Proceedings of the Standing Senate Committee on
National Finance
Issue 16 - Evidence
OTTAWA, Monday, June 15, 1998
The Standing Senate Committee on National Finance, to which was referred Bill C-36, to implement certain provisions of the budget tabled in Parliament on February 24, 1998, met this day at 11 a.m. to give consideration to the bill.
Senator Terry Stratton (Chairman) in the Chair.
[English]
The Chairman: Good morning, honourable senators. I call the meeting to order.
With respect to Bill C-36, we have with us this morning the Honourable Paul Martin. Thank you, sir, for coming here today. I believe you have a brief opening statement.
Before you proceed, though, I want to ask you if you received from us a note us that outlined three specific issues about which we are concerned. The first has to do with the Canada Millennium Scholarship Foundation. The second involves student bankruptcies, and the third involves taxation on reserves.
The floor is yours, sir.
Mr. Paul Martin, P.C., M.P., Minister of Finance: Mr. Chairman, I was given an indication of certain issues upon which you want to focus. I did not receive a note, but I was given that indication.
First, I should like to thank you for the opportunity to appear before the committee with respect to Bill C-36, the budget omnibus bill. My colleague, Tony Valeri, was here last week to discuss the bill with you. As a result of that, and as you have just requested, I will make my opening remarks very brief, so as to leave maximum time for discussion.
I am pleased to add my support to the legislation and to encourage its speedy passage.
[Translation]
First of all, as you know, this was the budget in which we announced not only the first zero deficit in 30 years, but three consecutive zero deficits for the first time in 50 years.
[English]
The fact that Canadians were able to balance the books in such a relatively short period of time certainly speaks to the inherent strengths of this country, and to the ability of Canadians to accomplish great things when they put their minds to it. This is a great victory for Canadians. It is not due to any level of government.
Senators, when one looks at the problems in Asia, the interdependence of all the world's economies and the volatility of markets, the fact that Canada's fundamentals are now as strong as they are is an important asset for this country as it moves into the future.
Although the measures in the bill are varied, each adheres to the basic goal that our government has pursued since coming to office; namely, to build a strong economy and a secure society. For instance, the Canadian Opportunities Strategy provides Canadian with the tools required not only to survive, but also to succeed in the new economy of a new millennium.
[Translation]
These measures give hope to Canadian men and women. They will have a considerable impact on each worker's life. They give more weight to that most fundamental Canadian value, equal opportunity.
[English]
Quite simply, the acquisition of skills and knowledge forms the essential infrastructure for all that we seek to accomplish as a nation. This is how we will forge a culture of innovation in the land. It is how we will deliver the value-added jobs of the future. This is how we will achieve the quality of life that Canadians deserve. Whether it is the 100,000 young Canadians each year who will receive as much as $3,000 from the millennium scholarships, the single mother who will qualify for a Canada study grant so that she can return to school, the tradesman who will be able to upgrade his or her skills, or the parents who will use the Canadian Education Savings Grant to save for their infant child's education, the message of the budget is clear -- every Canadian who seeks to learn should be given the opportunity to do so.
I would like to turn to some of the bill's other important aspects. You will all recall that the 1997 budget announced the National Child Benefit System, under which the federal government provides an enriched Canada Child Tax Benefit while the provinces and territories redirect money into better services and benefits for low-income families, in particular the working poor.
The 1997 budget proposed a $850 million enrichment to create a new Canada Child Tax Benefit by July of this year. The working income supplement was enriched by $195 million last July, and increased child benefits this July will help over 1.4 million Canadian families with 2.5 million children. As was announced in the 1998 budget following consultations with the provinces and Canadians, the Canada Child Tax Benefit will be enriched by an additional $850 million.
In other areas, Bill C-36 allows for the CDIC -- the Canada Development Investment Corporation -- to sell the government's 8.5 per cent interest in Hibernia.
Bill C-36 also includes a series of tax measures, including the increase of federal excise taxes on tobacco products; also included is the reduction of the air transportation tax, which will be followed by rules relating to its elimination later this year.
In other respects, it permits the Minister of Finance and the Minister of National Revenue to enter into tax administration agreements with aboriginal governments seeking to levy taxes.
In short, Mr. Chairman, Bill C-36 is a comprehensive piece of legislation that paves the way for the implementation of the many important measures taken in the budget.
[Translation]
I would like to close by emphasizing once again that Bill C-36 is at the very core of the government's vision of the future. That vision includes a more prosperous economy, supported by improved personal security programs. A vision where the nation does not measure its strengths with economic indicators but by the quality of life it affords all of its citizens. All of the elements of this bill will contribute to attaining that objective.
[English]
I believe you asked me to be brief, Mr. Chairman. I think I have accomplished that.
The Chairman: Thank you, sir. Indeed, you have, and I appreciate that very much.
