2nd Session, 41st Parliament,
Volume 149, Issue 157

Monday, June 22, 2015
The Honourable Leo Housakos, Speaker

Income Tax Act

Bill to Amend—Third Reading—Motions in Amendment, Motion in Subamendment and Motion—Debate Continued

Hon. Mobina S. B. Jaffer: Honourable senators, I rise to support Senator Cordy’s amendment, and I also want to thank Senator Cordy for her well-thought-out remarks.

At this time, I also want to thank Senator Ringuette and Senator Cowan for their untiring work on this bill. They have worked for many hours and months — in fact, for years — on this bill, and I want to thank them for their persistence.


Honourable senators, I rise to speak at third reading stage of Bill C-377, An Act to amend the Income Tax Act (requirements for labour organizations).


The bill’s summary reads as follows:

This enactment amends the Income Tax Act to require that labour organizations provide financial information to the Minister for public disclosure.

As we are at third reading stage, I will take this opportunity to examine the bill through the lens of the Constitution. When the Committee on Legal and Constitutional Affairs studied this bill, a number of witnesses expressed their concerns about the constitutionality of the draft bill. More specifically, they were concerned that the bill was not constitutional for two reasons: first, it violates sections 91 and 92 of the Constitution Act, 1867; and second, it violates the 1982 Canadian Charter of Rights and Freedoms.

Doctrine, jurisprudence and expert testimony clearly indicate that this bill is unconstitutional. Let me explain. As I just mentioned, the first problem with this bill has to do with sections 91 and 92 of the Constitution Act, 1867. Part VI of the Constitution Act explicitly sets out the distribution of legislative powers and the respective jurisdictions of each parliament. Thus, the Parliament of Canada has the exclusive authority to pass legislation under section 91, while the provincial legislatures have the exclusive authority to pass legislation under section 92. In order to determine whether a bill has been passed by the appropriate parliament, the Supreme Court of Canada developed the test of true character.


Honourable senators, according to Peter Hogg:

The pith and substance doctrine comes into play in determining the validity or constitutionality of a statute on federal grounds. It is concerned with the characterization of the challenged law by identifying its dominant or most important characteristic, or its leading feature, also sometimes referred to as the “matter” of the challenged law, keeping in mind that statutes can often have more than one feature or aspect.

In the matter of a Reference by the Governor in Council concerning the proposed Canadian Securities Act, the Supreme Court of Canada stated:

To determine the constitutional validity of legislation from a division of powers perspective, the pith and substance analysis requires the courts to look at the purpose and effects of the law. The inquiry then turns to whether the legislation falls under the head of power said to support it. If the pith and substance of the legislation is classified as falling under a head of power assigned to the adopting level of government, the legislation is valid.


The question here is about the pith and substance of the bill, or the intention in passing it. We must apply that test to the facts. I would like to share with you some expert testimony on the matter.


According to the Barreau du Québec:

A rather more serious problem is posed by the purpose of the bill, since it is intended to provide oversight of labour organizations across Canada. Such an intention falls within the ambit of labour relations, jurisdiction over which has been conferred on the provinces through case law interpreting subsection 92(13) of the Constitution Act, 1867, since the famous decision of the Judicial Committee of the Privy Council in 1925.

Labour relations are deemed to be under the exclusive jurisdiction of the provinces . . . . As the Supreme Court of Canada noted in Northern Telecom v. Communications Workers:

(1) Parliament has no authority over labour relations as such nor over the terms of a contract of employment; exclusive provincial competence is the rule.

The Service Employees’ International Union added:

In our respectful view, this Bill, in spite of its title, is not income tax legislation. In pith and substance, in purpose and effect, it is labour legislation. . . . Bill C-377 is an intrusion into provincial jurisdiction over labour relations, developed without provincial consultation or consent.


The message is clear. This bill will not pass the constitutionality test with respect to pith and substance because it was not passed by the appropriate government. Specifically, Bill C-377 falls under section 92(13) of the Constitution Act, which is an exclusively provincial area of jurisdiction. This is not income tax legislation; it is labour legislation.

The second problem with this bill has to do with the Canadian Charter of Rights and Freedoms. As you know, the Charter protects the rights and freedoms of Canadians. In particular, it protects them from this kind of bill.

First, section 2(b) of the Charter reads as follows:

Everyone has the following fundamental freedoms:

(b) freedom of thought, belief, opinion and expressions, including freedom of the press and other media of communication;

Second, section 2(d) of the Charter reads as follows:

Everyone has the following fundamental freedoms:

(d) freedom of association.

I would like to share some of the comments we heard in committee about that.


The Canadian Federation of Nurses said:

. . . C-377 will:

Substantially interfere with the freedom of expression and freedom of association rights protected under sections 2(b) and 2(d) of the Canadian Charter of Rights and Freedoms, being part 1 of the Constitution Act of 1982.

On that matter, the Association of Labour Lawyers stated:

There is no justification for compelling information about the political speech of unions and their members to be made publically available on a government website.


The committee also heard from the Canadian Bar Association, which expressed its doubts as to the bill’s constitutionality. It stated, and I quote:


Subsections 149.01(3)(b) . . . may contain disclosure requirements counter to the Charter of Rights and Freedom’sprotection of freedom of expression under s. 2(b) and freedom of association under s. 2(d).


