Canada: Government of Canada Introduces Proposed Federal Accountability Act

On April 11, 2006, the minority Conservative government introduced its much anticipated first Bill, the Federal Accountability Act (the FAA), along with a companion Action Plan, in a move aimed at strengthening the accountability of the Canadian government and increasing the level of transparency and oversight in federal government operations.

Of particular relevance to Osler clients are those provisions of the FAA and Action Plan aimed at:

• restricting the financing of federal political parties and candidates;

• toughening the Lobbyists Registration Act;

• introducing further controls on government procurement and contracting;

• increasing the control mechanisms surrounding government grants, contributions and loans;

• increasing protection for government whistleblowers;

• extending the scope of the Access to Information Act;

• establishing a Parliamentary Budget Officer to advise the House of Commons and Senate on the state of the Canadian economy; and

• creating a Director of Public Prosecutions.

In an effort that the government states is intended to "rebuild public confidence in the integrity of the democratic process, and to ensure that influence cannot be bought through political donations", the FAA would:

• amend the Canada Elections Act:
  • to completely ban contributions to federal political parties and candidates by corporations, unions and organizations (annual totals of up to $1,000 to the registered associations, nomination contestants and candidates of a particular registered party were previously allowed);

  • to lower to $1,000 (previously $5,000) the annual limit on contributions by individuals to a political party or its local entities (candidates, nomination contestants and district associations);

  • to lower to $1,000 per contest (previously $5,000) contributions by individuals to federal party leadership contestants;

• enact a Conflict of Interest Act ¹ to create a new Conflict of Interest and Ethics Commissioner as an officer of Parliament, establish qualifications for the position of Commissioner and give legislative force to expanded conflict of interest and post-employment rules for public office holders. Examples of provisions additional to existing conflict of interest restrictions² include:
  • barring public office holders (and their family members) from accepting any "gift or other advantage"³ that might reasonably be seen to have been given to influence them in the exercise of an official power, duty or function,⁴ from accepting travel on non-commercial chartered or private aircraft without permission from the Commissioner, and from contracting with or providing employment to family members or facilitating employment of family members in public sector entities, except under impartial administrative processes;

  • requirements for "reporting public office holders" (including Ministers of the Crown, and senior members of their staff, and senior public servants appointed by a Minister or the government)⁵ to disclose to the Commissioner within seven days all firm offers of outside employment;

  • prohibiting members of the House of Commons from accepting benefits or income from certain trusts,⁶ and related requirements to dissolve such trusts or barring use of the proceeds for political purposes upon order of the Commissioner; and

  • restricting the ability of Minister staff members to secure employment in the federal public service without competition following completion of their service.

The government’s Action Plan identified a number of weaknesses in the Lobbyists Registration Act, including a lack of compliance with lobbyist registration requirements, insufficient levels of disclosure in lobbyist registrations, and a lack of independence, power, and resources for the Registrar of Lobbyists to conduct effective investigations of possible infractions. To address these issues, the FAA would amend the lobbyist legislation (which would be renamed the Lobbying Act) to:

• establish a Commissioner of Lobbying as an independent officer of Parliament⁷ to administer and enforce the Lobbying Act;

• give the Commissioner subpoena and search powers, empower the Commissioner to bar those who have committed offences under the legislation from lobbying for a period of up to two years, and empower the Commissioner to publish the names of violators of the Lobbying Act in reports before Parliament;

• require paid consultant outside (paid) and in-house employed lobbyists to file public monthly reports (within 10 days of undertaking to lobby and no later than 15 days after the end of every month) of their communications or contacts with "senior public office holders"⁸ regarding each lobbying undertaking, and to empower the Commissioner to request those public office holders to confirm or correct the information provided by the lobbyists and to report to Parliament the names of those senior public office holders who do not respond to such a request;

• require consultant lobbyists to file "no activity" reports every five months for each non-active registration, and to renew or terminate, as applicable, a registration for each lobbying undertaking every six months;

• ban any payment or other benefit that is contingent on the outcome of any consultant lobbyist’s activity or their success in arranging a meeting with a public office holder (the FAA would similarly amend the Financial Administration Act to require that all government contracts contain provisions that prohibit the payment of contingency fees to a lobbyist);

• prohibit former senior public office holders from undertaking lobbying activities (whether as a consultant or in-house lobbyist) for a period of five years from the day on which they cease to be a senior public office holder (subject to certain exceptions where the individual is employed by a corporation and lobbying activities would not constitute a significant part of their duties, or where exempted by the Commissioner in the case of executive transferees from the private sector or junior staff members);

• extend the period during which prosecution under the Lobbying Act can be initiated to five years after the day on which the Commissioner became aware of the subject-matter of the proceedings, but not later than 10 years after the day on which the subject-matter of the proceedings arose; and

• increase the criminal penalties for consultant and in-house lobbyists who fail to file a return or knowingly make a false or misleading statement in a return or other document submitted to the Commissioner to a fine not exceeding $50,000 on summary conviction or $200,000 on proceedings by way of indictment, and to a fine not exceeding $50,000 for a contravention of any other provision of the Lobbying Act.