[Translation]
Senator Bolduc: Concerning financial assistance to international institutions, you alluded to the need for an international agency to monitor international institutions in developing countries. An agency somewhat akin to our Office of the Superintendent of Financial Institutions. Could the Bank for International Settlements not act as a preliminary certification organization for financial institutions, so that when the IMF asks the country for money, as we are, we will already have a guarantee?
Moreover, should the Department of Finance not commit itself to lending money only when it has obtained preliminary certification from the Department of Foreign Affairs as to the value of those institutions, and especially, the respect of human rights in some countries? We know that that is part of our foreign policy. That is why I am asking you that question.
Mr. Martin: It is a very relevant question, especially in the context of the international situation we work in today.
I think that the Bank for International Settlements is one of a number of institutions whose purpose is to regulate or monitor the international financial situation.
Aside from the BIS, you have the association that monitors security certification stocks, the regulation of insurance, the World Bank, the IMF and the Regional Development Banks. The problem we have is that all of these institutions have a role to play but there is no coordinating institution. Our suggestion is that we must put in place an organization that will coordinate all of those responsibilities without creating duplication among those institutions.
The problem is that each of them has an individual responsibility but no one has overall responsibility for things. That is what explains what happened in Thailand, to a certain extent, I think.
Concerning your second point, as to whether we should lend money to those countries, the problem has not been with loans to governments. The problem has really been with loans by banks to the private sector.
Because of a lack of transparency, information and regulation, it must be said that the private sector in a number of those countries lent short-term money to provide long-term credit. That is why they ran into trouble. Our objective is the same as yours, but we feel that a coordination organization is necessary.
Senator Bolduc: For 30 years, we have had in Quebec a bursary system that works well, I think that is clear enough. The federal government now has a smaller deficit and it is using its spending power to get involved in that field. A province such as ours, which is sensitive to these issues, is unhappy about that. There is virtually unanimous opposition to this project in the province on the part of students, university, rectors, administrators, professors, unions, et cetera, even the National Assembly. How is it that the government, as soon as it has a bit of money, uses its spending power to encroach on provincial jurisdictions and provide Premier Lucien Bouchard with the opportunity of waging an election campaign on that very issue? To me, this seems unwise.
Mr. Martin: Approximately one year ago, in a press release, all of the premiers asked that the Minister of Finance and the Minister of Human Resources Development, put in place before the last budget a supplementary financial assistance plan to tackle the question of student access to higher education.
So, we responded to that request. I think it is obvious when you look at the legislation that not only does the foundation have full authority to undertake negotiations, but also that the foundation will sit down with the province of Quebec to use existing lists and systems in order to avoid duplication and allow for full coordination in this area with the province.
Senator Bolduc: Do you not think it would be simpler just to send a $600 million cheque over a period of ten years? That would be added to the $250 million that is already being spent in the area. The students would be chosen and you could send them a cheque. The federal government would be visible in that way as well.
Mr. Martin: I think the objective was really to put in place, to celebrate the millennium, a project that would endure and really affect the country's future. When I look at what other countries are doing, we could have erected monuments or done other such things. I am sure that you will agree with me that investing in educational opportunities is a more durable project that will meet the needs of our population more effectively.
That is why we decided to proceed in this way. Senator Bolduc, I could quote the Prime Minister's letter, which states very clearly that the foundation will have all of the necessary flexibility, all of the necessary authority to negotiate with provinces and really find a way of coordinating and administering things with them.
Senator Bolduc: For the past 35 years, financial assistance for post-secondary studies was unconditional. It was a constitutional policy accepted by both levels of governments.
Now, conditions are being placed on assistance to post-secondary education, first of all because it will be going directly to students, and then because conditions involving merit, need, etcetera, are being put in place. Further, an enormous discretionary power is being given to a foundation outside the government, to define those conditions.
It seems to me that we are losing the opportunity of maintaining a constitutional policy whose value was self-evident, which was not causing any problem in the province of Quebec. This project has not been well received in the province. I think we are straying from constitutional policy in an unacceptable way. That is why there should be some way of amending this bill to make it acceptable to all.
Mr. Martin: The Prime Minister and the Minister of Human Resources Development, Mr. Pettigrew, indicated very clearly that the foundation could use the provinces' list. There would be no duplication, and the criteria will be virtually identical. So, if the foundation uses the province's list, I think we have a situation that will work quite well.
Moreover, I think it can be said, if you look at granting councils, that the federal government has been subsidizing students and researchers, for a long time, either in the social sciences and humanities or in basic scientific research. The precedent already exists. The federal government has contributed to that area in Quebec and has done so for a long time.
Senator Beaudoin: Insofar as spending power is concerned, we are not denying that the federal government can allocate funds to culture and education. The only practical problem, and we have seen three instances of it over the past 30 years, is that the spending power can lead to conflicts with provincial priorities in provincial areas such as, for instance, education.
I think what we need in a case like this is a little imagination, which is not a bad thing, to try and solve practical problems. Quebec may possibly be one of the only provinces that feels that way. I have always felt we should do everything in our power to solve such issues through administrative arrangements.
