INST Committee Report

            The Committee discussed several aspects of conflict of interest. Conflict of interest and access to government are related issues. The essential problem in conflict of interest is that it distorts the public decision-making process and, as a result, erodes public confidence in institutions of government. It does so because parties to the conflict are able to gain some "advantage," or to circumvent the normal "rules." Those rules, to which everyone else is subject, are designed to ensure that government makes its decisions in accordance with sound management principles and in accordance with principles of public trust. For this reason, conflict ? and the appearance of conflict ? if left unchecked, undermines public confidence in the integrity of the process by which public decisions are made.

            There is a second, related aspect of conflict and it involves the idea of "information." Information is, perhaps, the most critical "input" in the decision-making process. Whether the decision is one of simple contract, e.g. assessing bids on a public tender, or designing a complicated regulatory scheme that will affect an entire industry, it is of the utmost importance to decision makers that they have information that is reliable, up-to-date and complete. For this reason, the integrity of the public decision-making process relies on the open exchange of information between government and stakeholder. Public policy must necessarily balance competing interests; that cannot occur if all, or at least many, interests are not represented. Where conflict of interest exists, it impedes the free exchange of information by allowing one person ? with one view, one proposal, one bid, etc. ? to advance their position to the exclusion of others. Over time, this also contributes to the erosion of public confidence in government.

            Restoring public policy in the policy-making process requires three things be done: first, we must continue to ensure that conflict of interest is not allowed to occur. That issue has been addressed in the current Act and the Lobbyists Code of Conduct. The second issue, certainly of equal importance, is that we must further open up the policy-making process; we must take steps to remove all impediments to the free exchange of information between the public and government; and finally, we must actively encourage everyone concerned to participate in the exchange of ideas; in brief, a truly public debate over public policy.

The first issue for the Committee’s consideration, as summed up by one witness:

            The community of lobbyists is not a large one. Conflicts of interest may occur, for example, when two lobbyists in the same firm work on different sides of the same issue, either concurrently or sequentially, or in cases where a firm may be retained to advise the government on an issue and subsequently be retained by the private sector to make representations on the same or related issues. In such cases, precautions are usually taken to ensure that confidential information is not exchanged.

            Officially, the Registrar has expressed the view that the Canadian Bar Association’s guidelines for "chinese walls" are adequate to pre-empt possible conflict. However, as the Ethics Counsellor noted:

            While some industry participants view the guidelines as "appropriate where litigation and court related issues of evidence are involved," some concern was expressed that the guidelines are flawed in that they "focus on excluding the conflicted person from any contact with colleagues who may be working on a conflicted issue." However,

            As a result, some lobbying firms have established their own conflict protocol. Government Policy Consultants, for example, has such a code, which in its view:

            Two important points flow from this statement. The first is that conflict of interest, while undeniably having implications for the public policy debate, remains primarily a concern of the clients whose interests are being represented. In the legal profession, when a lawyer represents or advises clients with competing interests, the lawyer must declare the conflict and may continue only if the consent of the clients is obtained. Lobbying, like law, involves advocating on behalf of a client; lobbying differs primarily in the nature of the services rendered and in the fact that one of the parties is the Canadian government, and ultimately the Canadian taxpayer. Does that mean that every taxpayer should be informed of every potential conflict and asked for their informed consent? Some would say that this should be our aim. It is a weighty question, fundamentally related to the concept of representative government.

            Canadians elect MPs to make laws for them and to spend their tax dollars wisely, in a way that is consistent with the public trust. But the scope and complexity of modern government requires that Parliament delegate some of its authority; and so it empowers the executive branch, i.e. "the department," with the authority to make regulations, to formulate policy, and to procure goods and services in order to ensure the continued effective functioning of government in the service of Canadians. These tasks are carried out through countless individual transactions involving thousands of public and private sector employees. In that process conflicts, real and apparent, may arise. How far do we go to ensure that the process is carried out with integrity? Do we install video cameras or tape recorders in every public office? Should public servants and elected representatives be kept under constant scrutiny? Should we require that all public servants and elected representatives disclose the most minute details of their workday, every phone call, every conversation? If so, why stop there? Why not have them disclose a list of their friends and relatives? Some would say this should be our goal. The Committee does not endorse that view. And neither does it accept the premise upon which it rests ? that public servants are inherently corrupt or corruptible and, for the public good, must be kept under constant scrutiny.