The Bill interferes with the internal administration and operations of a union, which the constitutionally protected freedom of association precludes, unless the government interference qualifies as a reasonable limitation upon associational rights. It is unclear from the Bill what the justification is for these infringements.


They also stated:

There is certainly a rationale for making information about how the union spends money available to the union members themselves, but such information is already available to those members through provincial labour legislation.

According to the Alberta Union of Provincial Employees:

If this Bill is somehow able to survive a jurisdictional challenge, unions across Canada are sure to challenge the constitutionality of this legislation on the basis that it seriously interferes with the Charter right to freedom of association by impeding the ability of unions to pursue collective action in a fair way.

The Supreme Court of Canada in a series of recent cases has affirmed that the freedom to associate protected by section 2(d) of the Charter is broad and ought to be interpreted in a generous and purposive manner.

Moreover, it is clear that section 2(d) grants constitutional protection to the process of collective bargaining.

The Supreme Court of Canada has confirmed that if the government substantially interferes with the ability of labour union members to engage in collective bargaining, a breach of section 2(d) will be found.

The purpose of this protection is to ensure relative equality of bargaining power between employers and employees, and this balance can be disrupted in a variety of different ways.



The Fédération autonome de l’enseignement also shared some concerns about the constitutionality of the bill, and I quote:

Freedom of association is enshrined in subsection 2(d) of the Canadian Charter of Rights and Freedoms and article 3 of Quebec’s Charter of Human Rights and Freedoms. It is implicit in the exercise of this freedom that there should be no impediments to the internal management and decision-making of labour organizations. By requiring the public disclosure of strategic information, however, the federal government is interfering in the activities of labour organizations by requiring them to make specific information public and imposing upon them the form that such disclosure must take. This unique requirement, it must be pointed out, has the effect of weakening labour organizations in their relations with employers and impeding freedom of association by requiring labour organizations to disclose to the public all of their activities and expenditures.

Honourable senators, that statement was clear. Bill C-377 will not meet the constitutional test of the Canadian Charter of Rights and Freedoms. Once again, the Supreme Court of Canada will examine the constitutionality of a Harper government bill and taxpayers will, once again, end up with a huge bill.

Honourable senators, I would like to remind this chamber that, pursuant to subsection 52(1) of the Constitution Act, 1982, the Constitution of Canada is the supreme law of Canada, and any law that is inconsistent with the provisions of the Constitution is, to the extent of the inconsistency, of no force or effect. Parliament must therefore comply with this provision when it passes a law. It only ends up costing Canadian taxpayers money when the government ignores the experts, ignores the facts, ignores the doctrine and ignores the jurisprudence. These costs are irresponsible and unfair.

I’d like to conclude my speech by reading some excerpts from a letter from the Honourable Francine Landry, the Minister of Post-Secondary Education, Training and Labour in New Brunswick, who provided an excellent summary of the bill, and I quote:

In response to the revival of Bill C-377, An Act to Amend the Income Tax Act (requirements for labour organizations), the Government of New Brunswick wishes to reiterate its concerns regarding the Bill.

The Government of New Brunswick is concerned by the financial disclosure requirements proposed in Bill C-377 because, in our opinion, the internal administration of union business is primarily a matter between the union and its members. The issue of union financial disclosure is addressed in New Brunswick’s Industrial Relations Act which includes financial accountability provisions to ensure fiscal transparency by organized labour to its members. Under these provisions, union members may request a copy of audited financial statements confirming appropriate management and administration of union funds. The Labour and Employment Board has authority to enforce the provisions if necessary . . .


The Hon. the Speaker pro tempore: Senator Jaffer, would you like more time?

Senator Jaffer: May I have five more minutes?

Hon. Senators: Agreed.


Senator Jaffer: Thank you.

. . . New Brunswick data demonstrates that no complaints have been filed with the Board in the last six years and very few have ever been brought for adjudication. This confirms that existing protections available in New Brunswick’s legislation meet the expectations of union members. It also suggests that the democratic principles operating within union structures are responsive and effective in meeting standards of accountability and transparency demanded by union members.

The regulation of labour law, including governance of trade unions, is an area of provincial jurisdiction. It has been well-settled since the Privy Council decision in Snider (1925), that jurisdiction over labour relations rests with the provinces. Bill C-377 focuses on imposing reporting obligations on unions, rather than managing federal taxation. As noted above, New Brunswick already effectively legislates the subject-matter proposed under Bill C-377.

We consulted with public and private sector unions in New Brunswick and all respondents expressed concerns about the potential implications of Bill C-377. These concerns include:

Impact on key constitutional rights:

privacy rights . . .;

Charter rights . . . .

Significant administrative and financial burden to generate the comprehensive reports required by the Bill, particularly for small Locals. . . .

As the Minister responsible for labour in the province, and in light of the concerns highlighted above, it is my strong recommendation that this Bill not proceed.


Honourable senators, together we can defeat this bill because this bill does not belong within our jurisdiction. This is a provincial matter. Thank you.

(On motion of Senator D. Smith, debate adjourned.)