Will The Charbonneau Commission Change Anything?

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The final report of Quebec’s Charbonneau Commission was released last month and with costs estimated at $35 million. The public is justified in asking our politicians what taxpayers will receive in response. Is this going to be another report that sits on a shelf, or will the political level now address the systemic issues that gave rise to the rot and corruption that so enthralled those who followed the proceedings?

There are two such issues that demand immediate attention. First, in Quebec only unionized employees are allowed to work on construction projects, despite the fact that roughly seven out of 10 Canadian construction workers are not unionized. For over 30 years, a series of severely restrictive laws and regulations have disenfranchised thousands of workers who do not believe they should be required to join a union in order to work in Quebec’s construction industry.

Shrinking the competitive pool of workers by this magnitude automatically restricts competition. Furthermore, these laws created an environment in which a small group of union halls were allowed to dictate who is hired for each job. Witnesses before the Commission talked about union bosses using their power to pick workers to advance their own interests on construction sites.

Quebec’s labour laws allowed a situation under which the unscrupulous were able to take advantage and benefit themselves at the expense of taxpayers. It is not surprising to hear the revelations of collusion and bid-rigging that result from a system that allows corruption to flourish in the dark, behind closed doors. That is a natural outcome of this closed system.

The remedy is to change the system itself, though unfortunately that is not among the report’s recommendations. Quebec should follow the path of the other provinces and allow open shops to compete. No longer would there be the select few, cozily cutting up the cash in the backrooms, deciding who will be hired for which jobs without the need to really compete for contracts.

While Quebec is the worst case scenario for these practices, similar arrangements exist in many municipalities across Canada, wherein a select union will have a monopoly over all public tendering. That practice needs to be replaced with an open system that allows all contractors — union and non-union — to compete for public works, otherwise what happened in Quebec will happen elsewhere.

A second area that needs attention is union financial transparency. The testimony at Charbonneau was often salacious, with tales of the Province’s largest union being infiltrated by the Mafia and Hells Angels, death threats for dissenters, million dollar investments of union funds in biker-owned strip clubs and massive financial fraud involving some labour leaders.

The good news for our politicians is that a legislative solution to address this particular issue is already in place. Parliament passed legislation in June that will require unions and other labour organizations to publicly post annual financial statements, including salaries paid to top employees and certain expenditures over $5,000.

The first reports under this new transparency regime are due in 2016. There is a catch, however. The new Liberal Government in Ottawa has promised labour leaders that it will repeal this legislation. In fact, doing so is in the mandate letters of the new cabinet.

The Charbonneau report does not make such a policy particularly palatable to the general public, which is strongly supportive of union financial transparency. For example, a Forum Research poll in July found 62 per cent of Canadians support the transparency legislation passed by Parliament, with only 18 per cent opposed. Moreover, the most vocal opposition comes from union leaders themselves, which is not surprising given what was revealed about their financial dealings before the Commission.

A star witness at the Commission who later testified to the Senate when it studied the financial transparency bill was the former high-ranking union official turned whistleblower Ken Pereira. In detailing the financial mismanagement he discovered within his own union, Pereira told the Senate that “All Canadians, not just unionized Canadians, need detailed online financial disclosure of all tax exempt union organizations to put an end to the abuse of tax deductible union dues.” Pereira’s revelations were such a hit that his life was threatened.

This is the system and culture that those opposed to financial transparency seek to defend. It forces the public to rely on whistleblowers risking their own livelihoods (and lives) to reveal financial mismanagement within unions. While Justice Charbonneau recommends greater whistleblower protection, the better solution is transparency that does not require a whistleblower in the first place.

The pledge to repeal the federal union financial transparency legislation must be scrapped. It is unacceptable for politicians to listen to the revelations from the Charbonneau Commission, or other tales of union corruption or financial mismanagement, and absolve themselves of any responsibility to deal with it. If this happened in any other sector, would the Government response be to repeal legislation that addresses the problem? Why then is it acceptable when it comes to unions?

These two easy steps address basic principles of how our systems should work. First, true competition for public works provides greater value to the taxpayer and eliminates privileged access to contracts for the chosen few. Second, shining a light on union finances will help root out any cases of mismanagement or abuse.

These are hardly radical propositions. In fact, they underscore so many aspects of our political and economic systems that it is difficult to comprehend why they are not in place in all jurisdictions already. Remove competition and transparency and you create the conditions for corruption to take place.

The Charbonneau Commission identified the problems. Now let’s see if our politicians are willing to implement the solutions.


Source: HP

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