In other words, there are two powers involved: the province has jurisdiction over education, and the federal government has spending power. The jurisprudence in that regard has been clear since 1937. Only one question remains: the conflict with provincial priorities. In this instance, Quebec is probably the most affected. You will say that attempts were made to reach an agreement with the provincial government, and I understand that. Also, there was a resolution passed by the National Assembly. Should you not continue your efforts to find an administrative arrangement to settle the issue? There may be several possibilities. I hope you will not abandon your efforts. I would like you to come to an agreement, because the powers exist. We know what the Constitution says, but we have to find a compromise at some point. We have to come to an agreement. I do not think we should throw in the towel and say that it is impossible.
Mr. Martin: I agree with you entirely. I am convinced that we can come to an agreement. You mentioned the resolution that was passed by the National Assembly on May 14 and on that point I will quote an excerpt from the Prime Minister's letter to you:
...we examined the motion passed on May 14, 1998 by the National Assembly, as well as the one tabled by the Official Opposition in the National Assembly on May 7, with close attention. Our examination of those motions leads us to conclude that those motions express very valid and positive positions whose objectives in fact are in keeping with the spirit of Bill C-36. Indeed, that bill was drafted so as to take into account provincial roles, characteristics and programs in the area of financial assistance to students.
You are quite correct. We should not throw in the towel. The Prime Minister has indicated quite clearly that the foundation should negotiate with the government of Quebec and the other provinces to find common ground, precisely as you have just indicated.
Senator Beaudoin: On that, the motion passed by the National Assembly would seem to be an acceptable starting point.
Mr. Martin: The Prime Minister's letter is quite clear. There are certainly in the preamble to the motion certain things that may be less acceptable. But if you look at the three criteria that have been set, for instance, that works very well.
Senator Bolduc: Would it be possible to exert some pressure on the negotiations, to have clause 7 of the bill state that the foundation will be created immediately? For the rest, we could give the foundation three months to come to an agreement with the province. In that way, we would create additional pressure for a solution to be found to the problem.
Mr. Martin: I think we have to pass the legislation. There are deadlines that must be respected. Insofar as the foundation is concerned, the Prime Minister's letter is very clear. If you read the Prime Minister's letter, you see that the foundation will certainly recognize the spirit behind the words of the legislation.
[English]
Senator Kinsella: Mr. Minister, could a copy of that letter be tabled with this committee?
Mr. Martin: Yes.
Senator Kinsella: Speaking to this principle, then, my colleague Senator Bolduc has asked whether we could see an amendment to the bill that would require the foundation to negotiate with the provinces. The Prime Minister's letter is speaking to the same principle, the need for this kind of negotiation.
In my reading of the bill, it is discretionary to do this for the foundation of the board. Would you be open to another way of achieving the same objective? For example, I understand that the Government of Canada must have a memorandum of agreement when the funds are transferred from the federal treasury to the foundation. In other words, there will be a contract, an instrument.
Would you consider that the instrument contain a provision requiring the foundation to follow this principle, which you say the Prime Minister has endorsed, and which exists at the discretionary level in the present bill?
Mr. Martin: Senator, the legislation provides for the foundation to award the scholarships in a way that will avoid duplication and will, in fact, build on existing provincial needs and complement existing programs. The foundation has the complete authority and the Prime Minister's letter makes very clear that that is the real spirit that lies behind the wording of this legislation. To go beyond that at this time -- to contemplate further amendments -- would be very hard because of time constraints.
Senator Kinsella: Mr. Minister, if we cannot go that route, what about the instrument that will be drafted to cover the transfer of funds from the Consolidated Revenue Fund to the foundation? The instrument that transfers the funds could contain that requirement. In other words, a legislative amendment would not be required, but there would be, in writing, an expression that is tied to the funds. Would you look at that?
Mr. Martin: I will look. We all certainly want an expression that supports the spirit of the legislation. The degree to which that would be binding is something about which I am not sure. I would really have to examine it, and I will certainly do that.
Senator Bryden: Mr. Martin, this discussion has come up a number of times at our committee. The proposed act, as I read it, empowers the foundation to enter into discussions and agreements. The position taken on the other side is that the act, or some other instrument, would "require" the foundation to enter into such an agreement. If we were to do that, what would "or else" be? How could that be managed? I do not understand how you can go any further than what is in here.
Mr. Martin: That is the position I have just taken. The foundation is enabled. The Prime Minister's letter has made the spirit behind the words of the legislation very clear, but I do not think we can go beyond that to a requirement.
[Translation]
Senator Rivest: Mr. Minister, that implies that eventually the federal government could act unilaterally if there is no obligation to come to an agreement.
Mr. Martin: It is not the federal government, but an independent foundation.
Senator Rivest: In this new concept of federalism, we have the federal government, provincial governments, and government by foundations.
Mr. Martin: I think that everyone agrees that there are a lot of advantages to having arm's length foundations.
