May 7, 1998

To:Corporate Services Committee

From:Chief Administrative Officer

Subject:Interim Report on a Registry of Lobbyists and Related Matters

Purpose:

This interim report summarizes the findings to-date on former and present lobbyist registry legislation within governments, the rationale for its establishment and its degree of success. Additional or alternative methods available to protect the interests of municipal taxpayers and public scrutiny are being examined since there are legal constraints in local jurisdictions to enact similar lobbyist legislation. These alternatives include the development of municipal policies governing the general conduct expected of elected officials and staff in the carriage of their regular duties. The related matters of ensuring no undue influence in specific processes approved by Council, such as competitive calls for tenders, or Requests for Proposals, are also being examined. Detailed recommendations for the approval of Council, will be forthcoming by June, 1998, following further consultation, legal and policy considerations.

Funding Sources, Financial Implications and Impact Statement:

There are no financial obligations or implications associated with the recommendations of this report.

Recommendations:

It is recommended that: (1)the Chief Administrative Officer ensure that the municipal employee Code of Conduct/Conflict of Interest provisions now being developed, are inclusive of Corporate expectations about how to deal with lobbyists; (2)the Chief Administrative Officer, together with the Solicitor and the City Clerk, consult with Council to determine its degree of interest in establishing Code of Conduct/Conflict of Interest provisions for elected officials which are more clear and specific than those currently provided across several pieces of legislation;

(3)the Chief Administrative Officer, ensure inclusion of ethical matters and provisions in the purchasing procedures report, as directed by Council at its meeting of March 4, 5 and 6, 1998;

(4)the Chief Administrative Officer and the City Solicitor, further assess the specific legislative authority of the City respecting the ability to establish lobbyist registration provisions and identify an appropriate process or model for implementation, in light of the proposed new Municipal Act, anticipated provincial legislation respecting lobbyists registration, and previous municipal experiences; and

(5)the appropriate City Officials be authorized and directed to take the necessary action to give effect thereto.

Council Reference/Background/History:

On March 2, 1998, the Chairman of the Corporate Services Committee directed a communication from Councillor Judy Sgro, to the Chief Administrative Officer (CAO) for action. The communication advised that there appears to have been a significant increase in the number of lobbyists approaching Members of Council, on a variety of issues, since the inaugural meeting of Toronto City Council. Further, the communication noted that since these issues impact the interest and well being of taxpayers, the CAO be requested to submit recommendations respecting the establishment of a lobbyist registration by-law in the interest of meeting public scrutiny. Specific mention of the need to examine lobbyist registry models in other jurisdictions formed part of the communication.

Comments and/or Discussion and/or Justification:

Staff of the CAO Department and the Legal Department, have commenced a review of both former and present lobbyist registry requirements in other government jurisdictions. Several common themes underlie the rationale and purpose for establishing registration requirements for lobbyists, as well as processes and policies to govern the conduct of elected officials and staff. These findings are summarized in this report as are the Province of Ontario and the former City of Toronto experiences, in order to present Council with the required context for considering recommendations. (a)General Provisions Regulating the Conduct of Lobbyists, Elected Officials and Public/Civic Staff:

 Independent of the presence of any specific legislation designed to govern lobbying in the public sector, there are several mechanisms by which lobbyist behaviour and interaction with government officials is regulated, including:

• industry codes with which lobbyists representing a member sector must comply;
• professional codes of conduct with which lawyers and other professionals acting as lobbyists must comply; and
• the Criminal Code, which covers influence peddling bribery and fraud, municipal corruption and interference with the performance of official acts, for example.

 Governments have traditionally relied upon these provisions as well as their own purchasing/procurement policies to ensure certain safeguards and processes of integrity in their dealings with external organizations. In addition, while governments commonly establish a Code of Conduct for their employees, they have traditionally relied upon codes such as the (Provincial) Members= Integrity Act and the Municipal Conflict of Interest Act, to regulate elected officials.

