MPs and senators' side income provokes ethics debate

The debate over Justin Trudeau's speaking fees has raised questions about what MPs and senators should be allowed to earn on top of their parliamentary incomes.

"It's certainly not legally wrong. But as we are re-examining our democratic institutions, should we, in fact, be putting in place higher ethical expectations?" says Penny Collenette, a law professor at the University of Ottawa who served as a senior adviser to prime minister Jean Chretien between 1993 and 1997.

"It's a subject worthy of a public policy debate."

On Sunday, the Liberal Leader issued a statement offering to reimburse charities that paid him to speak at fundraising events while he was an MP. Trudeau’s statement followed a complaint last week by the Grace Foundation of Saint John, N.B., which said it lost money after paying him $20,000 to speak at a 2012 event.

Trudeau has earned about $277,000 from speaking engagements since becoming an MP in 2008. Some politicians believe Trudeau should not be making extra money for speaking as an MP.

'Because they’re allowed to sit on the boards of corporations, [senators] are essentially allowed to act as inside government lobbyists.' — Tyler Sommers, Democracy Watch

In an interview with CBC News, NDP MP Charlie Angus said, "The question is whether or not he's making this offer [of repayment] because it's political damage control, or because he's come to the realization that it was completely unethical for a Member of Parliament to be charging fees, especially outrageous fees, to charities and schools."

In light of the ongoing Senate spending scandal, freelancing should be part of a wider discussion about financial conduct among parliamentarians, Collenette says.

Earning extra income

According to government figures released in April 2013, MPs earn a base salary of $160,200, and receive additional remuneration if they hold a more senior role, such as a cabinet post ($76,700).

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Senators make a base salary of $135,200 and receive extra for positions such as government leader in the Senate ($76,000) or for chairing a committee ($11,200).

Conflict-of-interest rules forbid MPs and senators from using their positions to enrich themselves, but they are not prohibited from earning extra income.

Senators are allowed to own businesses and sit on corporate boards, provided these details are disclosed.

Pamela Wallin, who is the subject of a Senate spending probe, has served on several boards, including Oilsands Quest and Bell Globemedia (now CTVglobemedia). Last week, in the wake of questions over her living expenses, Wallin resigned from the boards of Porter Airlines and the investment firm Gluskin Sheff & Associates.

Wallin's corporate board appointments fall well within the guidelines for senators, but such positions should be viewed as conflicts of interest, says Tyler Sommers, coordinator for Democracy Watch, a non-profit citizen advocacy group.

"Because they're allowed to sit on the boards of corporations, [senators] are essentially allowed to act as inside government lobbyists. They can directly push for different legislation and for changing legislation to benefit the boards that they sit on," Sommers says.

Lyse Ricard, the Senate ethics commissioner, was not available for comment.

Historic legacy

The fact that senators can still carry on business activities is part of a historic legacy, Collenette says. When the Senate was established in 1867, it was intended to act as a counterweight to the House of Commons by providing greater regional representation.

Over the decades, says Collenette, senate appointments often became rewards for party loyalists who worked in other fields, particularly high finance.

"Most of them were men from Bay Street, a financial background, and there was no way they would give up that financial background to come up to Ottawa and sit in the Senate," she says. "The whole idea was that the salary wouldn’t be that high, so they could keep their businesses going [on the side].

"Why we have allowed this up to 2013 is beyond me."

The reason the Senate has come under such scrutiny in the past year, Collenette says, is that the existing codes of conduct do not compel senators to be as transparent and accountable to the Canadian public as the elected officials in the House of Commons.

Backbench MPs are allowed to own companies, and a recent analysis by the Huffington Post found that 40 per cent of MPs declare a secondary income.

'Loophole' in the system

Ministers and senior government officials are subject to more stringent rules, and must liquidate any corporate assets or place them in a blind trust.  

The reason ministers and parliamentary secretaries are subject to tougher conflict-of-interest rules is because they "have access to the executive, to the government, and know what the heck the government is doing, whereas in theory, the MPs don’t," says federal Conflict of Interest and Ethics Commissioner Mary Dawson.

But Sommers says there is a systemic conflict of interest even among senior government officials, when it comes to freelancing and even daily parliamentary responsibilities.

Ministers and senior government officials must recuse themselves from running corporations and put their investments in a blind trust. But because they themselves appoint the trustee of their investments and have a general idea of what’s in their portfolio, they could still consciously make decisions that benefit them financially, says Sommers.

"The loophole in this system is that so long as politicians are making decisions that apply generally, they're allowed to be in a conflict of interest," says Sommers.

For example, the finance minister might have investments in a Canadian bank, and could intervene to raise interest rates. He or she would benefit from the increase in bank profits, but because the move would benefit anyone invested in Canadian banks, the move wouldn’t be deemed a conflict of interest, says Sommers.

Collenette says that government can often foster a culture of entitlement, which sometimes makes it hard for even the most principled politician to recognize when they’ve had an ethical lapse.

"I often think that [politicians] don’t actually know there's a conflict of interest. Sometimes they do know and they decide to skirt around it, and in my opinion, that’s probably what's happened to a couple of these senators," says Collenette.

"But recognizing that conflict of interest — and I'm trying to be very fair — it can sometimes be difficult."

But while there has been much talk about parliamentary ethics, there has been little will so far on Parliament Hill to reform the system. Democracy Watch says that MPs were to review the conflict of interest code in the spring, but the study was abandoned without fanfare.