Senator Rivest: But why are they cropping up in fields of provincial jurisdiction? Again this weekend, at the Quebec Liberal Party's general assembly, Mr. Ryan, a former Minister of Education, a man who is held in high esteem, also felt the need to speak up. Where is the pressing need for this bill, this foundation? As Senator Bolduc said, you can create the structure. Why is it so urgent to pass this bill as it stands? By leaving the door open, if there is no agreement, we will be pressing ahead via the Foundation.
The first ones to benefit from the Foundation will be the students. I do not know if you read the extremely articulate brief the students submitted to this committee. They are the first ones concerned, and they reject this government project; in spite of that, the government persists in wanting to see it passed.
As Senator Bolduc indicated, politically speaking, in Quebec, this business may cause a lot of damage. First of all, administratively and financially, it undermines the Quebec loans and bursaries program. There is no obligation to come to an agreement. There could be duplication. The Department of Education will hide its lists. You can see the confusion that all of this may lead to; they do not want it included in the bill. No amendment is being proposed. You are creating a considerable political problem in Quebec at a time and in a context when it would be better to avoid creating problems.
I do not understand this obstinacy. I accept the principle that the federal government should put money at the disposal of students, but why isn't it possible to proceed as Lester B. Pearson and Jean Lesage did in 1964? Didn't their solution make sense?
Mr. Martin: You asked a question about the urgency of passing this bill. I can tell you that everywhere in Canada where I visited colleges and universities, whether in Quebec or elsewhere, the first question I was asked was always: Why wait for the year 2000? Students want to know whether they could not have the money in 1999. The urgency, Senator Rivest, comes from students everywhere. It is the same thing in Quebec and elsewhere. Students receive loans, they need assistance to pursue their studies and they have asked us why we are waiting for the year 2000.
Senator Rivest: Yes, but there is already a structure. As Senator Bolduc said, the need also existed when Mr. Lesage and Mr. Pearson signed their agreement. There is a crying need, you are perfectly right on that account. Students are well aware of that, and they came here to tell us so. But why chose a vehicle no one wants? Everyone wants to get to the same destination, but you are proposing a vehicle that does not work and that creates administrative and political problems. The federal government is throwing itself into this headlong. This makes no sense at all. I know that it is the Prime Minister's project and that it is dear to his heart, good for him, but the federal system will be paying the piper. This type of unilateral initiative is destructive of the federal option in Quebec, and you know that very well. You cannot deny it. I do not understand why you are giving the Parti Québécois and its minions this excellent argument to attack the federal regime. You are giving them further opportunities to undermine the federal system. We, the champions of the Canadian option, are giving them this opportunity. I just do not get it.
Mr. Martin: First of all, it must be said that if you look at the granting councils, the Canadian government has been providing grants to post-secondary students for a very long time. The precedent has certainly been there since the days of Mr. Pearson and Mr. Lesage. No one has said that the federal government should not do this. In Quebec, everyone has applauded that initiative.
Secondly, Senator Rivest, I can only repeat that the Prime Minister has expressed the wish, both in his letter and in this legislation, that the flexibility be built in to avoid duplication and allow for full cooperation with the provinces, including the province of Quebec, in this area.
Senator Rivest: Why not add the words, "must conclude an agreement with provincial governments", as Senator Bolduc suggested to you?
Mr. Martin: Because it is an arm's length foundation. The situation in each province could be quite different. Senator Bryden explained that, and the Prime Minister's letter is very clear about the government's intent.
Senator Rivest: If that wish is not satisfied, that is to say if there is no agreement, for whatever reason, the federal government will act.
Mr. Martin: I cannot imagine there not being an agreement. That would not make sense, because Quebec and the other provinces have so much to gain. Quebec has not been told that if the students take that money and if Quebec cannot invest it elsewhere in education, they will have a very flexible timetable to work with.
Senator Bolduc: Mr. Minister, with your permission, I would like to go back to my first question. I am sure you will acknowledge that you are doing something new, introducing conditions for assistance to post-secondary education. More than that, you are defining a priority relating to assistance to post-secondary education.
However, those who know education at the provincial level can tell you in no uncertain terms that the priority is elsewhere. Those who are familiar with post-secondary education know that that is not the priority.
Mr. Martin: You said you were going to go back to your first question concerning international institutions; I liked that question.
Senator Bolduc: Well, our job is to torture you a little. Your Prime Minister has sinned, and I hope that when you are the boss, you will not do the same.
Senator Rivest: That is the only hope we have left.
Senator Joyal: Mr. Minister, I would like to get back to a criticism that has been levelled at the bill across the board, which is that the bill is the Prime Minister's bill and that it reflects his wishes. By discussing this bill, we are calling into question the prime minister's choices.
I would like to remind my colleagues on the other side that the blue book says the following on page 33, and I quote:
The knowledge-based economy that is evolving demands expert skills and is transforming the labour market. Tomorrow's jobs will almost all require post-secondary education, and will force us to adopt a culture based on continuing education.