            The Committee believes strongly that, for the thousands of men and women employed in it, the "public service" is more than just the name of their employer ? it is an idea; an idea that, when you work for the government, you work for all Canadians. You serve the public. The Committee believes that, with very few exceptions, the men and women of the Canadian public service understand and honour the notion of the public trust and carry out their duties honestly and in good faith. This is the most fundamental axiom of representative government: that we are justified in placing our faith in our public servants.

            The Lobbyists Code of Conduct is clear and unequivocal in prohibiting lobbyists from representing conflicting or competing interests without the informed consent of those whose interests are involved. But whose interests are involved? In the broadest sense, the Canadian taxpayer; but, speaking practically, the consent of every taxpayer cannot be sought in every decision. Instead, we trust our public servants to do the right thing, to act

            faithfully and diligently in discharging the public trust. This is the person, in practice, to whom the conflict must be declared and the person whom we trust to ensure that the interests of the ultimate client, the Canadian taxpayer, are protected.

            In addition, Consultant Lobbyists are required to advise public office holders that they have informed their clients of any "actual, potential or apparent" conflict of interest and obtained their informed consent to continue. As well, the Lobbyists Code states that lobbyists shall not place public office holders in a conflict of interest by proposing or undertaking any action that would "constitute an improper influence." The Committee is satisfied that the principles set out in the Lobbyists Code of Conduct are sufficient to ensure that, where potential conflict arises, it is addressed in a manner consistent with the public trust.

            Democracy Watch made a number of recommendations aimed at ensuring conflict, or the potential for conflict, does not arise. The Committee is concerned that the response may not be proportional to the actual problem. Among the many recommendations made by Democracy Watch, three were addressed directly to avoiding conflict or the appearance of conflict:

            What is not immediately clear is how disclosing such information would prevent conflicts. It seems to flow from the presumption that a person, by getting involved with party politics or government, becomes privy to valuable confidential information by virtue of which the person may gain unfair advantage. But does every involvement by an individual with "government" or "political parties" result in the exchange of confidential information or the promise of "payback for services rendered"? How far back in time would the requirement extend? How long does "valuable" information keep its value? How long before "contacts" go cold? The Committee heard that, in politics, contacts and information go stale very quickly:

            In any case, information of this sort ? if it reveals anything of value ? is largely available through other sources. For all of these reasons, the Committee does not adopt this recommendation. Another recommendation from Democracy Watch would prohibit lobbyists

            Mr. Freeman noted that "this is prohibited in two U.S. States." Presumably then, it is tolerated in the other 48. The recommendation presents certain conceptual difficulties, not the least of which is the impact on the individual’s freedom of association, a right guaranteed by the Canadian Charter of Rights and Freedoms. The suggestion here appears to be that "political" lobbyists will be able to call in favours among their friends that they helped to elect. The Committee finds little to agree with in this characterization of Canada’s elected representatives.

A third recommendation from Democracy Watch:

            This recommendation aims at preventing conflict of interest resulting from the unauthorized disclosure of confidential information between associates in the same firm that might be working on opposite sides of an issue. Modern departments of government are vast operations, involving hundreds or thousands of employees. Lobbyists may be consulted for many purposes, not the least of which may be for their considerable expertise on policy issues. The Committee is of the view that it would be counterproductive to issue a blanket prohibition of the sort suggested. Departmental policy advisors routinely deal with highly specialized and technical issues. In many cases, only a handful of individuals in the country might have the necessary expertise to be able to assist the department by providing informed analysis. The suggested prohibition would be very likely to lead to all the available experts being "conflicted out," and precluded from providing advice to the department.

Still, it may be that potential for conflict exists in some situations. Two witnesses, who otherwise found little to agree on, expressed the issue:

The point was seconded with an illustration by Mr. Freeman:

            The Committee took particular note of what appears to be an increasing trend toward "contracting out" policy studies and consultation to private sector consulting firms. While the identity of the consulting firm itself would be reflected in the public record, what would not be clear is who, precisely, is advising the consultants? As Sean Moore explains the issue, the trend is perhaps most evident in the development of science policy:

The issue does not suggest an easy solution:

John Chenier agreed that the "process would be very laborious and perhaps not airtight."

            However, having identified the problem, no clear solution was suggested. It is questionable whether expanding the disclosure obligations under the lobbyists registry would resolve the issue. Again, the question becomes: how much disclosure should we require?

