April 19, 2004 (37th Parliament, 3rd Session)


John Bryden


Mr. John Bryden (Ancaster—Dundas—Flamborough—Aldershot, CPC)

Mr. Speaker, it is a pleasure to rise in this debate because it is important on the opposition side to point out not just negatives in a document like the budget, but also positives even when those positives fall far short of what could be done by the government.
I would like to comment on the provisions in the budget pertaining to charities and draw the attention of the House to a very important rule change that has occurred in the budget pertaining to the 80% disbursement rule.
The House will recall that in 1996 I did an MP's report on charities called “Canada's Charities: A Need for Reform”. It was a litany of all kinds of shortcomings in the oversight of Canada's $90 billion charity industry comprising some 80,000 organizations. I regret to say that the government has always been terribly slow to respond to the great number of recommendations that I made in that report.
One of the most important recommendations was the observation that the 80% rule, as it existed up until this budget, was extremely flawed. What it said was that all charities had to spend 80% of their tax receiptable donations on charitable activities. That sounds wonderful, but what it really means is that only a tiny percentage of a charity's income--that income that pertains to tax receiptable donations--actually has to be spent on charitable activity.
In fact, charities and charitable foundations were transferring funds to other charitable organizations and those charitable organizations did not have to use any of that money whatsoever on charitable activity. Often there were situations where a charity would get the main portion of its funding from another charity, like the United Way for example. It would amaze members to know that up until this budget, charitable organizations receiving money from the United Way did not have to use any of that money on charitable activity, none whatsoever.
After eight long years of billions and billions of dollars of abuse by many charitable organizations, the government has finally plugged part of the loophole in this budget. It has said that any transfers coming from one charitable organization to another charitable organization are covered by the 80% disbursement rule. So, when the United Way gives money to a small charity, that small charity must spend 80% of that money on actual charitable activity, not on paying salaries, not on administration, but actually on the charitable activity.
I regret to say, Mr. Speaker, that having taken a fine first step, the government did not take the second step. That second step would ensure that all transfers to charities are subject to the 80% rule because the majority of transfers to charitable organizations, particularly hospitals, for example, or any large charitable organization that is providing social and medical services, most of the money that they receive is from government.
The difficulty is, if the 80% rule does not apply to the money received from government, that large charities like hospitals, which are a classic example, could spend all kinds of money on salaries and administration rather than on caring for the sick and the injured or paying doctors salaries. Thus we have the situation where large hospitals like the Hospital for Sick Children in Toronto pay a CEO $500,000. This is the kind of abuse that is possible because hospitals are not under the 80% rule when it comes to spending government money.
I would like to make the observation that the Prime Minister has suggested that he wants to put more money into health care and he wants to make it conditional on that money being used properly. All he has to do is to make hospitals subject to this 80% rule so that when they receive money from government, they have to use 80% of it on providing charitable activity.
Mr. Speaker, the other aspect of this problem is that there were many other opportunities that the government had to increase transparency of large and small charitable institutions. It is all part of a package. It has made one very important step.
It is providing in the budget access of the public to the financial statements of charities. Never was that opportunity in existence before. What would happen is that if we wanted to find out a charity's spending practices, the only access we had to any kind of document that described those spending practices was the T-3010 form, which can be filled out by anyone. There is no requirement that an accountant do it. It is a simple form that provides minimal information.
So the prospect, particularly with large charities where they have to present a financial statement to their boards of directors and their boards of directors demand that a chartered accountant or public accountant or some qualified person examine these financial statements, the fact that these are now going to be available to the public is indeed a very, very important step, and I am very glad to see it. But again, the government has failed to take advantage of the opportunity to spread the transparency around so that we can see into these large institutions that are spending mostly government money.
I proposed in 1997 that large, non-profit organizations and charities come under the Canada corporations act so that there are the same standards of corporate governance that apply to all charities, to all organizations that use public funds, particularly, again, large hospitals and large institutions that provide social and medical services.
I regret to say that there are no standards of governance across large institutions like the Cancer Society or any of the large hospitals. I would suggest that if they were committed to the same type of standards of governance and transparency that exists in the Canada corporations act for for-profit organizations, we would see enough into those organizations that we would be able to see the management inefficiency. We would see the kind of nepotism that must exist in any large institution that does not have oversight. And if we could see that, we would correct it and there would be a huge saving to the taxpayer.
We do not have to put more money into health care. All we have to do is put in a regime of transparency and accountability, a real legislated regime, not just hope and smoke and mirrors. This has been on the agenda. I have been talking about this particular issue for seven years now. Seven years and there has been no progress other than a small crumb: that the financial statements will now be available from large charities. This is not good enough.
I despair. We work very hard on these things and it does not matter what side of the House we are on. I tried very hard to get this agenda forward. I thought I was making progress a few years ago, but what did the government do? It went out to the charitable sector and asked them what they thought. And so the voluntary sector round table and various other charitable organizations and institutions, and sometimes the very people, the very individuals I criticized in my report for failing to live up to their obligations of transparency and accountability, became the advisers to government.
And so we see in the budget document that credit is given to the charitable organizations that advise the government to do the least possible.
Mr. Speaker, that is what it amounts to. Sometimes we really, really wonder around here, when politicians spend years working on a problem and develop expertise and they cannot be heard by their own government.
So yes, Mr. Speaker, progress has been made, and I am delighted to compliment any small move forward in this file, which is worth billions of dollars and affects the lives of countless Canadians. Any small move forward is a positive thing, Mr. Speaker, but this is yet another, another opportunity lost.

Topic:   Government Orders
Subtopic:   Budget Implementation Act, 2004
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