The government’s Action Plan states that it is "important that the bidding process for government contracts, including those for polling and advertising, be fair, open, and transparent". Accordingly, the FAA would amend the Auditor General Act, the Department of Public Works and Government Services Act and the Financial Administration Act to:

• create a statement of procurement principles that commit the government to promoting the fairness, openness, and transparency of the government contract bidding process;

• require that specified integrity provisions be included in government contracts against corruption, collusion, and the payment of contingency fees in the procurement process, as well as provisions to allow the Auditor General to conduct funding audits; and

• create a Procurement Auditor to: review government procurement practices in order to ensure fairness and transparency, and to make recommendations for improvement in procurement practices; review complaints from aggrieved Canadian suppliers in respect of contracts for goods and services covered by the Agreement on Internal Trade or below the monetary thresholds in that Agreement ($25,000 for goods and $100,000 for services); review complaints concerning the administration of government contracts for goods and services; and ensure that an alternative dispute resolution procedure is provided for government contracts.

As a means of enabling parliamentarians to hold the government to account for its grants and contributions spending, the FAA would amend the Auditor General Act to strengthen the powers of the Auditor General. Similar to the manner in which the new Procurement Auditor would be empowered to oversee government contract procurement, the FAA would enable the Auditor General to inquire into the use of funds provided to a "recipient" by the government pursuant to a "funding agreement", and to make determinations as to whether a recipient of government funding:

• has failed to fulfill its obligations under any funding agreement;

• has used money received under a funding agreement without due regard to economy and efficiency or has failed to establish satisfactory procedures to measure and report on the effectiveness of its activities in relation to the objectives for which it received funding under any funding agreement;

• has failed to faithfully and properly maintain accounts and essential records in relation to any amount it has received under any funding agreement; or

• has expended money received under any funding agreement without due regard to the environmental effects of those expenditures in the context of sustainable development.

In addition, recipients of government funding will also be required to maintain records of the funding received in accordance with prescribed standards, and to provide information and records to the Auditor General on request. The extension of the Auditor General’s powers will affect private sector companies and organizations that receive contributions from the government, grants for research or other purposes, or operational funding.

Part 3 of the FAA would amend the Public Servants Disclosure Protection Act (the federal whistleblower protection legislation) to:

• establish the Public Servants Disclosure Protection Tribunal and empower it to make remedial orders in favour of victims of reprisal, and to provide job reinstatement and compensation to victims of reprisal for lost remuneration and damages up to $10,000, including the ordering of disciplinary action against those who took or directed a reprisal;

• extend the protection of the legislation to all persons who report wrongdoings to the Public Sector Integrity Commissioner, not only to public servants;

• require public reporting by deputy heads/senior management and the Public Sector Integrity Commissioner where wrongdoing is confirmed as a result of whistleblowing;

• extend the prohibitions against reprisals to cover broader employment and government contracting activities; and

• allow the Public Sector Integrity Commissioner to provide access to legal advice to whistleblowers or potential whistleblowers (up to $1,500 – $3,000 in legal fees) and to make awards to whistleblowers of up to $1,000. (It is doubtful that these amounts will be sufficient to provide a monetary incentive to potential whistleblowers to come forward with a complaint.)

