sports leagues in bowling, softball, hockey and basketball, and thousands of Canadians participate in these leagues each year.
Our League for Human Rights of B'nai Brith Canada has for over 30 years built an outstanding reputation for its role in monitoring public education and advocacy on general human rights issues, racism, anti-Semitism and discrimination in Canada, and has launched numerous initiatives to build tolerance and mutual respect among all Canadians.
The Institute for International Affairs has worked to promote human rights internationally, to defend Jewish communities at risk, to encourage better relations between Jews and other peoples around the world and to ensure fair treatment for the State of Israel in international fora.
We depend heavily on our members for their financial and personal volunteer contributions to our activities, and it's from that perspective that we comment on Bill C-224.
I would now ask Rubin Friedman, our national director of government relations, to speak on the issue.
Mr. Rubin Friedman (Director, Government Relations, B'nai Brith Canada): I thank the committee for the chance to address it on this issue.
As several participants have already said, the policy objective of the bill is not clear. One could make many assumptions about it. Some people have said that they assume the bill is to help ensure accountability.
But what goals will this serve? It talks about organizations that benefit directly or indirectly from the tax system. In fact, everybody who gives a donation to a charity benefits from the tax system. Many businesses benefit from the tax system. Why are we picking on this particular group at this particular point in time?
All registered charities have to submit forms right now outlining how much they collect and how much they disburse. There is space for indicating the amount that's spent on administration. I agree that it shouldn't be that difficult to allow for the collection of information on salary ranges within that context, but the decision to render this information public should be left with the individual organizations and the registered charities. To proceed otherwise is basically for the Parliament of Canada and the government to micromanage Canada's 70,000 charities and all it's voluntary, non-profit organizations, a task whose cost I don't know yet from this bill.
.1150
We should remember that voluntary organizations are run by voluntary boards. Members of these boards are legally liable for the operation and activities of the organization. They have to obtain liability insurance to protect them against personal bankruptcy, should the organization overspend or default to its creditors or be sued. So there are many built-in mechanisms for accountability without doing anything further.
Most organizations are currently transparent and democratic. Organizations with transparent and democratic mandates and structures are clearly accountable to their boards, who are in turn accountable to the members.
Elections to the board typically take place every two years. Remember that elections to Parliament take place every five years. Board members who are not delivering on their duties are soon reminded of the fact that they have not delivered, because they don't stay in place. When the organization does not respond to its members, its members abandon the organization, and the organization cannot stand.
Our own organization, like many others over the past five years, has had to make painful choices in programs and staffing. We believe we have been very responsible in this process. The members of the board were fully accountable to the membership for their decisions. Fiscal irresponsibility in this environment is soon uncovered and dealt with.
We still don't quite understand what the effect will be of making public the salaries of senior staff, or what overall public policy purpose it serves. In some ways, this measure appears to be intrusive and in keeping with other intrusive measures that various governments have taken over the last little while.
The federal government and provincial governments have created entities that are allowed to collect charitable donations. They've done this through acts passed in provincial Houses and in the House of Commons. These organizations have many advantages that grass-roots organizations don't have. It is one measure that the government has already taken to skew the charitable sector and the voluntary sector.
The government has also become heavily involved in fund-raising through lotteries. The Government of Ontario now runs a casino, and we wonder if bingos won't be next. Basically, the lines between voluntary grass-roots organization and things that are run by government are difficult to see, except in the nature of the organization and the salaries that the employees receive, in one case, and the salaries that the volunteers don't receive, in the other case.
We see that there is a much broader context that is not addressed by this bill. We wonder why this is a stand-alone bill being proposed at this point in time. What general review has been undertaken of support to voluntary organizations or to the charitable sector? What figures are available to help us to understand the broader context into which this specific measure is supposed to fit?
We have to understand that many of the difficulties we now face in the voluntary sector are due to the fact that there's been an ad hoc and piecemeal approach to the development of granting programs, charitable status, and so on, with no relationship to each other. Is that the kind of process we want to repeat by going at it one measure at a time?
The Chairman: Thank you very much.
We're now going to go to our rounds of questioning. We're going to keep the witnesses from all three organizations, so the committee members are able to question any of the representatives. You don't have to confine your remarks or your questions to one individual.
We'll start with the Bloc.
Mr. Deshaies (Abitibi): Good morning, dear friends.
.1155
I would like to put my first question to the president of the Canadian Hospital Association. Do you think there are charities funded by the general public, which is not necessarily your situation, that may defraud people through false advertising?
For instance, let's say I'm a smoker and I decide to create an association for the protection of smokers. I could collect large amounts of donations, put a large proportion of those revenues in my pocket as an administrator, director general, etc., and have a little advertising campaign in order to start the ball rolling again the following year. Do you think that scenario would be possible?
Ms Carol Clemenhagen (President, Canadian Hospital Association): Yes, it's possible. I think there have been documented cases of this kind of procedure. Fraud exists in all areas. I don't know whether this is a social issue, but it's certainly not part of the conceptual framework of this bill.
Mr. Deshaies: If you accept that there be controls for other kinds of organizations - for instance, there are financial controls for corporate income tax - why shouldn't there be a minimum amount of control to avoid situations where people can be defrauded by well designed false advertising? For example, people could be asked to send money to children in Africa, homeless people in the Third World, etc.
Ms Clemenhagen: There are no measures against fraud; however, there are penalties once fraud has been uncovered.
Mr. Deshaies: How can this fraud be detected if we don't have any information?
Ms Clemenhagen: You'd have to put that question to the RCMP rather than the Canadian Hospital Association.
Mr. Deshaies: I'm aksing you the question because the three witnesses here today say that there should be no controls because they are already self-regulating. Moreover, your organization doesn't have a problem so I'm wondering why you fear interference when you're already very well controlled. I'm also wondering about whether funds are received directly or indirectly. The problem is not really the bill. The point is to find out to what extent people are prepared to be subjected to a certain amount of control.
I think that Mr. Friedman wanted to answer my question.