            The Committee is mindful of the potential for conflicts when private sector consultants provide advice on the development of government policy. The subject is of special concern for the reason that its real effect on the direction of public policy is not necessarily apparent and, more importantly, not easily discoverable by the public. A complete examination of this important emerging issue is beyond the scope of the current study, however, and for that reason the Committee is unable to offer definitive recommendations. However:

            Another aspect of conflict of interest relates to the post-employment "cooling off period" to which some public office holders are subject after leaving office. The "cooling off" period refers to those provisions in the Post-Employment Conflict of Interest Code that impose restrictions on a former public office holder’s post-employment lobbying activities. The Committee is aware that issues arising under the Conflict of Interest and Post-Employment Code are beyond the scope of the current study; again, however, the Ethics Counsellor’s dual role leads to blurring of the boundaries and, for this reason, many witnesses spoke to issues related to the Conflict of Interest Code.

            The Committee heard that, as important as it is to ensure real fairness exists in the system, it is important that the system appear to be fair as well. One member discussed the great concern Canadians have with the "easy access and congenial familiarity that some lobbyists have with key decision-makers" and the relationship that may exist between decision-makers and those lobbyists who were once involved in the decision-making process. The Ethics Counsellor addressed the purpose underlying the "cooling off period":

The Ethics Counsellor also emphasized the importance, and the difficulty of, striking the right balance:

The Ethics Counsellor discussed his practical experience with the conflict of interest rules:

Democracy Watch did not agree:

However, as John Chenier expressed the point:

Scott Proudfoot also addressed the issue:

            The Committee is aware that the issue of the post-employment "cooling off period’ is not a subject that falls within the current study, and for that reason makes no recommendation on that subject. Moreover, the Committee is aware that this and other related subjects have been studied in the past by committees of both chambers, and will likely be the subject of further study in future. In any case, the Committee is of the view that such a discussion is perhaps best reserved for the appropriate committee.

            At the heart of any discussion about lobbying lies the larger issue of integrity in government. Where conflict of interest is permitted to exist it undermines integrity by permitting one interest or one point of view to be advanced to the exclusion of others. The lobbyists registry does a great deal to open the process and expose potential conflicts to public scrutiny. People can easily find out who is talking to government, who is providing information and influencing ? or trying to influence ? the opinions of decision-makers. That information is readily available to anyone with Internet access. Access to this information promotes integrity in government by providing a clear window onto the policy-making process: the lobbyists registry reveals, among other things, the issues that are being considered, exactly where "inside government" they are being considered and the identity of the private sector interests and NGOs that are involved in trying to influence that process. In effect, the lobbyists registry shows precisely where "inside government" the debate is taking place, and thereby opens that debate to public participation. The possibility of one strategically placed lobbyist "hijacking" the public policy debate, shutting out opposing views and other sources of information, appears to no longer exist in practical terms. This was the purpose for which the system was created, and it has largely succeeded. Pierre Morin made the point:

The point was expanded upon by Peter Clark. As he described it, the Act was a statute:

            However, even though the Act has brought a measure of transparency to the decision-making process, this is only part of the picture. The lobbyists registry forms part of a larger legislative framework, which aims at ensuring integrity in the process of public decision making by, first, making the process transparent and, second, by opening the process to wide public participation. But, the Committee heard, the process by which policy is made still cannot be described as inclusive:

Democracy Watch makes the same point:

            What emerges from this is the point that integrity in government really has two aspects: one is the desire Canadians have to see that the decisions being made by their government are being made fairly and intelligently, in accordance with principles of sound business management and the public trust. At the same time, though, Canadians also want to be involved in the process by which those decisions are made. Canadians quite rightly want to know who is driving the public policy debate, what factors are shaping the discussions and the decisions that are being made. But, equally important, ordinary Canadians need assurance that their government is listening to their concerns as well. It is not enough that we simply open the door; we must encourage all Canadians to join the discussion.

            While the reasons for modern scepticism about government are many, one is certainly the feeling, on the part of many Canadians, that they cannot make a difference, that their government is not interested in hearing what they have to say. Reversing this trend, and restoring faith in institutions of government, will require a significant change in thinking about the way governments make policy. We must begin to engage Canadians earlier in the policy development process, and that engagement must be active; governments must encourage it and seek it out.

            The Committee is also of the view that there is a vital role for Members of Parliament in the policy-making process. Sean Moore, recalling his years as a Washington, D.C. lobbyist, talked about the difference between Canadian MPs and their "American brothers and sisters…":

            Notably, many members of the Committee expressed exception to Mr. Moore’s characterization of the role of MPs in the legislative process.