The FAA would implement certain reform proposals for the Access to Information Act (the ATIA) recommended by the Information Commissioner in a September 2005 report to the Standing Committee on Access to Information, Privacy and Ethics, including:

• expanding the coverage of the Access to Information Act (as well as the coverage of the Privacy Act) to include officers of Parliament ( the Information Commissioner, the Privacy Commissioner, the Commissioner of Official Languages, the Chief Electoral Officer, the Auditor General, the Public Sector Integrity Commissioner and the Commissioner of Lobbying) subject to certain exemptions from the obligation to disclose relating to investigations carried out by these offices;

• expanding the coverage of the Access to Information Act to include the following Crown Corporations that had not been subject to the Act before: Canada Post, Via Rail Canada, the Canadian Broadcasting Corporation, Atomic Energy of Canada, Export Development Canada, the National Arts Centre, the Public Sector Pension Investment Board, Canada Foundation for Innovation, Canada Foundation for Sustainable Development Technology, and the Canada Millennium Scholarship Foundation (again subject to exemptions from disclosure protecting the commercial information of these corporations);

• providing a positive duty for the head of a government institution to, without regard to the identity of the person making a request for access to a record under the control of the institution, make every reasonable effort to assist the person in connection with the request, respond to the request accurately and completely and, subject to the regulations under the ATIA, provide access to the record in the format requested;

• providing a 15 year exemption from disclosure for draft reports of internal audits of a government institution and related audit working papers that are delivered to the government institution within two years of the commencement of the audit. This exemption does not appear to cover final reports of internal audits of government institutions.

The government has also tabled a discussion paper on issues regarding amendments to the exemptions from disclosure, the request process, application of the legislation to Cabinet records and broader coverage of the legislation that were recommended by the Information Commissioner to the Standing Committee on Access to Information, Privacy and Ethics in September 2005.

In a novel initiative, the FAA proposes to establish a Parliamentary Budget Officer within the Library of Parliament who will have a mandate to provide analysis to the House of Commons and the Senate on the state of Canada’s finances and trends in the national economy. Normally, economic advice to Committees of the House of Commons and Senate is provided by the Department of Finance, other government departments or by economists or witnesses to Committee proceedings who advocate various measures or policies on behalf of their companies or clients. The Parliamentary Budget Officer will be specifically mandated to generate advice on economic issues for Parliament that is independent of the government or other Committee witnesses. The Parliamentary Budget Officer will also be mandated to undertake research at the request of certain Parliamentary Committees in order to better equip those Committees in their consideration of economic measures proposed by the government. Provisions in the legislation will also require government bodies to equip the Parliamentary Budget Officer with data necessary for the performance of this mandate. These provisions have potential to significantly change the outcome of House of Commons Committee deliberations on the government spending estimates and on economic or money bills.

Currently, federal criminal offences are prosecuted by the Federal Prosecution Service of the Department of Justice. However, according to the government’s Action Plan, it "is important for transparency and for the integrity of the federal justice system that prosecutions under federal law operate independently of the Attorney General of Canada and of the political process". Through the enactment of the Director of Public Prosecutions Act, the FAA would:

• create the Office of the Director of Public Prosecutions, which will reside outside the Department of Justice; and

• grant the Director of Public Prosecutions (or their delegate) the jurisdiction to: initiate and conduct federal prosecutions on behalf of the Crown; conduct any appeal or other proceeding in which the Crown is named as a respondent; intervene in any matter that raises a question of public interest that may affect the conduct of a prosecution or related investigation; issue guidelines to federal prosecutors concerning the conduct of prosecutions generally; advise law enforcement agencies or investigative bodies concerning prosecutions generally or on a particular investigation; communicate with the media and the public on all matters respecting the initiation and conduct of prosecutions; exercise the authority of the Attorney General for private prosecutions; and carry out any other duty or function assigned by the Attorney General.

While the Attorney General would retain the ability, upon consultation with the Director of Public Prosecutions, to issue directives concerning the conduct of prosecutions generally and to assume the conduct of a prosecution, the Attorney General would only be able to do so upon publication of the directive or of a notice of intent to assume conduct of a prosecution in the Canada Gazette.

If you would like a more detailed written description of the FAA, the government has published a 39-page Action Plan entitled "Turning a New Leaf" (which is available on-line at http://www.faa-lfi.gc.ca). The FAA itself (at some 250 pages) is also available online at the same site. In addition, the authors of this Osler Update are familiar with the terms of the legislation and are monitoring the progress of the FAA. At the time of writing, the FAA is before a House of Commons Legislative Committee after having received Second Reading in the House of Commons. It is the government’s stated desire to pass the legislation prior to the summer recess of the House of Commons which is expected to take place towards the end of June, 2006.

For specific questions related to your business, please feel free to contact any of the authors.

Authors Credit: Patricia Wilson is a partner in the Litigation Department, practising in the area of public and administrative law. Ronald Atkey is a senior partner and Chair of the Arts, Entertainment & Media Practice Group. Paul Winton is an associate in the Competition and Antitrust Law Group. Patricia Brady is an associate and member of the firm's Communications Law Practice Group.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.