Mr. Friedman: I would like to add that no studies have been conducted to determine whether there is more fraud committed by private companies than by charitable organizations or governments. There are a lot of audits.
Mr. Deshaies: Well then, you're saying that since the government, public servants or others can commit fraud, volunteer organizations should be allowed to do the same.
Mr. Friedman: No. All I mean is that in this society, there are ways to uncover fraud and obtain the information necessary to come to the conclusion that a problem exists. People start to complain. How can you know whether people have not received a service that they ordered? You only find out when they complain to the police. So in our society, there are mechanisms to uncover fraud.
Mr. Dehaies: Has the Minister of Nation Revenue suggested to you that you add certain information to the annual report that you produce, especially in your case, which is not the same as the situation of the hospitals? For instance, it could be the total salaries paid as a percentage of total revenues, which would be quite self-explanatory. If you pay out $150,000 in salaries on a maximum revenue of $200,000, you have a problem.
Do you think that this would be simple, that it wouldn't require much effort and that it would also be appropriate to include names of individuals?
Mr. Friedman: The challenge in what you're proposing is that, for example, in the course of our activities at the League for Human Rights, there are lawyers who develop many proposals and who do so without pay. That work is not reflected in the resources of the organization.
Mr. Deshaies: Other organizations have told us the same thing. I know that those people who work in the field of suicide prevention are almost all paid employees. These organizations don't make any revenues. The salaries they pay to their employees are not made public because it is considered confidential information. I would however like to know where the money I send them every year goes. I would like to know if I am being robbed or if I am giving to a worthwhile cause. Can I ask to have that information? Is it justifiable?
.1200
Mr. Friedman: If the report could reflect the work done by volunteer workers I don't see that that would create a problem. We depend so heavily on volunteer workers that the meer fact of disclosing information on salaries and on the amount of money we collect would give the wrong impression about our organization.
Mr. Deshaies: But just like hospitals, don't you have an obligation to tell the public who you are offering services to and where their money goes?
Mr. Friedman: Yes. As I said earlier, our books are audited every year.
Mr. Deshaies: If you can prove that the total amount given for salaries is actually spent on salaries, there is no problem.
Mr. Friedman: We can do that. The only thing I'm saying, is that giving other type of information that is not requested on the form would give a false impression of our work.
Mr. Deshaies: But it could be done in a very straightforward manner without creating too much work for you. I have worked as a volunteer for 20 years and at the end of the year, I didn't feel like filling in 18,000 forms on top of it.
Mr. Friedman: Of course not.
Mr. Deshaies: This information should be requested of organziations making sufficient revenues for it to be worthwhile. It is not worthwhile if the revenues amount to $200,000. Organizations which collect $350,000, $400,000 or $1 million per year should be able to fill a couple of small forms.
[English]
Mr. Kelly: I would just like to point out that there are already systems of accountability in place. For registered charities, Revenue Canada conducts random and frequent audits of charitable operations and if they find anything amiss they withdraw the charitable status.
In the case of non-profit organizations that receive financial support from any level of government, that financial support - be it for a project or operations - is often predicated on receiving an audited financial statement and, in some cases, project audits on top of annual audits.
So there's certainly a very high level of scrutiny that the governments already exact for any kind of direct financial support or for a charitable status. The provision of audited statements to Revenue Canada would not be problematic for anyone.
The Chairman: Are you sure these financial statements are always audited, Mr. Kelly?
Mr. Kelly: In the case of our organization, it's an absolute requirement.
The Chairman: But my understanding is that is not the case, that it is not a requirement. Financial statements, yes. Audited statements, no.
Mr. Kelly: In terms of federal financing, certainly from our lead department, which is the Department of Canadian Heritage, audited financial statements are a condition of funding.
The Chairman: You indicated in your remarks that if there were something amiss, if there were some kind of abuse, then a course of action could be taken. But is that true?
For example, let's say within a charity or non-profit organization - I hope this hypothesis is correct - the going market rate for paying the chief officer is $75,000 a year. To continue the hypothesis, let's say there is an organization run by one powerful individual and he may pay himself or herself double that, $150,000 a year. Are you suggesting that the government could come into that organization and say, ``Sorry, you're paying your man or woman too much money. If you don't cut the salary, you could lose your charity status''?
Mr. Kelly: No, not really.
The Chairman: So where's the discipline?
Mr. Kelly: The discipline is from the membership of the organization.
The Chairman: But if the organization was happy with the salary paid, even if it was twice the market rate, there's nothing government can do?
Ms Clemenhagen: No, and there's nothing government should do.
The Chairman: No, I'm not suggesting...but as I listened to Mr. Kelly, he indicated that there might be a course of action. Now he's suggesting that perhaps there isn't.
.1205
Mr. Kelly: No. What I was suggesting, Mr. Harvard, is that to begin the task of imposing regulations on non-profit and charity is a tempting political course. There are some who would certainly like to. No one is opposed to reasonable accountability. I think that's very clear.
However, what I was saying is that in the future, if the reporting came out, I know what will happen. There will be a very diverse range of salaries to disclose. Say, for example, that somebody is paying their CEO $150,000 a year. Then perhaps there are other measures of control that might be proposed in additional legislation.
B'nai Brith certainly makes a very important point. If we're going to really look at the issues of accountability and control in the charitable and non-profit sector, then it should be a far more coherent examination than the band-aid approach this legislation suggests.
Mr. Epp (Elk Island): I thank you all for coming here. As I've said to the other groups, I am a strong believer in charitable organizations and volunteerism. I've participated in it all my life. To a degree, I think my present position is like being a volunteer of a different sort.
I would like to ask each of you how you earn your money. How do you get your revenue?
Ms Clemenhagen: The Canadian Hospital Association is a federation of eleven provincial and territorial hospital associations, which flow membership fees to us each year. Approximately 24% of our budget is covered by those membership fees. The remaining 75% is made up from services such as educational programs and publishing services, which we sell on a cost-recovery basis. That covers the totality of our budget. It's a mix of self-generated revenues and membership dues direct from the provincial associations.
Mr. Epp: Your members are funded by taxpayers.
