Andrew Kania Liberal Brampton West, ON

Mr. Speaker, “Salaries at some charities make a mockery of the concept of charity”. That is a quote from the member for Mississauga East—Cooksville, and she is correct. That is why I wish to congratulate her on introducing this bill which seeks to protect and stand up for donors, recipients of charitable funds, and taxpayers. I am honoured to be a seconder of this bill.

The purpose of this bill is twofold: first, to limit the global compensation of employees of charities to $250,000 per year, which is a substantial sum; and second, to allow full public disclosure of the incomes of the top five employees of charities.

In terms of the analysis of the bill and the $250,000 limit, the practical effect of imposing this, if it were to be exceeded by a charity, would be to provide the minister with the discretion to revoke the charitable status. This would not be automatic. It would allow the minister to use discretion in a particular circumstance if there were some reason that this should not take place. As well, there is an effective date of 2011 for this bill to provide ample time for transition purposes.

There are multiple reasons to support this bill. First, we must protect the recipients of charity, Canadians in need. We must ensure they are not taken advantage of and that the money raised to help them actually reaches them to the greatest extent possible. Every dollar spent on an executive that is in excess of what is reasonable is a dollar taken away from a recipient, and that must end.

Second, we must protect donors. Most donors are ordinary people who dig deep into their pockets in order to help others. It is simply unfair to these ordinary donors, ordinary Canadians, to allow such executives to abuse their generosity and, frankly, to earn far in excess of what most Canadians earn.

Third, we must protect charities and the charity system itself. Every year Canadians dig deep and contribute billions to 85,000 registered charities. They will not do so if they believe the system is broken, if their trust has been violated and, frankly, if their money is being wasted on exorbitant compensation packages for executives.

The SickKids example, which has already been mentioned in the House today, is relevant. When the Toronto Star broke the story that the head of the SickKids Foundation took home $2.7 million in salary and severance in one year, people were rightly shocked and outraged.

Think about the average donor who is providing a donation of $30 or $50, whatever it may be, digging deep to help. Think about the recipients of charities who need that money to live. When they hear that somebody is making $2.7 million from moneys that should be used to help, they are outraged and they should be.

What is important in terms of the integrity of the charitable system is that once the SickKids Foundation story broke, it hurt the foundation. There was a backlash from donors. The foundation had to set up a specific hotline to take questions and address concerns. The SickKids Foundation received a 10% decrease in donations and had to lay off 38 staff members.

I ask, how is it right that that individual received $2.7 million in one year, and then the foundation itself was hurt by a decrease in contributions and 38 innocent Canadians received a pink slip, a layoff notice?

If this legislation had been in place at the time, it would have stopped this. The foundation would not have been allowed to pay $2.7 million to that executive. The SickKids Foundation would not have received a 10% reduction in contributions, and those innocent 38 people would not have been laid off.

It is instructive to reflect upon the recent changes the Conservatives did make for disclosure provisions. The disclosure provisions, although admittedly an improvement, are not enough. The $2.7 million salary was only learned of because the foundation also operates in the United States and had to file there.

The changes that have been made by the Conservatives create a continuing problem, because despite the new filing requirements introduced by them, there are no exact salary figures or names of the highest paid individuals that must be disclosed. Instead, charities must identify the number of people who earn a salary within a certain range, with a top range of “$350,000 and over”.

Using the SickKids Foundation as an example, if that foundation had not also operated in the United States where there are strict filing and disclosure requirements, and we only had the benefit of the new regime that the Conservatives introduced, the only thing we would have known is that at least one person, if not more, at the SickKids Foundation made more than $350,000. We would not have had the right to know that $2.7 million had been paid to an individual. Although the changes introduced are an improvement, they do not go far enough. This private member's bill must be supported in order to ensure that we have full disclosure of this information.

The other reason we must support this bill is to protect taxpayers. In the most recent year, the taxpayers of Canada contributed almost $3 billion in federal tax credits. Every Canadian has the right to know the salaries of such executives and provide reasonable limits to these taxpayer-supported activities. We are supporting these executives in their positions. We have a right to know how much they are making and we have a right to set reasonable limits on what that income is.

In terms of integrity, it must be remembered that in 2007, Canadians donated a total of $10 billion and volunteered 2.1 billion hours. If that goes down because people do not believe that the system can be trusted and people are being treated unfairly, Canadians will suffer. Six years ago, in 2004, the United States recognized it had a problem regarding disclosure. The IRS announced new enforcement efforts to identify and halt such abuses. The IRS said:

We are concerned that some charities and private foundations are abusing their tax-exempt status by paying exorbitant compensation to their officers and others.

In Canada, nothing has been done to remedy the situation apart from the small change that I noted, which does not solve the problem.

This outrageous compensation is a serious problem in Canada. It is not limited to the one example of the SickKids Foundation that I noted. That perhaps is what broke the story, but it is not the only example. One reporter stated:

It seems for some of Canada’s best known charitable organizations, charity begins in the chief executive’s office.

Some of Canada's largest and best known charities pay some of their top officials more than $300,000 per annum, which is more than deputy ministers make. Frankly, it is more than most Canadians make. Chief executives at Plan International Canada Inc., the Heart and Stroke Foundation of Ontario and York University Foundation all were paid more than $300,000 last year. The BC Children's Hospital Foundation and Toronto General and Western Hospital Foundation paid top executives between $250,000 and $300,000 per year.

Some people will oppose this legislation, but I ask why. First, why are they afraid of transparency? What are they trying to hide? Why would they not want to disclose what the top executives actually are making on an individual basis? Taxpayers have a right to know. Donors who provide the money have a right to know. Canadians who are receiving the benefit of these dollars have a right to know.

Second, is $250,000 not enough? It is enough, but more than that, setting a limit will level the playing field in Canada. Tim Price, chairman of the York University Foundation board, said it paid CEO Paul Marcus $394,000 in salary and bonus last year and that the payment “was in the context of the competitiveness of talent to be able to get a first-class person”. The foundation would not be required to have paid $394,000 to that individual if there was a cap of $250,000.

Frankly, people would not be seeking to move around and drive up the cost of compensation packages if there was a limit. Canadians who need these funds would actually receive them.

There are very large Canadian charities that already are compliant, such as Big Brothers Big Sisters of Canada, United Way of Canada and the Red Cross. There is no reason that everybody cannot be compliant.