The following is taken from the Conservative Party's platform during the last election, a year ago, and I quote:
A Charest government would allow a greater number of students to enroll in colleges and universities:
by allocating $100 million to a program of merit scholarships that would open the door to post-secondary studies to 25,000 disadvantaged students who would have obtained the best marks in exams in compulsory subjects;
by co-operating with interested provinces in setting up universal student assistance programs funded by the private sector. ALL students would be eligible for assistance and would reimburse their loans after obtaining their degrees, according to a repayment schedule based on their personal income;
I wonder, Mr. Minister, if we have not forgotten, in the course of this debate, to acknowledge that student debt is a reality, the impact of which is felt by people on both sides if the committee. I think we have to disabuse everyone of the notion that this is nothing but the Prime Minister's bill.
In reply to the statement that reducing student debt should not be the priority in education, I would once again like to quote the joint communique issued by the premiers after their meeting in the month of December 1997, so, approximately six months ago. There is in it an extremely specific paragraph referring to the child tax credit, as you pointed out, but concerning the field of education, the press release also mentions student debt quite explicitly. I would like to quote it so that this is very clear in everyone's mind. Everyone has constantly been saying that student indebtedness is not a priority, as this bill would make it, and in reply to this, I quote the following:
[English]
The First Ministers agree on the importance of lessening students' financial burden. Furthermore, it is agreed that the Minister of Finance and the Minister of Human Resources Development will accelerate work in concert with provincial and territorial Education Ministers so that the Minister of Finance can take account of this work in the next federal budget.
[Translation]
It seems to me that in the debate on this bill, some arguments have been brought forward that are nothing but grand-standing. But here in the Senate, it is incumbent upon us to deal with bills that are referred to us by the House of Commons in a manner befitting this chamber of sober second thought.
And in the context of this sober second thought, one of the elements that seems most important to me are the comments made by the Auditor General concerning the Innovation Fund. You will remember that the Auditor General raised these points in his annual report and my colleague Senator Bolduc also mentioned this in his speech in the Senate. You know that the Auditor General views the operation of the Innovation Fund with enormous reservations. I imagine he would have the same reservations about the Millennium Scholarship Fund. I know that you were not specifically advised of this question, but would you be in a position to reply to the objections that might arise concerning the operations of the foundation that might put it in conflict with the standards of the Financial Administration Act?
Mr. Martin: Yes, fine. Firstly, concerning your preamble, I already quoted the provincial premiers. You are quite right, we acted in response to a request issued by the provincial premiers. Secondly, I have a quote from the Conservative Party -- Senator Simard is often a little more partisan -- which I am tempted to quote myself. This certainly is an initiative which came from the Prime Minister, but so was the entire budget. It recognizes that if we want to create jobs in the modern economy, skills are of paramount importance.
That is why the Prime Minister wants us to invest in research and development, and that is why he wanted us to create an equal opportunity strategy which goes much further than the Millennium Foundation. There is the 17-per-cent credit for student loans, as well as the $3,000 grant for single-parent families where the parent, usually a woman, wants to go back to school. There is also the education savings plan.
Ten years from now, when the budget has been forgotten, the education savings plan will remain as a symbol, with the Millennium Foundation, of that budget. We are ready to put money into the hands of parents to help their children.
In that spirit, the budget really strives to achieve equal opportunity in today's economy. This is very important. And yes, it was all done at the behest of the Prime Minister.
Concerning the accounting matter referred to by Senator Bolduc, we have a difference of opinion with the Auditor General, it is that simple. Let me explain why.
The transparency of our books is crucial to us. In the private sector, when you have a liability, you must post it in your books immediately. Some feel that the same thing does not apply to the public sector. I think that the public sector has the responsibility of being as transparent as the private sector, if not more so. That is the first thing.
Secondly, we have a letter from the Coopers & Lybrand accounting firm that tells us that even with interpretation of public sector rules, this is really a grey area. They told us that there were arguments both in favour of the Auditor General's position and of our own. They said that in a grey area such as this one, it is up to the government to make a decision, and that decision carries the day. I do not know if you have that letter.
[English]
Senator, do you have the Coopers & Lybrand and Ernst & Young letters?
The Chairman: Not that I recall.
Mr. Martin: In order to respond to Senators Joyal and Bolduc, I would like to table these letters. Essentially, they say that the difference of opinion between the Auditor General and ourselves is a matter of debate. This is a grey area. In our view, in this debate, we have the responsibility to be as open and transparent as possible.
Senator Cools: On a point of order, the minister has said that he wishes to table some documents. Do have you those with you?
Mr. Martin: I doubt that I have them with me; however, I shall ensure that you receive them before you break.
Senator Cools: Excellent. Colleagues, I move that on receipt of those documents they be tabled with the committee.
The Chairman: Honourable senators, is it agreed that these documents be tabled with the committee?
Hon. Senators: Agreed.
[Translation]
Senator Bolduc: In saying that, Coopers & Lybrand mention that when there is a divergence between accepted accounting practices current in the private sector and the opinion of the government of the day, the government must decide.