Ms Clemenhagen: Those provincial associations get their membership dues from individual hospitals and long-term care facilities across the country.
Mr. Epp: Those are funded by taxpayers.
Ms Clemenhagen: Yes, you're right.
Mr. Epp: Okay. Do you receive any direct federal government funding?
Ms Clemenhagen: The only government funding we would receive would be for research projects we would conduct.
Mr. Epp: You get a contract.
Ms Clemenhagen: Yes.
Mr. Kelly: Our revenue comes from memberships and the sale of publications. We receive some grants from the provincial government. We also have a significant contract revenue base, where we enter into purchase-of-service agreements with the federal government for one activity or another.
Mr. Epp: You're also getting taxpayers' money, even though it is for services rendered.
Mr. Kelly: And the taxpayers are getting services at a rate the government could never replicate.
Mr. Epp: Presumably the taxpayers get service for all of the taxes they pay. Sometimes they wonder whether they're getting their dollar's worth. I think that's generally true.
Mr. Gussman: Our revenue comes from membership fees, charitable gaming, and donations from members and citizens. We do get some contractual funding from government for special projects, but not on an ongoing basis.
Mr. Friedman: Our revenues are fairly small.
Mr. Epp: Do you receive no direct government funding at all?
Mr. Friedman: As Tom explained, it's for specific activities. We have received such funding in the past.
Mr. Epp: It's for specific activities. Would that be like a contract?
Mr. Friedman: Yes.
Mr. Epp: Obviously you have a constituency that is supporting you. One of the presentations here, from the arts people, indicated that a better way of providing accountability would be via the annual reports that go to the members.
What kind of detail is given in those annual reports that would satisfy the problem that John Bryden is trying to correct in his bill?
.1210
When I think of the charitable organizations I've worked with, every one, without exception, has had no paid people at all. We've all been volunteers; in fact, all of us have occurred expenses in order to participate. You go on a trip 200 kilometres to attend a meeting and you don't even submit a bill most of the time, you just do it. So that's the bulk of them, but some organizations use the charitable organization thing; they collect government money either directly from government funding or by way of being able to give charitable donation receipts, which is just another way of spending the taxpayers' money because every $1,000 that's issued represents up to $290 of taxpayers' money.
So we're saying this ought to be accountable. I think there are some 6% or 8% of charitable organizations whose chief executive officers make over $75,000 a year, which, for a lot of people who are struggling to make ends meet, is an awful lot of money. I think John Bryden is asking why we shouldn't tell the people who are supporting the organization what's happening, because that will be a line of accountability.
What's your reaction to that?
Mr. Kelly: First, I would like to say that for charitable organizations the charitable donation is not the only benefit the Income Tax Act offers. For example, I'm thinking of the return on donations to political parties. Are political parties going to make some more disclosures of all of their paid staff, as well? How do we, the taxpayers, apart from a general election every five years, hold the political parties accountable for their day-to-day operations and the decisions and expenditures that they make over the course of -
Mr. Epp: Since you asked the question, I'm going to answer it from our point of view, which is that we would go much farther with political parties. We're asking you for disclosure. If we had our way, the money for political parties would just be gone, period.
Mr. Friedman: You would take away the -
Mr. Epp: Yes, there should be no federal feedback. It's really obscene the way that's handled, but that's another issue.
Mr. Kelly: That is another instance. What I'm saying is this is not a situation that exists in isolation. For example, there is a provision in the Income Tax Act that allows registered amateur athletic associations to receive charitable donations and to issue tax receipts for contributions. Mind you, most of those would be non-profit and probably would be captured by this bill.
Mr. Epp: Yes.
Ms Clemenhagen: Perhaps I could provide some comments. If we look at why hospitals are registered charities and why the Canadian Hospital Association is their national body, why are we a charity? Clearly, it relates to our role in promoting health, providing educational services, and providing health services. That's our raison d'être. That's why indeed the charitable status at present, and, hopefully, into the future, will continue to be applied to those organizations.
If we look at the lines of accountability for hospitals and for CHA, as well, they're governed by boards of trustees who are legally responsible not only for the financial affairs of the organization but also for the quality of care delivered in the organization. There are numerous levels of accountability dealing with purely administrative accountability in terms of the audited financial statements, review by the board of trustees and professional accountability to licensing authorities' accreditation programs.
Salary reporting or publicizing salaries of hospital administrators or the president of the Canadian Hospital Association is a non-issue. Lots of boards already have policies in place. It's not something that people necessarily want to hide.
The point that CHA wanted to raise here is that the proposed bill doesn't get at increasing accountability for health service agencies, certainly. Publishing the hospital administrator's salary is not a useful way of trying to make sure that taxpayers' money going to health care is best spent. It's essentially an irrelevant piece of information that could be in a database somewhere at Revenue Canada. Maybe it will serve some purpose; but, essentially, creating a separate bureaucracy to collect, monitor, and ensure compliance with a separate piece of legislation seems like a very big breach in terms of the accountability of how we're saving scarce government resources at the moment.
.1215
The Chairman: Without debating with you, Mr. Epp, about this figure that 6% of the employees of these organizations earn $75,000 or more, to me that figure is meaningless unless those people are identified.
For example, this kind of legislation would pick up university presidents and presidents of hospitals. If you were told that the president of a large hospital with hundreds and hundreds of employees, with millions of dollars in budgets, was earning $75,000 or $80,000, I don't think you would be that surprised. So unless this 6% is identified, I think it's quite misleading.
Mr. Epp: It could be.
[Translation]
Mr. Duhamel (Saint-Boniface): I thank all of you for being here as well as for the presentation you have made before the committee.
I would like to ask you your opinion on the comments I am about to make. It appears that this bill has given rise to a lot of interest and concerns. If I have well understood the testimonies given before the committee today as well as those we have already heard, people agree with the fact that there must be more transparency and accountability. But let's be reasonable. Let's not go as far as creating a new bureaucracy and crushing these organizations.
Some people also indicated that this bill could be going further than what is reasonable. What is the solution?
