Conservative senators took the rare step Friday of overruling the chamber’s speaker in a bid to break a logjam and pass a law critics say would hit thousands of pension and mutual funds with “staggering” compliance costs.
The proposed law -- Bill C-377 -- is supported by Prime Minister Stephen Harper’s Conservatives and is aimed at boosting labor-union transparency. It would require disclosure to government of a wide range of union spending.
Finance groups, labor leaders, seven provincial governments and even National Hockey League players oppose the bill, partly because many warn its language is too broad and may force disclosure of personal information and financial data with little link to a union.
The fight boiled over in the final hours of Canada’s current Parliament, with Conservatives using procedural tactics to push the bill through. The speaker, also a Conservative appointed by Harper, dismissed those efforts, so Conservative senators voted instead to overrule him -- a move that amounts to changing the Senate rules on the fly.
“It’s a black eye for the Senate, it’s certainly a black eye for government,” said James Cowan, leader of the opposition Liberal senators. “If we start changing the rules because we can’t win within the rules, then we have chaos.”
Conservative Senate Leader Claude Carignan didn’t respond to questions sent to his office Thursday. “This is within the rules,” he said on Twitter Friday, adding Cowan and the Liberals voted in 2009 to overrule a speaker’s ruling.
The Liberals had pledged to filibuster and, in doing so, extend a Senate sitting that had been due to adjourn and not return until after a fall election. The threat led Conservatives to overrule their speaker to limit debate and force a vote.
C-377, introduced by Conservative backbencher Russ Hiebert, creates new compliance requirements and forces disclosure of transactions over C$5,000 ($4,057) by any fund with at least one union member, critics say. Hiebert denies that.
The disclosure rules could inadvertently include fund purchases and sales, share purchases and sales and health benefits paid and the individuals who received them, critics say. Canada’s privacy watchdog warned the information captured by the legislation is “very sensitive.”
“The disclosure required will be staggering and there will be significant compliance costs,” the Canadian Bar Association said in its submission to lawmakers.
The Investment Funds Institute of Canada estimates 9,000 mutual funds in Canada would be affected, although it hasn’t yet calculated how much the new rules would cost.
It would have “costly unintended consequences for Canada’s investment funds industry, to the detriment of the millions of Canadians,” Joanne De Laurentiis, IFIC President, said in a written submission to the Senate committee in January.
“It would involve reviewing every account with every individual account holder” to see if they are union members, said Sara Clodman, the group’s senior manager public affairs.
The bill would require disclosure to the Canada Revenue Agency, which would then make the information public. It’s the broad definition of “labor trust” that could inadvertently capture mutual funds and others, critics warn.
However, Hiebert said a clause in the bill excludes any fund whose activities are “exclusively” limited to administering, managing or investing of a retirement, health, insurance or other such plan.
“There is no truth to the suggestion that pension funds, health care benefits or any other regulated funds will be subject to disclosure,” Hiebert said in a written statement.
Senate rules forbid the fast-tracking of non-cabinet bills like C-377, known as private member’s bills, and the Senate speaker has ruled against previous attempts to do so. Current Speaker Leo Housakos upheld that Friday, saying the Conservative motion “violates a fundamental distinction in our rules and practices” and was out of order.
Carignan then requested a vote to overrule him, which passed with the Conservative majority. Cowan said he expects the Conservatives to force a vote and pass the bill next week.
If the bill doesn’t pass before adjournment, it will die when the scheduled Oct. 19 election is called, no later than Sept. 13.
The National Hockey League Players’ Association, representing all the league’s players, was among the critics. It warned the disclosure rules would hurt its ability to strike deals, including those for video games, trading cards and team jerseys.
“The parties with whom we work have a reasonable expectation that the terms of such agreements will not be made public, and requiring disclosure could well make it more difficult for us to conduct those negotiations, reach and administer those agreements,” NHLPA executive director Donald Fehr wrote to the Senate in April.
The NHLPA has “significant concern” with the “serious substantive and constitutional issues arising out of this legislation,” Fehr added.
Hiebert said players’ associations in other major leagues already are subject to disclosure.