[English]
To me, this is not the sound way to do it. The wise way would be a legislative amendment to the Financial Administration Act so that those parameters are in the law itself; would you not agree?
[Translation]
Mr. Martin: Your last suggestion may be a good one. We could study it. Coopers & Lybrand mention that when you look at the interpretation, in the public sector, this is a grey area. When you have a grey area in the interpretation, the government not only has the right but the responsibility of making its own choice, and that is what we did. Your suggestion of going further and amending the Act is certainly something we could have a look at.
Senator Bolduc: Basically, this is a rule that should be included in the Financial Administration Act so that we could have a debate on it. Otherwise, the public sector applies different rules than those that are applied in the private sector.
It is a bit like the Consumer Protection Act in Quebec which states that private sector companies cannot lie or make baseless claims. Now, we know that political parties promise the moon to the population during electoral campaigns, and once they are elected, the reality is quite different. They decide, for instance, that the Free Trade Agreement is actually a good thing. If the Consumer Protection Act applied to politicians, some of them would go to jail.
Mr. Martin: We agree with the idea that the regulation or the interpretation of public sector financial statements should be as transparent as in the private sector.
As to your second comment, you have far more political experience than I do, but I do share your point of view.
[English]
Senator Bryden: I wish to turn to the issue of keeping student loans out of the insolvency and bankruptcy process for a period of 10 years.
The principal concern of the Insolvency Association and the Canadian Bar Association, both of whom testified before this committee, was that there was an agreement in place to extend the grace period for repayment of student loans from two years to 10 years.
I tried to defend this decision on the basis that there are specific provisions dealing with insolvency for students in trouble with educational debt. Could you or your officials shed some light on this? This became troublesome for us the other day.
Mr. Martin: Part of Bill C-36 provides for a substantial improvement in how we handle loans for students in difficulty. Essentially, the changes we made are such that, if a student earns more, he or she can still be eligible for interest rate relief.
We will be extending that relief further up the income scale. We have extended the repayment period, for those who have exhausted their interest rate relief, from 10 to 15 years. This will reduce monthly payments by almost a quarter. We have also extended the repayment period from 30 months to 54 months. The list is quite long.
We have essentially put in place a series of interest-rate and repayment reliefs, which ultimately lead to the forgiveness of 50 per cent of the principal amount of the loan at the end of the period, such that students should not have to avail themselves of the bankruptcy legislation. In fact, one of the things we very much want is that students do not avail themselves of the bankruptcy legislation but that they take into account this interest-rate relief.
On the other side of it, we were asked to do this by several of the provinces. The numbers of bankruptcies in the first two years are staggering. There was something like a 14-per-cent increase in student loans and a 35-per-cent increase in bankruptcies. As you know, certain controls are necessary to ensure that a good program is not being abused.
The Chairman: If I may, I have a supplementary to that.
While that is true, sir, the Canadian Bar Association said that there are no reliable statistics yet regarding that because the bill has only been around for two years. They also argued that we are seeing an increased bankruptcy rate across the population as a whole because of the greater use of credit. They argued that while there is indeed a rise in insolvencies on the part of students, it is below that of the average of Canadian population as a whole.
Could you respond to that?
Mr. Martin: Senator, first, you are right that the experts seem to feel that, over the course of the better part of three-quarters of the last decade, there has been an increase in bankruptcies, largely due to the use of the credit cards and probably also the trauma of the recession at the beginning of this decade.
That being said, recent data show a slowing down in the increase of bankruptcies but not a slowing down in the increase of student bankruptcies. If I can go back to the numbers, while there has in fact been a 14-per-cent increase in student loans, there has been a 38-per-cent increase in bankruptcies, which is substantially greater than anything comparable in the general population.
The Chairman: The perception on the part of the current students, that is the students who will finish their undergraduate degrees before the millennium fund comes into effect, is that they are being singled out. Students graduating when the millennium fund comes along will have the opportunity to apply. However, those who are currently students, who have seen a skyrocketing increase in their tuition fees, will be hit with this 10-year provision. Of course, they look at it and say, "Why us? Why are you singling us out and giving the kids down the road a greater benefit?"
Mr. Martin: To a certain extent, that is true, but they are also being favourably singled out. The students who will now graduate will be the first ones to be able to get the 17-per-cent credit, which is quite substantial. At the same time, they will be the first students to have this substantially improved and extended interest-rate-relief program. It is very important to look at what the interest-rate-relief and principal-repayment opportunities were before this legislation and what they are now. Any impartial person would say that they are much better off now.
The Chairman: I would agree, but that is not in the bill itself.
Mr. Martin: The interest-rate relief?
The Chairman: Yes. Is that in the bill itself?
Mr. Martin: I am told it is in the regulations.
The Chairman: That is what I thought. The regulations can be changed by Order in Council.
Mr. Martin: Yes, they could.
The Chairman: Or by another Minister of Finance. That is my concern. While you are moving from 2 to 10 years in the bill, you are providing the interest-rate relief by regulation, so if another finance minister comes along or something else changes, you will be able to change the rules on the students. That is really what I am getting at.