[English]
As I understand it, not a lot of people are lining up saying that this bill should be supported. We talked a bit about modifications, but that perhaps would be somewhat difficult. Abandoning the whole thrust is problematic, I suspect. So what's the solution?
I note - and I ask for a reaction - that when one goes into business one can declare losses for a period of time, but after a while if one does not start making progress, somebody says, ``Hey, no more deductions''. So there is a control mechanism in the private sector.
So I'd like to focus on the following. There have been some indications from, I think, all of you that you have some insight into what a solution might be. I don't know how we might go about this and in what order necessarily, Mr. Chairman, but I'd like to focus on what the solution is here. We have a problem in terms of the bill, in terms of its acceptance and the questions that have been raised, and in terms of the points that organizations have made. So what do we do? What's the advice?
Ms Clemenhagen: To start, you already have the administrative mechanisms in place. An annual return is completed by all the charities.
CHA's recommendation to you would be to modify that form somehow and try to capture the information that you think might be available. We're not sure exactly what information is, but maybe some valuable information could easily be added and dealt with through an administrative process and administrative structure that's already in place.
Mr. Kelly: We would agree with that absolutely, but we probably would go even further. As Mr. Harvard noted, audited statements are not universally available in the non-profit sector. Perhaps one of the things this committee could recommend is that any registered non-profit corporations be subjected to an annual audit, and make those findings public.
Mr. Friedman: In terms of this bill, the one thing that is not really clear, except for anecdotal evidence that people have been throwing around, is the size of this issue we're dealing with. Are we dealing with an elephant or a mouse? You can't really tell from the information at hand.
People have an uncomfortable sense that maybe there are problems. Some cases of fraud have been reported in the charitable sector. So people have a sense that there's something there, but we really don't understand it.
.1220
For instance, we say there are over 70,000 registered charities. If you go through that list, what's the average amount these charities actually collect? Do some of them collect zero? We really don't know. We point to organizations that have charitable registration, but do we know whether these organizations collect money?
I think that's one of the problems that is not solved by this legislation. We don't really know what the size of the issue is.
In terms of the rest, I would have to say we would go along with the kinds of recommendations that have been made by the others.
Mr. Duhamel: That leads me to my second point.
One of the problems may be that we are dealing with both an elephant and a mouse. A number of objectives are coming forth. Some examples are: what is the salary of particular individuals, and are the accountability procedures appropriate? There are several others.
Perhaps we need to sort that out in our own minds, because it's going to be extremely difficult, I suspect, to come forth with a solution unless we know what objectives we are trying to reach. I sense that as an undercurrent.
There are several objectives. They're not necessarily bad, but they may be problematic, costly or inappropriate. Until those objectives are laid out, it's extremely difficult to come forward with a coherent, comprehensive, insightful, sensible, sensitive solution.
Ms Clemenhagen: I think you're completely right; the objectives are very unclear. It's almost as if in the proposed bill we're trying to use the salary of directors as a proxy measure of all these other things we're trying to get at.
I haven't thought about this a great deal, but it may even be the wrong proxy measure. We may be going after something that really is a false lead in trying to get at whether this organization is accountable or is appropriately making use of public funds and not abusing the system.
From a personal perspective, I think the salary of CEOs is irrelevant, because it depends on the organization you're running. Something like $75,000 is a very low salary if we're talking about people who are responsible for budgets of $900 million, if we take some of the regional health authorities as examples. One would be worried about the calibre of individual if we're paying them that low a salary.
It all depends. In another organization it may indeed be overpaying, but such is life.
Mr. Duhamel: I go back to the business model. As I understand it - and I'm certainly not a great expert on taxation - there's always someone looking at the relationship between what you earn and what you can deduct legitimately. If you're a little bit heavy on the deduction, somebody says, ``Oh, just a minute. We need to talk to you''.
Is there any merit - and I don't know if there is; I'm really asking a question to which I have no answer, and that's always dangerous in politics - in looking at the relationship between that which is spent on administrative salaries and others and that which is collected? That seems to be contentious, because there appear to be some concerns that there may be organizations out there receiving very little in relationship to what they spend.
While that may be so when you initially get started, because there are mechanisms to put in place and positions to refine, after a while you'd think that if you're not collecting a lot more than you're spending, there's a problem there.
Ms Clemenhagen: Except that for endowment funds the whole purpose is to spend very little on your administrative things and collect funds so that you're able to fund charitable purposes.
Mr. Duhamel: But I think most people would not feel very uncomfortable with that. It's when the ratio is in reverse.
Let's take a fictitious example. Let's say I'm earning $60,000 a year at an organization; I'm their chief fund-raising officer and that's my whole purpose; and I'm raising $20,000. Somebody ought to be asking questions.
I suspect someone would have been asking questions a long time ago. That's why I ask that question.
The Chairman: By the way, we might be dealing with both an elephant and a mouse at the same time.
Mr. Duhamel: That's what I said. You can't just feed me my line again.
The Chairman: We may have to resort to mathematics and ask what is the median or the mode.
.1225
[Translation]
Mr. Bellemare (Carleton - Gloucester): Unfortunately, the member who tabled the bill is not here to answer questions. There are good ones that have been asked, among other things with regard to the purposes and objectives of the bill. I have had the opportunity to debate this with the member; I was arguing a position contrary to his own. He began this debate, but unfortunately, the work was not well prepared at the outset.
I would like to ask the witnesses whether they agree that there should be transparency and accountability.
[English]
Mr. Kelly: Oui, absolutely.
[Translation]
Mr. Bellemare: Now I would like to know if this information should be revealed or published. In my opinion, those are two different things. For example, should you publish all your expenses, including details about salaries? In my opinion, there's a difference between revealing and publishing. How do you feel about that difference?
Mr. Friedman: We've already discussed the problems that this could create from the standpoint of competition between organizations, and the differences that exist between organizations today. That's the main nuance.
Mr. Bellemare: Very well. Others have expressed roughly the same opinion.