 New business pressures and the pace of rapid change being experienced by governments, have led to additional policies and procedures being established, particularly by senior government levels. This has occurred in order to address the public=s expectations for information about, and confidence in, government decision-making and the conduct of public officials and staff. (b)Lobbyists Defined:

 Most commonly, lobbyists are defined as individuals or organizations paid to communicate with elected or appointed officials and any staff of government, in a deliberate and concerted attempt to influence government decisions. The behaviour under scrutiny is specifically related to the phrase Aattempt to influence government decisions@ because the activity often occurs beyond public scrutiny and is on behalf of someone else. The intent and accompanying activities of lobbyists are considered distinct from advice seeking, public deputations (for which individuals are named and identify their interest), or regular business transactions and communications. (c)The Existence of Lobbyist Registration Legislation:

 The Canadian government, the United States government and many individual states in America, have a lobbyist registration law. In Canada, Ontario is the first province to announce similar initiatives. In their 1996 budget statement, they declared their intention to establish procedures to Arequire the registration of all persons and firms who lobby the government@. This legislation is anticipated during 1998.

Some municipalities with complex and/or highly visible or contentious issues, including the former City of Toronto and the Municipality of Metropolitan Toronto, have taken steps to manage lobbyist activities, although in different ways as summarized later in this report (see Municipal Actions to Manage Lobbyists). Evidence from these and other government sectors, suggests that the success of such initiatives will depend upon implementing procedures that are appropriate to the situation and within the authority and power of the municipality. (d)The Purpose of Lobbyist Legislation:

 The manner in which governments carry out their business has changed significantly in recent years. As governments seek to achieve more efficient and effective service, they have broadened their interactions, relationships and exposure to external organizations and centres of expertise. Initiatives such as public-private relationships, the contracting-out of services and the accompanying increase in the issuance and evaluation of competitive call documents, have resulted in new accountability mechanisms being developed. The principle of accountability to the public was the driving force where government has established:

• formal registers listing all persons and firms paid (and, in some cases unpaid) to lobby;
• public access to the registry of lobbyists, their clients and their respective issues;
• open and available information respecting those who seek to influence the decision-making of government; and
• rigorous conflict of interest standards and codes of conduct for elected officials and public servants. 

(e)The Relationship among Codes of Conduct, Conflict of Interest Provisions and Lobbyist Registration:

 It is recognized that lobbying is an acceptable and integral part of all government levels= processes. For many years, federal and provincial Canadian governments have regulated the behaviour of elected representatives holding office, as well as those who have left office. Post-employment rules preventing former cabinet ministers from receiving government contracts, or representing private sector clients seeking government contracts, are common. The restrictions normally apply for a period ranging from twelve to twenty-four months.

 In late 1997, the Integrity Commissioner of the Province of Ontario, recommended that the Members= Integrity Act for elected officials, be extended and applied to senior public officials. This involves new conflict of interest standards to reinforce and expand rules in the Public Service Act governing public servants in their day-to-day duties. Similar to federal legislation, its intent is to more clearly regulate the official dealings of government staff with other sectors, as well as the treatment of confidential or insider information both during and following employment with the government.

 Underlying these provisions are themes consistent with that of lobbyist registration, namely:

• to ensure fair and open government processes and business dealings;
• to prevent the occurrence of unfair individual influence or advantage resulting from positions of authority or insider knowledge; and
• to prevent putting the public interest at risk.

 Municipal Actions to Manage Lobbyists: (a)Creation of a Municipal By-law on Lobbyist Registration:

 In 1988, the former City of Toronto adopted a report from its Special Committee on a Code of Conduct for Members of Council which recommended, along with other recommendations, that a register of lobbyists be established and available to the public in the office of the Clerk. This recommendation led to enactment of By-law No. 183-89 (the ALobbyist Register By-law) in February of 1989.

 The authority to enact the Lobbyist Register By-law, was purported to be the former Section 104 of the Municipal Act, which is now a part of Section 102 of the Act. This Section permits a municipal council to pass by-laws for the Ahealth, safety, morality and welfare of the inhabitants of the Municipality in matters not specifically provided for by the Municipal Act@.

 The Lobbyists Register By-law included the following provisions:

• a definition of a lobbyist as, Aa person acting on behalf of others with respect to an issue and doing so for remuneration and/or compensation@;

• all lobbyists were required to file a form with the Clerk showing the name of the lobbyist, the employer(s) or client(s) of the lobbyist, and the issues on which the lobbyist was appearing;

• a lobbyist who made an Aappearance@ without first registering was guilty of an offence and liable to a fine up to $ 2,000.00; and

• an Aappearance@ included oral or written deputations to Council, its committees, or agencies and any communication, oral or written, with Councillors or senior staff.