Senator Forest: Mr. Minister, you will know that post-secondary education has been my preoccupation. Our Senate Committee on Post-Secondary Education travelled across Canada, interviewing students, rectors, and Canadian business people, as well. Certainly both the proposed legislation that is before us and last year's have responded to student concerns about student loans and their interest rates, and the educational programs for which parents will be able to save. These were all good things and we are pleased about that.
You might be interested to know that in every province except Quebec there was a call for a stronger national presence in education. We did not deal with that.
We all have the concern -- as you have said yourself -- that students in the province of Quebec be able to avail themselves of the millennium fund in a way that will be of most value to them. We understand that amendments cannot be made at this point, but can you assure us and the students from Quebec that every avenue will be explored in the negotiations to ensure that the needs of those students are attended to as they will be in the other provinces?
Can you take that message back to the Prime Minister?
Mr. Martin: Yes, I certainly can. I will do that. I can tell you that the Prime Minister, cabinet and caucus have as their ultimate goal facilitating access to education for literally hundreds of thousands of Canadian students, to make it easier for them, to equip them not only to survive but also to succeed in what will be a very difficult but exciting economy. I will certainly take that message back, senator.
Senator Forest: It is most important. Thank you.
Senator Kinsella: On a different topic altogether, Mr. Minister, on page 52 of the bill, you are proposing to amend the Employment Insurance Act by providing a new section 96. As I understand that, basically what you are proposing is that, in 1999 and in the year 2000, there will be an incentive to hire workers under the age of 25. There are dangers in this type of social engineering.
Will that not have the effect of encouraging employers to lay off workers over the age of 25 and replace them with workers under the age of 25? You must have some concern around that yourself, because the bill provides that the premium break would be cancelled if a competent body rules that an employer fired an employee to take advantage of that program. I am curious to know the kind of competent body you are thinking of there. Would it be the Human Rights Commission, or do you see that type of provision becoming part of labour contracts, where seniority and lay-offs and hiring are part of the collective agreement? Have you done any studies around that? You are moving into an area where you will provide an incentive or relief on the premium for companies that hire people under 25, but there is a danger in that, which you seem to have apprehended yourself.
Can you shed a little light on that?
Mr. Martin: Senator, obviously a huge number of companies will be involved. If this proposed section is abused, obviously there will be complaints made by employees who are treated badly, and the government will respond very quickly.
Let me deal with what I think is your fundamental question, which is a very important one.
You may or may not remember that in a previous budget we had a forgiveness program on unemployment or employment insurance premiums for small- and medium-sized business. That was in position for two years. We have been working very closely with the Canadian Federation of Independent Business, with the chamber of commerce, with the BCNI, and with other business organizations to deal with a number of issues. How do you encourage companies to hire those who otherwise are considered unemployable? How do you encourage companies to hire the physically disabled? How do you encourage companies to hire young Canadians?
It was very clear in the consultation period that there was tremendous worry about the high levels of youth unemployment, and we had to find incentives. Our discussions both with labour unions and business associations indicated that the only way we will find out is to try these things, so let us try pilot projects. That is what we are in process of doing. I hope it works, but, as well, we are building up a body of knowledge to be able to answer precisely the questions you are asking, which I think are dead on.
Senator Kinsella: Is the Human Rights Commission, which deals with anti-age discrimination legislation in Canada, involved in that process?
Mr. Martin: We did consult. We did not consult with the commission, but we did take legal advice on this matter. We were told that this did not contravene the legislation. We were concerned about that ourselves.
The Chairman: I have a question related to Part 4 of the proposed legislation. We had a representation by the Iroquois band over their concern about bands being given the right to impose taxes on the sale of alcohol, tobacco and fuel on reserves. Their concern was that under the Indian Act it was an individual right to be exempt from taxes on reserves. We are trying to understand what this part of the bill does and why the band came forward. We do not clearly understand the reasoning behind this. Could you help us?
Mr. Martin: I will try. I do not want to be accused of misinterpreting what they are saying to you, however, if I can hazard a guess, they may well be saying that if Indians are exempt from taxation under the Indian Act, this taxation is therefore contrary to the act. I would suspect that that may be their position. However, that is not a position we hold. That is not our interpretation.
I will express a personal view. There are probably 100,000 areas where I am not an expert, and this is one of them.
I think the fear Her Majesty might have had was that governments would use taxation powers to negate treaties. That is not the case when, in fact, the taxation is being imposed by the bands themselves. That is a very different thing.
This is not contrary to the Indian Act. In fact, it is probably an essential part of the evolution towards self-government, in that they be able to generate internally sourced funds.
The Chairman: We are beyond the time for questions, but I know there are more questions.
Does the minister have the time to answer more questions and is he willing to answer more questions?
Mr. Martin: That all depends on the question.
[Translation]
Senator Rivest: If I understand correctly, what the prime minister asked you to say about his Millennium Scholarship project is that he wants no amendments to be made to it.