In your opinion, are there various types of fundraising organizations? Volunteer groups who want to provide some sort of service must collect funds. In my opinion, there are various levels or types of fundraising organizations. The groups before us here today are enormous organizations, and all MPs and Canadian citizens would agree that they should not be critized on the details because they are well-organized and in their case, accountability and transparency already exist. You are well-organized.
However, the member gave me certain examples, such as that of an organization that receives enormous amounts of money from the government, that had only a single visible activity throughout the year, when its executives gathered perhaps once a year, let's say in Jasper to dramatize the situation. In his opinion, the government should not contribute funds to such an organization.
What we would like to know is whether someone receive a salary. I found out that in the United States, people who are not poor and needy, but people who are extremely well-healed create organizations that happen to be in vogue. For instance, you have leagues of human rights. Someone could get the inspiration from that to found the league for rights of cats in their municipality, which may be seeking to pass a bylaw. Cat lovers everywhere will send contributions to a person who advertises in the newspaper.
Worse yet, you could have the league for the rights of elderly widows. There could be an organization specialized in recruiting elderly widows to get money from them and draw a good salary while providing an absurd service.
What I think I can see in this member's bill, is that it should allow us to identify immediately people who are part of volunteer programs or fundraising organizations that only operate for their own profit. Organizations like yours would automatically be excluded.
Could you share your views with me on that point?
.1230
[English]
Mr. Kelly: The Income Tax Act will not allow charitable status for any group that shows a preponderance of self-interest. That is a very rigidly enforced principle. You can't even get a charitable number if there's a suspicion that there's a preponderance of self-interest. You have to satisfy one or all of the four points of common law that provide charitable status.
In our sector, for example, we have La Fondation Jean-Pierre Perreault, which is a dance organization. Jean-Pierre Perreault is the choreographer. He was not given charitable status even though it was a charity, because the name Jean-Pierre Perreault appeared in the name and they said it's a preponderance of self-interest, so no.
So there are instruments in use, which are being applied, that would prevent the society for the welfare of cats or the advancement of cats, or whatever, from getting in the gate.
Ms Clemenhagen: Perhaps one of the problems is not so much the receiver of these funds as what government agency is giving funds to organizations that meet only once a year and can't really demonstrate what they're doing. A legitimate charity will make its case legitimately to receive funds and be accountable for those funds. So perhaps there's some work to be done on the other side as well.
Mr. Friedman: I would just like strongly to support the notion in the first example you gave, that an organization was receiving funding from the government. I would agree that such a case is outrageous and that those things have to be checked. That organization shouldn't be receiving funding in the first place. I don't know how it got it or why. It's an interesting question to answer. Politics might have had something to do with it in the first place.
The Chairman: If you haven't seen it, Mr. Bellemare, I should just point out that the charities have to fill out a schedule for Revenue Canada. One of the sections is headed ``Calculation of whether a charitable foundation has met its disbursement quota''. In other words, you couldn't have an organization that would spend 95% of its proceeds on salaries. Obviously there would be something amiss that would not be consistent with a charitable quota.
Mr. Epp: I have a first quick question to the B'Nai Brith.
We have two people here today who are involved in government relations. Why is this necessary? I look at you as a charitable organization. Why would you need to have people whose focus is government relations?
Mr. Gussman: I'm not sure where your question comes from. I'm the national chairman of the government relations committee. I'm a volunteer, and I don't make any money from B'nai Brith. In fact, it costs me a lot of money to belong, just like it costs you.
Mr. Epp: Yes.
Mr. Gussman: Government relations encompass all our areas, whether these be human rights, international affairs, community outreach - stuff like that.
We deal with governments at all levels. Rubin is not well paid, but is a paid employee of the organization who probably works 80 or 90 hours a week.
Mr. Epp: I saw his face light up when somebody said $75,000.
Mr. Gussman: Yes, he'd like that.
Mr. Epp: I'd like to ask you all a question. Whether this is done via a line that's filled in on a form to the government and in an area that becomes part of the public record or whether it's a statement annually, are there any specific objections to disclosure of salaries, say the top five earners in the organization or anybody who earns over $75,000? Is there any objection to disclosing that?
Mr. Isabelle: In the case of hospital boards, the typical policy is the dévoilement, revealing the salary range of the CEO or the senior officers of the organization. That seems to be current practice.
Ms Clemenhagen: So it would be the range as opposed to the individual's specific salary.
Mr. Epp: Yes, and there's no objection to that.
Mr. Isabelle: No.
Mr. Kelly: We would have no objection to that because we would have nothing to report.
The next point is that we would certainly agree with our colleagues about the salary range.
.1235
Mr. Epp: The brief of the Canadian Conference of the Arts states, ``Mr. Bryden's proposal would require a very sizeable bureaucratic structure and potentially cost millions of dollars''. Do you mean millions of dollars to the government or millions of dollars to the organization?
Mr. Kelly: To the government. If we're talking about a new form of report with fairly explicit and severe enforcement mechanisms, we're talking about receiving thousands and thousands of documents, checking to make sure they're complete, acknowledging their receipt, sending second notices for non-filers, engaging in the legal process for those who didn't, and imposing the penalties. It's impossible to do that at no cost under the existing system.
Mr. Epp: If we were to counter by saying that perhaps the purpose of this bill could be achieved just by adding one or two lines to an existing form, then the cost wouldn't be great, and there would be no objection.
Mr. Kelly: None.
Mr. Epp: Maybe the taxpayers would be happy with that, too.
Ms Clemenhagen: I think perhaps the taxpayers would be a little bit concerned that we had to go through a whole proposed bill with committee meetings and people coming and making presentations. There is certainly a cost to that. So we might have wished that the administrative solution could have been thought of a little bit earlier in the process.
Mr. Epp: Yes. Obviously, that's part of what has to be thought through here.
I have one last question with regard to the agencies, boards, and so on that operate. We've had a number of witnesses come here and say, ``We have a board of directors. We're accountable. We're honest''. Everyone who has come here so far has not conceded they're guilty of anything untoward. Maybe those who are guilty just won't come to this committee, Mr. Chairman. That's possible.