 The Lobbyist Register By-law had an effective date of April 1, 1989 and on May 18, 1989, the City Solicitor reported to the meeting of the Council on a number of problems with the by-law. These problems included an inadequate distinction between lobbying and advice-seeking, deputations by a paid staff member of an organization, or other routine interactions. The by-law also proved to be unworkable in terms of its monitoring and enforcement. These problems were addressed by an amending by-law (By-law No. 330-89) which included provisions as follows:

• an attempt was made to narrow the apparent application of the by-law to all circumstances where paid agents contacted the municipal government by limiting the application to contacts with an intent to Ainfluence a decision@ in respect of an issue; and

• to exempt members of other governments and their employees from the registration requirements.

 The City Solicitor also reported to Council that a court challenge had been started to quash the by-law as illegal (an interpretation of Section 104, perceived conflict between the Lobbyist Registration by-law and professional ethics and responsibilities, and the validity of municipal regulations respecting the conduct and discipline of lawyers). The Solicitor stated that he would be discussing the concerns of the counsel bringing the action and the court challenge was adjourned to permit this. A sub-committee of the Council was established to examine the by-law in the circumstances of the challenge. During this time, enforcement of the by-law was suspended and no charges or prosecutions of infringements were pursued. (b)Lobbyist Disclosure System:

 Following the report of the sub-committee in November of 1989, the former City of Toronto Council repealed the Lobbyist Registry By-law and enacted By-law No. 716-89 (the ALobbyist Disclosure By-law@). The new by-law placed the responsibility on an Aapplicant@ rather than the lobbyist to file with the Clerk a duly completed lobbyist disclosure form. An applicant included any person who made an application to the City in respect of any one or more of a number of matters enumerated in the by-law. These included matters under the Planning Act and other legislation. Persons who responded to proposal calls and tenders, with some exceptions, were also included in the definition of applicants.

 Reflecting the change in making applicants rather than lobbyists responsible for filing a disclosure form, the obligation respecting filing with the Clerk became part of the Council Procedure By-law. The Council approved staffing and administration for the disclosure system and determined that failure to comply with the disclosure rules would result in a lobbyist issue not being placed on an agenda. (c)Difficulties with the Lobbyist Disclosure Provisions:

 For a number of reasons, the lobbyist disclosure provisions proved to be as problematic as the previous lobbyist registry had been. Examples included additional workload, missed agenda items of importance to City business and complicated scheduling requirements and conditions to fill forms. In addition, legal and other staffs were required to define cases for exclusion from the disclosure rules, list professionals and other parties exempted, and identify staff to whom disclosures were to be made (over six pages). All of these factors resulted in repeated amendments to the Council Procedural By-law. (d)Repeal of the Lobbyist Disclosure Provisions:

 In February of 1993, the City repealed its By-law on lobbyist disclosure after experiencing repeated difficulties. Additional analysis on the degree of public use of the information, showed that in two and one-half years, there had been only five cases of file review by a member of the press or Council and none by a member of the public. There was insufficient data to indicate whether the information and disclosure forms provided value to Council members when they came before Committees where lobbying was indicated.

(e)Another Municipal Approach to Managing Lobbying:

 The Municipality of Metropolitan Toronto experienced two instances where restrictions on the conduct and contacts of its Council Members and officials were imposed. In each case, intense lobbying (by paid and unpaid representatives) to influence the decisions of Council, threatened the integrity of approved Council processes and the accountability incumbent upon municipal business procedures. Specifically, a >no-lobby= ban was imposed in two instances of high profile high dollar-value Requests for Proposals. In one case, the ban was imposed as a condition stated in the call document since the issue had been generating a high degree of lobbying for some time before the competitive call took place. In the other case, the ban was imposed during the call process in order to restore order, objectivity and integrity to the evaluation process since it was in danger of being severely compromised.

 The >no-lobby= ban was extended to external and internal stakeholders including both elected and staff officials of the Municipality. While the imposition of the ban in those cases was determined by Council to be warranted given the issues and public interests at stake, many subsequent competitive calls were issued without such provisions. In this manner, the conditions imposed around conduct were appropriate to the special circumstances involved and did not indicate a particular set of pre-conceived assumptions on the part of the Municipality respecting the legitimacy of lobbying or lobbyists.

