With Ontarians heading to the polls in a little more than a week, and up to four other provincial elections possible this fall, unions across the country have ramped up their political activism. Unfortunately, the unionized workers footing the bill through forced union dues will be left in the dark about the millions of dollars unions spend on political attack ads and donations to advocacy groups and political parties.
While public companies, charities and, hopefully soon, First Nations reserves, need to supply significant disclosure, little is asked of unions in terms of disclosing financial information. It is high time the government forced them to open their books.
Greater transparency and accountability are goals most Canadians would support. In fact, 83% of Canadians (unionized and non-unionized) agree that unions should publically disclose their financial information on a regular basis.
Unfortunately, neither federal nor provincial labour laws currently require unions to disclose financial information publicly. This special treatment is striking, given that unions receive funding from tax-deductible union dues. And the lack of transparency is even more troubling for public-sector unions that have a monopoly (or near monopoly) on government-service provision, such as education and health care.
Workers in Canada can be forced to join a union as a condition of employment and they have no choice but to remit union dues. Union leaders are able to use these mandatory and tax-deductible union dues to fight political battles that their "members" may not support.
Although unions in most jurisdictions (save for Alberta, Prince Edward Island and Saskatchewan) are required to make financial statements available to their members, the members must formally request the information. This means requests are not anonymous. Without anonymity, a worker's confidentiality and ability to make conclusions without influence from union representatives are seriously compromised.
What's more, there are no regulations specifying the amount of detail in union financial statements. Most importantly, there is no requirement that financial statements indicate a breakdown of money spent on activities directly related to representing workers and money spent on activities unrelated to representation, such as political activities.
In comparison, the U.S. government enacted new financial disclosure requirements in 2004 to counter corruption and mismanagement and to increase the transparency of union operations. This legislation requires all unions to submit detailed financial statements to the U.S. Department of Labor.
Large unions - those that spend more than US$250,000 per year - must provide information for 47 financial items and 21 non-financial items that are organized into two financial statements and 20 supporting schedules. Smaller unions - those that spend less than US$250,000 - have less onerous requirements. Critically, all unions in the United States must specify the breakdown of spending on collective representation and spending not related to representation.
Another important aspect of union financial disclosure in the United States is that union members and the public have equal access to all this information on the Labor Department website. This allows anonymous access, and, therefore, union representatives are less likely to influence a worker's decisions.
Publicly providing information about the financial status of unions enables workers to assess more accurately the financial position, activities and performance of their representatives. The public disclosure of financial information allows workers and interested parties to determine the appropriateness and effectiveness of union spending. The increased transparency that comes from public disclosure is also essential for accountability and provides an incentive for union leaders to manage membership dues properly.
Because of increased public disclosure, thousands of cases of questionable and fraudulent union spending came to light in the United States. All told, the U.S. Labor Department reported more than 1,000 union fraud-related indictments and 929 convictions, over an eight-year period.
Unlike in Canada, workers in the United States cannot be forced to join a union as a condition of employment. Federal laws in the United States also allow workers a choice when it comes to financially supporting union activities that are not directly linked with worker representation, such as political activities. This means U.S. workers have a choice regarding union membership and full dues payment, and they have anonymous access to detailed information on union finances. Canadian workers have neither.
Given the disclosure requirements already in place for public companies, charities and other public organizations, it is time to end special treatment for unions. At a minimum, Canadian unions should provide the same level of financial disclosure as their counterparts in the United States. As the saying goes, a little information would go a long way.