What is your feel for it? Mr. Bryden and others, along with some members of the public who have spoken to me because I'm on this committee, have a concern that there are people who are using the charitable organization status to end up with more taxpayers' money in their pocket than they're entitled to. What is your feel? Do you think that this is totally a red herring and that in fact there are none? If there are some, how many are there? How big is the problem?
Mr. Isabelle: In statistics it's frequently stated that the great aberrations are rarely above 3%. In other words, 97% of the organizations, be they hospitals or agencies like yours, are above-board, transparent, non-defensive, etc. I personally would be quite concerned if we were to set up a whole bureaucracy in order to get information from the 97% because of a small group of people who are the marginal ones.
Mr. Epp: Mind you, we also have 98% of our population not in jails, yet I don't think we would suggest dismantling our justice and punishment system because of that.
Mr. Isabelle: I don't want to get involved in a debate about the penal system. I worked for Correctional Services Canada for a while, and I'm not proud of the record that Canada has with regard to its punitive approach. Of the 42 nations of the OECD, we're eleventh for putting people in prison.
Mr. Epp: Okay. That was a digression I should probably not have made.
Some hon. members: Oh, oh!
Mr. Epp: Coming back to the problem, how big is it?
Ms Clemenhagen: The point you make is an interesting one. Why do we put people in jail? It's because they've committed a crime. So here we are trying to devise a law that looks at this whole gamut of organizations not because we've actually identified them as doing something wrong but because we just want to know this additional information. So if the real issue is getting at fraud and criminal activity, it really does need to be dealt with through whatever processes are available with the police, who look at fraud.
Mr. Murray (Lanark - Carleton): Actually, Mr. Epp has covered an awful lot of what I wanted to ask about.
I want to thank you for coming.
.1240
I am not sure if I understood Ms Clemenhagen's comment a couple of minutes ago about the expense of coming to appear before a committee. Are you saying that taxpayers will not be happy that you had to come here and appear before the committee?
Ms Clemenhagen: The taxpayers won't have to bear the cost of us being here. Putting together a proposed bill certainly is a costly activity. Please forgive me if I am rude, but I think this committee has more important things to deal with. There are real issues in the country, certainly in the health care field, that would require your attention. I feel that perhaps this has not been the best use of very scarce resources.
Mr. Murray: This bill has passed second reading in the House of Commons because a sufficient number of Members of Parliament thought there was a problem. There is enough evidence to show that there is a problem in terms of public accountability. You are suggesting that we should be looking at this as if it were a case of fraud or criminal behaviour. That's not what we're after. It is a question of public money going to organizations.
I was struck by the comment Mr. Friedman made when he said that when members abandon an organization, that organization cannot stand. I agree wholeheartedly that when members abandon an organization, it should no longer stand. That's really the crux of the matter as far as I'm concerned. We have organizations that purport to represent large groups of Canadians, but when we look into their record, they may have very few members and they can be receiving a large amount of government money. That's really what triggered this whole thing.
I think most Canadians would support our looking into this. We are not out to get charitable organizations such as those that all of you represent, but there is an abuse here. That's why we're going through this exercise.
Most of what I wanted to ask about has already been asked, but it boils down to a concern with privacy, does it not? I don't see the millions of dollars in reporting costs. I think it is a line item on a piece of paper and that's all that's required.
Ms Clemenhagen: Not if the bill goes through. The bill requires a specific reporting structure for salaries only, over and above what's already done administratively on the annual -
Mr. Murray: That can be handled very easily by a line item. It doesn't cost millions of dollars for the top five earners in certain corporations to give their salaries to the Securities and Exchange Commission, for example. What I am saying is it doesn't have to be that onerous and it wouldn't be the intention of this committee to recommend anything that would cost anywhere near $1 million. It just wouldn't be done.
I want to go again to what I see as being the crux of the problem. It's a question of privacy. In other words, if it is possible to have legislation that did not cost a lot of money to implement and also gave salary ranges as opposed to precise salaries, you'd have very little or no opposition to this legislation. Is that a fair statement? Actually, it's a question.
Ms Clemenhagen: The concern I would have doesn't relate to the issue. I'm not opposed to revealing salaries. If you want to know mine, I would be happy to report it to you.
Mr. Murray: Salary range.
Ms Clemenhagen: Salary range. I think it is a more fundamental issue. For example, in the recent budget act, transfers to provinces for health care are projected at being cut by $7 billion. When I heard you say it won't cost that much more and we'll just add it on because it is a piece of information that is nice to know, I do find that troubling, because I see better uses for very limited public funds.
Mr. Murray: When we find out that some organization was abusing the public money, we cut them off and save that money. That's essentially what would happen.
Ms Clemenhagen: That's what you should be doing.
Mr. Murray: That's what we're doing, that's what we're talking about. We have enough examples of organizations that -
Ms Clemenhagen: I don't see how asking someone to report the salary of their CEO is going to be revealing. It would involve such an elaborate process to try to track back from a simple reporting of my salary, whether the Canadian Hospital Association is appropriately managing its overall resources -
Mr. Murray: As I said, we are not looking at organizations such as yours as being the problem. When somebody applies for money from the federal government, it looks at their financials, how much they're spending on different items, one of which is salaries. If it turns out they've got 10 members across the country and they're paying themselves $90,000 a year, then perhaps it shows there is not wide support across the country for that organization. Why should the taxpayers at large be funding it? It's that sort of organization we're talking about, not hospital associations and councils of the arts.
.1245
Mr. Friedman: I don't think anybody would disagree with you. But the problem with that is that the answer or the solution is not reporting salaries on the revenue; the answer is that the government organizations that are dealing with these should have better tools and better procedures in place, and criteria that allow them to disqualify somebody such as that from receiving government money.
You see what I mean. It's not that we disagree with what you're saying; it's just that we don't see how this solution will deal with your problem. We do think that the problem you're talking about has to be dealt with.
The Chairman: Or it may sometimes solve the problem in instances where salaries are, say, inflated, but not in those instances where perhaps the salaries are quite normal but other expenditures of a different kind are way out of whack.
