For the first time in 13 years, a parliamentary ethics committee is reviewing the Conflict of Interest Act, a law designed to prevent federal officials from abusing their power.
Some experts say the serial conflict-of-interest scandals of recent years show that the act needs a major overhaul.
“The federal government’s ethics law is a sad joke,” said Duff Conacher, co-founder of the government accountability watchdog Democracy Watch, at an Oct. 1 press conference held before he testified in front of the House ethics committee.
Conacher says one of the act’s biggest loopholes is that public officials are permitted to place their assets in blind trusts while in office, instead of having to fully divest.
“The current ethics enforcement measure of a blind trust is completely ineffective because the trust isn’t blind at all,” he said.
“The office holder knows what investments they put in the trust. They choose their own trustee. They’re allowed to give initial instructions to the trustee — such as don’t sell anything — and the trustee is allowed to give them regular updates on the investments.”
Conacher pointed to Prime Minister Mark Carney’s arrangement as a case in point.
Before running for the Liberal leadership, Carney had served as chair and head of transition investing at Brookfield, a global asset management firm that controls over US$1 trillion in assets. He continues to hold substantial stock options and deferred shares in Brookfield.
In March, Carney placed virtually all his assets in a trust managed by an independent trustee.
In July, Carney and the ethics commissioner agreed on a conflict-of-interest screen covering these assets. The screen is administered by Carney’s chief of staff, Marc-André Blanchard, and the Privy Council clerk, Michael Sabia. It is meant to ensure Carney is neither briefed on nor participates in policy decisions involving any of these assets.
However, ethics laws permit Carney to participate in “general” decisions about broad, sector-wide files — such as housing policy or carbon pricing — that could affect these investments.
In Conacher’s view, ethics screens are therefore little more than “smokescreens” that enable officer-holders to continue making decisions that affect their holdings.
He is not alone in his concerns.
“There’s no way I’ve ever heard of anything quite this broad,” York University Professor Ian Stedman told the ethics committee on Oct. 1, referring to the more than 100 companies included in Carney’s screen.
When asked by Conservative committee member Michael Cooper about the efficacy of Carney’s ethics screen, Stedman expressed skepticism.
“It’s trust and faith,” he said. “You just have to hope that we put someone in public office who acts with integrity at this point.”
Stedman and Cooper also noted that Blanchard and Sabia serve at the pleasure of the prime minister, creating an inherent conflict of interest.
“Being subordinate to the prime minister means that you are in a conflict of interest,” Stedman said. “You care about his interests as much as you care about the public interest because you sit at his pleasure. There’s no way to avoid that.”
On Oct. 16, Democracy Watch issued a press release saying the Privy Council Office has said it needs until 2026 to provide basic records about the enforcement of two ethics screens Carney created after first becoming prime minister.
“Democracy Watch’s [access to information] request asks for disclosure of basic records that provide basic details that PCO officials must have on hand every day if they actually enforced Prime Minister Mark Carney’s initial two ethics ‘screens’ — details that will reveal that the screens are actually loophole-filled smokescreens,” Democracy Watch’s press release says.
The push for divestment
Carney is not the first Bay Street veteran to draw scrutiny for potential conflicts once in office.
When Bill Morneau served as finance minister, he retained a large stake in the HR and pension administration firm Morneau Shepell, even while spearheading pension legislation reform. Then ethics commissioner Mario Dion was asked to investigate whether this violated the Conflict of Interest Act and ultimately concluded it did not — because the pension bill applied generally.
“The act does not apply if you are making a decision, participating in a decision or discussion, or vote about a general matter, or about a matter that applies to a broad class of people or businesses or organizations,” Conacher said at the press conference.
In Conacher’s view, the only way to truly prevent conflicts of interest is to require public office holders to sell their investments. He proposed exempting such mandatory divestments from capital gains tax, and permitting office holders to invest in guaranteed investment certificates or government bonds while in office.
“And then when they leave, they can reinvest again in the stock market,” he said.
Canadian Affairs sought comment from all of the committee’s nine members about whether they would support such a requirement. Only two MPs responded.
In an emailed statement, Liberal MP and committee vice-chair Linda Lapointe said it would be “premature to pre-judge” the committee’s work when it is actively conducting its review.
“We’ll carefully consider the committee’s recommendations when they report,” she said.
In an emailed statement written in French, Bloc MP Luc Thériault said the current rules need to be improved, but stopped short of calling for mandatory divestment. He noted that participating in politics always requires sacrifice, and politicians accept sacrifices in other areas, such as loss of work-life balance or privacy.
In her testimony, Dalhousie University Professor Lori Turnbull expressed skepticism that stricter ethics laws are needed to ensure office-holders act ethically.
“I don’t necessarily think that including a whole bunch of things in the act that aren’t already there is going to solve all the problems,” she said. “I admit that, when I was younger, when I started in all of [my research on Canada’s ethics laws], I really felt then that the more things were enumerated, the more ethical everybody would be.
“Now I know that’s wrong. Now I know that there’s not much you can do to force somebody to do what they are not inclined to do. You can’t force someone to be ethical … It’s a judgment call on that person’s part.”
The risk of deterrence
During the hearing, Liberal MP Leslie Church suggested that more stringent ethics rules risked shrinking the pool of qualified candidates for political office.
In response to a statement by Conacher that full divestment is the only way to avoid conflicts of interest, Church said:
“How do you reconcile that with the purpose of the act, which … is to encourage experienced and competent persons to seek public office, and especially to facilitate the interchange between the public and private sector.
“How do you balance those objectives of the act with a position that would ask everyone who seeks public office to relinquish all of their financial investments?”
Conacher says he is skeptical that a divestment requirement would discourage talented individuals from serving in government.
“[Politicians] are paid in the top one to five per cent of salaries in the country,” he said during the press conference. The current base salary for a MP is $209,800 and for a cabinet minister is $309,700.
“They have one of the best pension plans and benefits plans of anyone in the country,” he added. “How greedy are these people? Do they really want to serve the public, or do they want to serve themselves?”
At the press conference, Canadian Affairs asked Conacher whether he was aware of any other advanced economies that require political office holders to fully divest their assets. Conacher said he was not.
“Unfortunately this is very common. Politicians write their own rules,” he said.
The ethics committee will continue hearing from witnesses throughout the remainder of the year and will likely submit a report of their findings to the House of Commons in 2026.
Michael Barrett, the Conservative MP who introduced the Sept. 17 motion to have the committee examine Canada’s ethics laws, noted the time is now for the committee to act:
“This motion offers us an important opportunity to review an act that is foundational to the public’s ability to have confidence in elected officials …
“I think that this is very timely. You don’t want to wait until the eve of an election to start a study. We’re at the start of a new Parliament. Now is the time.”
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