Canada Passes Union Transparency Legislation

Canadian national flagLabor leaders, especially corrupt ones, resent it when outsiders inquire into how member dues are spent.  As in the U.S., this is an observable pattern in Canada.  And as in the U.S., widespread discontent has led to tangible reform.  On June 30, the Canadian Senate voted 35-22 to approve a bill, C-377, to mandate union financial accountability.  The measure, supported though not sponsored by Prime Minister Stephen Harper’s Conservative government, had traveled a long road since initial passage by the House of Commons more than three years ago.  The new law will force unions to make available to the public detailed data.  Unions and political supporters are denouncing the legislation as an attack on workers’ rights, and vow to overturn it in court.  Yet the weight of public opinion stands in the way – and with good reason.

Union Corruption Update addressed this issue at length in June 2012.  Bill C-377 was introduced as a means of forcing Canada’s unions to become more transparent about their finances with members and the general public.  The bill, among other things, would require each union to disclose all transactions of at least $5,000, and the names of all officials who make at least $100,000 a year, to the Canada Revenue Agency.  The agency in turn would post this information on its website.  Supporters of the measure argued that the bill would shed light on potential acts of theft and the routing of funds for partisan political causes that members might find objectionable.  If all this sounds familiar, it should.  The measure was based on our own Labor-Management Reporting and Disclosure Act (i.e., the Landrum-Griffin Act of 1959), and more specifically, regulations pursuant to the Act drawn up a dozen years ago by the U.S. Department of Labor under then-Secretary Elaine Chao in response to National Legal and Policy Center recommendations.  An incensed AFL-CIO responded with a federal lawsuit to block the rules, especially for the expanded Form LM-2, claiming they placed an undue burden on member unions and restricted member free speech.  For the most part, the challenge failed.  The result has been that union corruption in America has become more detectable and less prone to underworld infiltration.  And the costs of compliance have turned out to be far less than originally projected by union leaders.

The battle for passage of Bill C-377 was anything but easy.  Under the Canadian system, a bill must be passed in all stages – first reading, second reading, committee stage, and third reading – in both the House of Commons and the Senate before it can receive ceremonial Royal Assent and become an Act of Parliament.  Moreover, this was a Private Member’s Bill, not a government bill.  That is, the prime sponsor cannot be a cabinet minister.  In this case, the lawmaker was Russ Hiebert, a Conservative in the House of Commons from South Surrey-White Rock-Cloverdale (Vancouver area).  While each type follows the same legislative process, a private bill offers a smaller window of opportunity for debate.  The House of Commons had passed the "third reading" (i.e., final) bill in December 2012 by a 147-135 vote, but opponents in the Senate delayed action through lobbying and procedural maneuvers.  In the end, however, supporters won the day.

Union leaders and their allies in the Liberal Party and the New Democratic Party (NDP) are highly displeased, having maintained from the start that the measure targets unions but not other types of private organizations.  Ken Georgetti, president of the Canadian Labour Congress, in a July 2013 article in The Huffington Post, denounced the bill.  The measure, he argued, "singles out unions for discriminatory treatment, invades the privacy of individuals, violates provincial jurisdiction, and is likely unconstitutional."  Seven months earlier, in December 2012, after House of Commons passage, NDP leader Thomas Mulcair declared: “This is an attempt by the Conservatives to break down the system of representation and protection of workers’ rights in Canada.”  He added:  “(The law) will be thrown down by the courts.  I have no doubt about that.”

The problem with such statements is that they assume that unions are analogous to voluntary fraternal lodges or neighborhood associations.  In point of fact, there is very little about union membership in Canada that can be called voluntary.  Canadian unions enjoy the same monopoly privileges of exclusive representation and forced dues collections as here – and their country doesn’t have the equivalent of our Right to Work laws at the provincial level.  About 30 percent of the Canadian work force belongs to a union, far higher than the 11 percent here.  This goes a long way in explaining the de facto grant of court immunity to unions in the face of a challenge from a dissenting member or group of members via Duty of Fair Representation.  Virtually all cases before the Canadian Supreme Court seeking redress of grievance are dismissed outright. 

Supporters of C-377 understand that if unions are to continue to enjoy monopoly privileges, they should expect to have their finances scrutinized more than other types of organizations.  “Transparency and accountability are fundamental to democracy,” said Terrance Oakey, president of Merit Canada, an association of open-shop building contractors.  “If labor organizations want to enjoy the dual benefits of mandatory dues collection and beneficial tax treatment, they must earn it by operating in a transparent manner.”  Similarly, Peter Coleman, president of a Toronto-based limited-government advocacy group, the National Citizens Coalition, stated immediately after Senate passage:  “These same union bosses are desperate to maintain their cushy privileges and their complete lack of oversight.  Now they are finally going to be accountable to taxpayers, and that is a good thing for all Canadians.”

Opinion polls have revealed that a large majority of Canadians – including union members themselves – favor the C-377 law.  We in America should take heed.  About a half-million workers in Canada belong to a local affiliate of a member union of our own AFL-CIO.  That figure no doubt includes any number of potential dissenters — assuming they have a right to dissent.  The new C-377 law expands those possibilities.  


Canadian Legislation Would Require Union Transparency