Mr. Shepherd (Durham): I think that in some ways our debate has gone beyond Mr. Bryden's intention. I think he simply wanted the concept of accountability. Many people have argued the difference between accountabilities to their members, saying that they are accountable in that fashion as opposed to to the taxpayer.
I would suggest that even a lot of voluntary organizations, if they have access to financial statements - Certainly many of them are also not likely to be fully cognizant of how to read them. So I have some difficulty with that argument.
Of course, there's the other side: the fact that taxpayers are all contributing to this and therefore they have the collective right to know.
What we do with the information when we get it is something else totally. We add lines to the income tax return year after year, but we don't really sit down and we are overly concerned from time to time about how that regulatory approach works.
To the Canadian Hospital Association, your argument isn't based heavily on the cost of implementation. Have you done any projections of what it is going to cost your members to comply with simply looking at the top five highest-paid executive staffs on each hospital board, where there is information that is already readily available in your accounting system?
I look at this from my background as an accountant. It would take me two minutes to get that and display it on a form.
What is the cost to your organization?
Ms Clemenhagen: You're right. It's not a difficult piece of information to provide.
There are over 1,000 hospitals in the country, and if we add the long-term care sector from the not-for-profit sector - Let's add perhaps another 1,000, so let's say for the sake of argument that 2,000 organizations across the country each year will get a form from the Minister of Revenue asking for that information. Someone will be assigned - the VP finance, the chief operating officer or the accountant - to fill it out and send it back in. So it's the cost of an administrative detail being dealt with, times about 2,000 organizations.
Mr. Shepherd: I'll bet you that within that structure in your organization there's somebody with a different form. I'm not justifying that, but I'll bet you that there are all kinds of changes to forms year after year, and I'll bet you that this would be a very small incremental part of that.
Ms Clemenhagen: I think there are all kinds of changes to the same form. The charities return has been updated several times. I think we should congratulate Revenue Canada. They've made a real effort to make the form more user-friendly, to incorporate new information.
So there's a lot to be said - and you, as an accountant, will perhaps appreciate this - Why not change it on the one form? We already receive a form; we already complete it. Why send a second form?
Mr. Shepherd: I think we're saying the same thing.
Mr. Friedman, you talked about a judgmental approach. You were concerned about the consistency with all organizations and if, in a regulatory framework, we could actually make judgment calls about how much people are paid or if they're paid inappropriately. In other words, if 100% of your receipts are taken up in the form of wages, this would be inappropriate.
.1250
Do you really feel it's the purpose of government to make those kinds of decisions?
Mr. Friedman: Why are they collecting the information if they're not making those decisions?
Mr. Shepherd: It seems to me that if it's accessible by other people in the society, then maybe people who contribute to your organization, once that was focused on, would have a different analogy.
Mr. Friedman: The point I was making before is that they already ask those questions. Those questions always come up. It's why we've had to cut staff and programs. It's because members of the board, 90% of whom are also accountants and tax lawyers, are very conscious of the issues of accountability, fiscal responsibility.
All I was saying is that we are already affected very directly. It's hard for me to imagine an organization that could exist and collect money that would be transparent, democratic, and representative and could exist and collect money on that basis and not be accountable. It's hard for me to imagine. The only way I can imagine it is if the federal government is funding this organization up to the hilt through direct grants.
Mr. Shepherd: Maybe that is so in your organization, but my experience is that the financial statements that a lot of non-profit organizations prepare are certainly inconsistent with generally accepted accounting principles.
Taking your argument - indeed, a lot of my colleagues would be very impressed with your suggestion that they should all be audited - I suspect that alone will make this too prohibitive, so most people wouldn't subscribe to that. But getting back basically to your point, Mr. Friedman, I think it would an asset to all the individuals and members of non-profit organizations if there was a system out there that actually collected the information and displayed it to them and they would know it's something that's universal in all charitable organizations.
Is there merit in that?
Mr. Friedman: The purpose being?
Mr. Shepherd: Visibility, accountability, that we know the top five officers of every non-profit organization.
Mr. Friedman: In the country?
Mr. Shepherd: Yes.
Mr. Friedman: I think it's something like 350,000 names.
Mr. Shepherd: Would it be of assistance to some of your members who possibly are not attuned to reading financial statements if they could at least find that out? You may say it's a useless number. Some others would say -
Mr. Friedman: No; as I mentioned before, I think people would use that information for different purposes. Some people would use it to say that you're getting too much or you're not getting enough. It will be used for various purposes.
Mr. Shepherd: But isn't that the essence of why you want it in the first place?
Mr. Friedman: To generate a discussion about whether it's too much or - I don't know.
The Chairman: Do you agree that when this bill includes senior officers and directors, perhaps it goes too far in that it would catch a lot of people who are just straight employees and they have no power whatsoever in setting their own salaries or setting organizational policy? My guess is that perhaps there would be more concern or a greater desire for transparency of those who are in a position perhaps to set their own salaries.
Mr. Friedman: If people are in a position to set their own salaries, this definitely is something that is reported in the Income Tax Act under Revenue Canada.
The Chairman: The other thing is that when you were talking to Mr. Shepherd, the word that came to my mind was ``busybodies''. I know that transparency is sacrosanct, democracy is sacrosanct. You can never argue against more information, and yet we all know that if you tell everything, it does invite a swarm of busybodies, all always with the best of intentions, I'm sure, but who can sometimes make life slightly more difficult.
Would you agree?
Mr. Friedman: There's a lot of truth to what you say.
.1255
We always try to balance that. We have to be a democratic organization and the people in charge of the organization, democratically elected, have to have enough information to make decisions.
The Chairman: I think we all agree with that, but sometimes it's the little detail that can really create problems. Even though the detail in itself is not troublesome, the busybody can make it quite so.
Mr. Epp: I want to ask a question of all of you. Do you agree that organizations such as yourselves seek charitable or not-for-profit status primarily because of tax considerations and secondarily because it helps them to get donations from donors? Are those the two main reasons?
Mr. Friedman: I would say we do that primarily because those things exist.
Mr. Epp: In other words, if they didn't exist, you'd just carry on?