 Recommendations and Conclusions:

 At the senior government levels in Canada, lobbyist registration law, stringent codes of conduct and conflict of interest provisions for elected officials and public/civic servants, have been successfully implemented. The purpose of such regulations is twofold, namely, to make government information available to the taxpaying public and to add to the continuum of ethics in government. While this may logically suggest that there is merit in developing and applying similar processes for the City of Toronto, the municipal level actually possesses very limited authorities and powers to do so, as described earlier in this report.

 Attempting to put in place operations to distinguish between lobbying to affect a matter to be before a Council or Committee, as opposed to seeking information or conducting routine business, is extremely difficult at the municipal level. The nature and volume of City business and the democratic process by which the public has access to elected officials and civic staff, requires an enormous degree of administrative process associated with attempts to monitor and regulate lobbying. For example, how does one determine that a direct contact with an elected official was for the intent of attempting to influence government policy outside of accepted >parliamentary= procedure, i.e. was it lobbying? Many other questions of a similar nature can be posed. In the end, much of the success of procedures for registering lobbyists will be very dependent upon individuals= understanding of acceptable legal and ethical behaviours. This applies to elected officials as well as to civic staff.

 Managing activities in an open, fair and transparent manner is particularly important in municipal government given its high degree of direct and frequent interaction with constituents. Accordingly, it is considered good practice to establish clear rules and applications around government accountability mechanisms designed to protect the public interest. The Chief Administrative Officer, together with the Solicitor and the Executive Director of Human Resources, are well underway in developing municipal employee Code of Conduct/Conflict of Interest provisions. It is , therefore, recommended that these include corporate expectations about how to deal with lobbyists.

 Methods of making government information available to the taxpaying public will add to the continuum of ethics in government. Currently, the conduct of municipal elected officials is regulated through the federal Criminal Code, the Municipal Act, the Municipal Conflict of Interest Act and the Municipal Elections Act. The Municipal Freedom of Information and Protection of Privacy Act and the Council Procedural By-law requirements for open meetings and requirements to declare conflicts of interest, are other examples of ensuring ethics in government. Most, but not all of these statutes/legislation tend to emphasize economic or pecuniary matters such as bribery or the acceptance/solicitation of gifts, voting on a matter in which one has a personal economic interest, or exceeding the allowable maximum election expenditure.

 There are several improvements possible to financially related definitions in these regulations/statutes although these are outside the direct control of the municipality. In contrast, specifying what is considered to constitute conflict of interest for elected officials and staff does fall within the control and authority of a municipality. Examples could include, defining the use of insider or confidential information, the exertion of undue influence by virtue of office, or acting as a paid agent for a government within which they are members, for example. It is, therefore, recommended that the Chief Administrative Officer, together with the Solicitor and the City Clerk, determine the degree of interest held by Council in establishing Code of Conduct/Conflict of Interest provisions for elected officials. The intent would be to collect existing legislative requirements in this respect into a single document for the assistance of Councillors, as well as consultation with Council to identify any specific issues additional to those of a financial/pecuniary nature, for inclusion in such a document.

Similarly, it is recommended that the Chief Administrative Officer ensure inclusion of ethical matters and provisions in the purchasing procedures report, as directed by Council at its meeting of March 4, 5 and 6, 1998. This would ensure consistency in the approach and content of policies for the City.

The proposed new Municipal Act and the Provincial decision to enact legislation for a registry of lobbyists to the province, may provide a model to the City. A precedent may have been established in this regard respecting referenda. Recently introduced provincial legislation for referenda brought forward mirror-image packages for the provincial and municipal levels respectively. It is, therefore, recommended that the Chief Administrative Officer and the City Solicitor, assess the specific legislative authority of the City respecting the ability to establish lobbyist registration provisions and report on the appropriate process or model for implementation of such a registry. This assessment will need to be undertaken in light of previous municipal experience around implementation difficulties. Moreover, it will be necessary to ensure, if possible, that any by-law proposed will meet the requirement, not only of municipal jurisdiction, but also of the Charter of Rights and Freedoms and the authority to collect the information under right to privacy legislation.

Contact Names:

Jack Horsley, Legal 392-8736

Laurie McQueen, Corporate Policy & Planning 392-8895

Michael R. Garrett

Chief Administrative Officer