Political and Constitutional Reform CommitteeWritten evidence submitted by Karen E Shepherd, Commissioner of Lobbying of Canada

1. In Canada, lobbying legislation was first introduced in 1989. The initial Lobbyists Registration Act focused primarily on the registration of lobbyists by introducing basic disclosure requirements for lobbyists. Subsequent amendments to the legislation changed the focus from simple registration to more extensive regulation of lobbying activity. Over time, the federal legislative framework for lobbying has been strengthened, through: the development of a Lobbyists’ Code of Conduct; the creation of an independent Commissioner of Lobbying with greater powers to carry out investigations; an increase in the disclosure requirements for lobbyists; and increased penalties for offences under the Act.

2. Under the current federal Lobbying Act (which replaced the Lobbyists Registration Act on July 2, 2008), the Commissioner’s mandate is threefold:

(i)establish and maintain the Registry of Lobbyists, which contains and makes public the registration information disclosed by lobbyists;

(ii)develop and implement educational programs to foster public awareness of the requirements of the Act; and

(iii)undertake administrative reviews and investigations to ensure compliance with the Lobbying Act and the Lobbyists’ Code of Conduct.

3. It is in this framework that I wish to respectfully submit the following areas for the Committee’s consideration in the context of the introduction of a Statutory Register of Lobbyists.

1. Registry

Definition

4. Under the Lobbying Act, lobbying is defined as communicating, with a public office holder, for payment, in respect of specific subjects.

5. There are two types of lobbyists: consultant lobbyists and in-house lobbyists, who may be employed by either corporations or by organisations. Corporations are profit making entities. Organisations can include trade or industry associations, unions, partnerships, charities and not-for-profit corporations. For in-house lobbyists, the need to register lobbying activities is triggered when the combined lobbying activities of the entity represent a significant part of the duties of one person’s time. The “significant part of duties” has been interpreted as 20% of the duties of one person’s time.1

6. Certain communications with public office holders do not require registration: oral or written submissions to Parliamentary committees; oral or written communications to a public office holder concerning the enforcement, interpretation or the application of any Act of Parliament or regulation; and oral or written communications made to a public office holder that are requests for information.

7. In addition, the following individuals are not required to register for communicating with public office holders: members of provincial legislatures, of municipal councils and their staff; government employees; members of a council of an Indian band or their staff as well as band council representatives; members of an aboriginal government; diplomatic agents and representatives of foreign governments; and officers of international organisations.

8. From the perspective of operating an online lobbyists’ registry system, the existence of different types of lobbyists has not created any problems. The system allows for access and provides search features based on each of the two types of lobbyists.

Frequency of reports

9. Lobbyists shall file an initial registration in the Registry indicating that they will communicate with public office holders from specific departments, on what subjects and on behalf of whom. Both categories of lobbyists must update their initial registrations by the 15th of every month if: any information contained within is no longer correct; additional information has come to the attention of the registrant that is required to be disclosed; the undertaking has terminated (for consultant lobbyists); or no employees are conducting activities requiring registration (for organizations and corporations).

10. In addition, lobbyists have to report certain types of communications with certain senior federal officials (known as “designated” public office holders) on a monthly basis. These returns specify the date of the communication, names of designated public office holders attending and the subject-matter of the communication.

11. If there has been no monthly report because no prescribed communications with designated public office holders took place nor any changes made to the initial registration, and five months have lapsed since the last update, lobbyists must renew their registrations.

12. The introduction of monthly communication reports in 2008 has made available information regarding actual communications between lobbyists and senior federal government decision makers. Monthly communication reports provide timely information on who is lobbying which high-level public office holder, and on what subject-matter. These reports increase transparency in that they provide a more complete picture of lobbying activities actually being conducted at the federal level.

13. Requiring lobbyists to regularly update their registration improves the transparency of lobbying activities by improving the accuracy of the information in the registry.

Funding

14. There are no fees to register under the Lobbying Act. Prior to 2008, Filing a registration on paper cost $150. This cost was not truly reflective of the administrative cost to process registration. Given that more than 99% of registrations were filed online, the Government decided to remove the option of filing registration on paper. There is a special provision to allow persons with a disability or without access to a computer to file on paper at no cost.

15. System upgrades to the existing registration system (set up under the previous version of the Act) were necessary in order to accommodate the requirements of the Lobbying Act. As it required major changes, the upgrade cost approximately $2 million. An annual budget of about $1.1 million is allocated to the administration of the Registry, including salaries for the equivalent of six full-time employees dedicated primarily to providing registration assistance to lobbyists.

16. The Lobbyists Registration System requires ongoing maintenance and development. The annual budget mentioned above includes an amount of $400,000 to $500,000 that is invested by my Office annually. The system is complex and “bugs” often emerge, which must be fixed. We also make improvements to system features and capabilities, which allows us to better meet the needs of users. The improvements to the system since its creation have made it significantly more user-friendly than when it was first released. Users of the system include lobbyists, the media, academic researchers, corporations and organizations and the public.

2. Education and Awareness

The importance of an education mandate

17. I firmly believe that fostering awareness of the requirements of the Lobbying Act among lobbyists and public office holders leads to greater compliance. As part of the 2008 amendments to the federal lobbying legislation, the Commissioner of Lobbying was provided with an explicit mandate for education. Paragraph 4.2(2) of the Lobbying Act states:

The Commissioner’s duties and functions, in addition to those set out elsewhere in this Act, include developing and implementing education programs to foster public awareness of the requirements of this Act, particularly on the part of lobbyists, their clients and public office holders.