Mr. Friedman: Absolutely. We existed for 120 years. I don't think that during all that time these tax credits and different -
Mr. Epp: No, our temporary tax system isn't even that old.
Then my question is this. If we were to tell the government to simply butt out and to not allow organizations to issue tax credit receipts any more and, if there was an organization that wanted to run, to let them operate and get their money from the people who are willing to support them with no implications for the tax legislation at all, what would be the implications and the results for your organizations?
Ms Clemenhagen: In health care, as federal and indeed provincial transfers have been cut back, there has been more need for charitable organizations to support health service agencies. So charitable organizations are becoming almost a necessity for health services. We'd be very concerned if the charitable sector was somehow targeted for elimination.
Mr. Epp: It wouldn't be targeted for elimination. It would just be that there wouldn't be a tax credit for people who donate to you any more.
Ms Clemenhagen: I guess we could assume, then, that public funding of health services would be increased -
Mr. Epp: Maybe it should be.
Ms Clemenhagen: - to take up the loss we'd feel.
Mr. Kelly: First, I think that the very non-profit status that most of us elect is meant to give some legal framework for the work we do on behalf of our constituency and in the wider community. In a sense, that creates some accountability, a framework of accountability.
It also says that our intention is not simply to make profit or make money, but that the organization comes together under ideals that are broader than the profit-making motive and that really lie at the heart of service to the community.
In compensation for that, or to help us achieve that, we have charitable status that allows us to solicit funds from people who have some affinity with our objectives and who also will hold us accountable for the appropriate use of the money they have entrusted to us.
If you do away with charitable status, then you won't have non-profit organizations. You'll have a major thinning out of the ranks and it will be the perfect scenario to create those things about which you are most concerned - people paying themselves big salaries and putting very little back into the primary objective. Because it is market-driven, profit is the motive and profit is the basis of accountability.
This is a way society has been able to support, recognize and hold accountable organizations that are dedicated to broader objectives that are important to Canadian society.
Mr. Epp: Yes. I guess the only question I have is, if there are 150 people who want to support your organization, how is it that somehow that accrues to an obligation, which to me is not involved at all, to help fund it? That's what happens in the tax-free and charitable organization structure. I know that in total it does a lot of good in this country, but -
Mr. Kelly: But it also happens with defence. That's a bit of a red herring. I don't believe that we should be spending a dime on defence, yet my taxes go to buy new submarines and helicopters - although cheaper than the ones of the previous administration - and I don't have any elective. Why? Because there's a broader benefit that is not discretionary and that is part of the values that hold the country together.
.1300
Mr. Shepherd: Mr. Chairman, I wonder if it would be appropriate that we move a motion that we consider the clause-by-clause discussion of the bill immediately after the break.
The Chairman: Which break?
Mr. Shepherd: The break we're going to have after the May 24th weekend.
The Chairman: We have more witnesses at the beginning of June. For example, on June 1 two groups are coming. So I don't think that would be possible right now, Mr. Shepherd.
Are there any more questions?
Mr. Epp: Would it be possible, Mr. Chairman, that we could say to our witnesses that we no longer need them? I think the hearing of witnesses is really at the pleasure of the committee and not the other way around.
The Chairman: There was an indication at one of the meetings to hear from the privacy commissioner, who is tentatively scheduled for June 1.
There's another organization called the Coalition of National Voluntary Organizations, and it wants the opportunity to present.
Mr. Epp: In a way, I'm with Mr. Shepherd, in the sense that I think these people who are here and the witnesses we've heard before have given us a fairly good overview of the situation and perhaps it would be repetitive to hear more witnesses - not because they have any less merit but because maybe we should proceed to the clause-by-clause consideration. I'm certainly willing to second a motion if he wants to make it, and then we can vote on it as the committee.
The Chairman: I think it would be rather discourteous, because it was one of our own committee members, Mr. Bélair, who wanted the privacy commissioner to appear. He's been contacted and I think maybe we should hear from him.
Ms Whelan (Essex - Windsor): It was requested by the committee?
The Chairman: Yes, it was requested.
Mr. Shepherd: I guess my concern is for the order of business, to the extent that we will complete the clause-by-clause consideration and report the bill back to the House before the recess in June.
The Chairman: I suppose if that were possible, yes. But you have to remember, Mr. Shepherd, that Bill C-224 is not the only item of business. There are a number of things we have to do, and when you look at the business before the committee, I think some things are not going to be done. For example, there is a government bill, Bill C-82, which will probably come down tomorrow, and generally speaking government bills get priority over private members' bills. I think this private member's bill has already been given special attention. We have another private member's bill that has been before us since Christmas, but we haven't even touched it.
Mr. Shepherd, the only reason why this particular bill was brought to the committee at this particular time was because there were a couple of cancellations and we found time to work on Bill C-224. Given all of the business before the committee, I know that something is going to have to give, but at this time I don't know what it is.
For example, we haven't finished contracting out, and there are outlook reports that have not been finished, and after today's meeting there will be only about seven or eight meetings left. So I think it would be rather imprudent on the part of anyone to make a commitment that everything that's before us is going to be finished by the third week in June.
Mr. Shepherd: On your point that something has to give, wouldn't that give some credibility to possibly moving to clause-by-clause consideration then, and not seeing the witnesses from the Privacy Commission, as something that can be done, a part of your agenda that could be truncated?
Mr. Epp: The only problem with that is that if we don't hear from the privacy commissioner, it could well be that all of our work is for naught, because what we're doing in this committee will be a violation of the Privacy Act, and then it will be down the tube anyway. So I can see it from our chairman's point of view as well.
.1305
The Chairman: I really think that we should pursue this.
Mr. Murray: There is no reason why we couldn't hear from the privacy commissioner and go clause by clause immediately thereafter.
The Chairman: We're going to hear from that other organization, and the national voluntary organizations as well. We will know more this week.
If Bill C-82 comes, that's important, Mr. Shepherd, because it has to do with the new $2 coin and that's going to deserve some priority.
If there is no further business, this meeting stands adjourned.