18. Last year, my staff and I met with nearly 800 individuals, including lobbyists, public office holders, parliamentarians and their staff, my counterparts, academics and university students, to provide information about the federal lobbying regime.

19. Education activities include:

responding to inquiries from registered or potential lobbyists about the registration requirements under the legislation and providing technical assistance to facilitate their interaction with the web-based Lobbyists Registration System;

delivering training and information sessions to individuals and groups about the key features and requirements of the Act;

meeting regularly with associations representing lobbyists, including the Government Relations Institute of Canada, the Canadian Public Relations Society, the Public Affairs Association of Canada, the Canadian Chamber of Commerce, and the Canadian Society of Association Executives, to inform participants and share views on the legislation;

contacting registered lobbyists directly to provide information on specific changes to registration requirements, with a view to raising awareness and further improving compliance—communications are primarily done via email; and

sending advisory letters to individuals who may be engaging in lobbying activities but may be unaware of the registration requirements under the Lobbying Act, to encourage them to visit the Office’s website so they may determine whether they should be registered as lobbyists.

20. I believe that federal public office holders, whether they are elected officials or public servants, have a key role to play in ensuring a better understanding of the Lobbying Act and its requirements. When public office holders understand what the Lobbying Act is intended to accomplish, they can contribute to greater transparency by inquiring if the lobbyists they meet are aware of the Act and are in compliance with it.

21. Our website is one of our main outreach tools, and visits to the website are on the rise. More than 110,000 visits were recorded last year, an increase from the 89,000 visits in the previous year.

22. My experience is that a more in-depth understanding of the requirements of the Act is demonstrated in part by the decrease in the number of technical questions addressed to the Office.

3. Enforcement

Fines

23. In 2008, penalties for breaches of the Lobbying Act were increased to a maximum fine of $200,000 or imprisonment for a term not exceeding two years, or both. If a person is convicted of an offence under the Lobbying Act, the Commissioner may also prohibit the person from lobbying for a period of up to two years.

24. Under the Lobbying Act, the Commissioner can investigate allegations of breaches of the Act and the Lobbyists’ Code of Conduct. Enforcement options available to the Commissioner are: referral to a peace officer (Royal Canadian Mounted Police) when the Commissioner has reasonable grounds to believe an offence under the Act has occurred, and Reports on Investigation, tabled in both Houses of Parliament, at the conclusion of my investigation into an alleged breach of the Lobbyists’ Code of Conduct.

25. Despite the available penalties, no one has ever been charged or convicted of an offence under either the Lobbyists Registration Act, or the Lobbying Act (which came into force on 2 July 2008). Since 2005, 12 cases have been referred to the Royal Canadian Mounted Police.

26. In my recent submission to the House of Commons Standing Committee on Access to Information, Privacy and Ethics in the context of Parliament’s statutory review of the Lobbying Act,2I recommended introducing administrative monetary penalty provisions, for the following reasons:

Not all alleged breaches of the Act should be treated in the same manner, as they can range in gravity.

As some transgressions, such as late filing, do not warrant referrals to the RCMP, I have chosen to educate registrants, in order to ensure compliance for these and other minor transgressions. Providing me with the ability to administer monetary penalties would address the lack of flexibility in terms of enforcement options provided for in the Act. There is no option between the two extremes currently being utilized: the system of education, correction and monitoring employed by me, at one end, and a Report to Parliament and/or criminal proceedings with resulting fines, jail terms and possible prohibition, at the other. Minor transgressions, such as late filing, do however negatively affect transparency. In cases such as these, I believe that having the ability to administer administrative monetary penalties might improve my ability to ensure compliance by demonstrating consequences for even minor breaches of the Act of the Code.

Ensuring compliance

27. There are challenges in enforcing the “significant part of duties” provisions of the Lobbying Act. This is all the more problematic given that the concept is applied in a number of areas.

28. The most obvious is that the provisions affect the “coverage” of the legislation. Does the legislation capture the individuals it was intended to regulate? Currently, the Act does not require the registration of corporations and organizations whose employees do not spend, collectively, “a significant part of duties” on lobbying federal public office holders. Many organisations and corporations who lobby federal public office holders are therefore not required to file a registration to be in compliance with the Lobbying Act. An unknown number of lobbying activities are therefore not disclosed publicly. Transparency is further reduced given that corporations or organizations that do not have to file an initial registration, are also not required to file monthly communication reports when their employees meet with designated public office holders.

29. In order to facilitate compliance (and enforcement), it is preferable to have a clear demarcation of what activities are covered by legislation. The use of the concept of “significant part of duties” makes it difficult to quantify the level at which the Act applies. As previously mentioned, the concept has long been interpreted as 20% of duties (ie, the 20% rule), which is essentially a measurement of the proportion of time worked. This requires an extensive examination to properly measure the amount of work that has been performed and to verify that this work is related to activities requiring registration. Furthermore, one must ascertain the total amount of work being performed.

30. The 20% rule therefore requires the measurement of two activities—registrable activities and total work activities—both of which are difficult to quantify reliably and with accuracy. In spite of the longstanding interpretation, it is possible that the courts might take a different view of what constitutes a “significant part of duties”, as this interpretation has not been tested in the courts to date.

31. Please note that, as I previously mentioned, the Lobbying Act is currently under a legislative review. The House of Commons Standing Committee on Access to Information, Privacy and Ethics has prepared its report. The next step is the Government’s response.

32. More information on the activities of my Office and accomplishments is available in my Annual Report on my Website: www.ocl-cal.gc.ca.

33. In conclusion, I hope the members of the Committee will find my comments useful in the introduction of a Statutory Register of Lobbyists. I will be pleased to provide clarifications if necessary.

May 2012