Mr. Martin: First of all, the point raised by Senator Joyal is very important. This is a government project to further equal access and it is the basic philosophy underlying the development of a modern economy. The prime minister does not wish to amend the bill. Because of time constraints, we are not in a position to accept amendments.
Senator Rivest: I am asking you the question because the President of the CSN will be testifying before the committee this afternoon and we will also be meeting with officials from the Quebec government, but it seems that all of this will be to no avail. Mr. Chrétien does not want his bill to be amended. He wants it to pass as drafted. He is overriding us.
Mr. Martin: We have to pass the legislation because there are a number of measures and government actions that depend on it.
[English]
Senator Bolduc: It is not very often we have the opportunity to question the Minister of Finance, so I will begin with a general question.
How is it, Mr. Minister, that, even though the economic fundamentals of our economy are not too bad, given the decreasing value of the Canadian dollar we do not increase our competitiveness on an international level?
Mr. Martin: Senator, you have asked a very good question and a very important question.
By the standards of the various international organizations looking at competitiveness, Canada is doing reasonably well. Nonetheless, I think your question is quite pertinent as it relates to productivity.
There are a number of ways in which I can answer your question. First, the anecdotal evidence on productivity is that we are doing quite well. I met not long ago with the manufacturers' association. They believe that their productivity is improving substantially. I met with the Canadian Advanced Technology Association, and they feel the same way. Most service providers and engineering firms feel it is improving. However, senator, the statistics do not show that increase, and that is why your question is so pertinent.
In the United States, Allan Greenspan and others have said that the measurements of productivity have simply not kept up with real productivity. How does one measure productivity in a service industry? How does one measure productivity arising out of a multitude of financial instruments, which obviously is a productive force in a rapidly evolving world?
I think, senator, there are two factors. First, clearly our measurements are out of date and, secondly, we have to do a much better job measuring productivity. That having been said, productivity obviously establishes the difference between an economy able to provide its society with increasing standards of living and our ability to measure up against the rest of the world.
I think we have a long way to go. We must invest in education; we must invest in research and development; we must keep our taxes as low as possible.
Senator, you have really raised what may well be the gut question for the Canadian economy.
Senator Cools: Mr. Minister, I wish to thank you for appearing before the committee this morning. I should also like to thank you for your willingness and readiness to be available to us. In point of fact, minister, you met our schedule and you went to considerable trouble to do so today. I would also like to thank you for responding to many of the serious concerns raised by members of the other side.
On a personal note, I should like to thank you for the innovation contained in Bill C-36. It is a bit of genesis and creativeness. Bill C-36 attempts to move money directly into the hands of those who need it, namely, the students themselves. I thank you for that innovation, but that is my own personal "thank you".
Finally, for the people of Canada, I thank you for your splendid work in bringing Canada's fiscal house into order. Having said all that, you do not come before this committee very often. I invite you to attend here again and again.
Mr. Martin: If you continue to speak in the same vein, I will come back as many times as you want!
The Chairman: Thank you very much, Mr. Martin.
We will now proceed with witnesses from the Canadian Cancer Society. Mr. Rob Cunningham has a brief opening statement to make, and then we will open the floor to questions.
Before we continue, on Thursday we asked for the amendments from the House of Commons. We asked the clerk to request a response to them. We now have that response. It is in English only at this time and we are awaiting the translation before it can be distributed. We can go through today's agenda, but I think it is fairly straightforward.
Please proceed, Mr. Cunningham.
[Translation]
Mr. Rob Cunningham, Lawyer, Senior Policy Analyst, Canadian Cancer Society: Mr. Chairman, honourable senators, I am also the author of the book entitled Smoke & Mirrors, The Canadian Tobacco War.
On behalf of the Canadian Cancer Society, I support the increase in cigarette taxes proposed in Bill C-36.
[English]
This is a positive step in the right direction, in terms of returning tobacco taxes to their former levels, the pre-1994 tax rollback levels. We commend Finance Minister Martin for his actions resulting in the tax increases in this bill and also acknowledge the support of Health Minister Allan Rock and National Revenue Minister Herb Dhaliwal leading to this announcement.
We see higher tobacco taxes as an essential and important component of a comprehensive strategy to reduce smoking among the population and among adolescents.
To put the increase in perspective, under this bill, federal excise taxes on cigarettes increase by 60 cents per carton of 200 cigarettes in four provinces -- namely, Ontario, Quebec, Nova Scotia, and PEI -- and by 40 cents per carton in New Brunswick. The total increase, when you factor in the matching increase by provinces, is $1.20 in four provinces, 80 cents in New Brunswick. Even with these increases, cigarette taxes in Ontario and Quebec remain $16 per carton lower than prior to the 1994 tax rollback.
In the written materials that you received, a reproduction of a graph from The Globe and Mail compares taxes before and after the increase found in this bill and prior to the 1994 tax rollback.
The written materials also consist of a tax map, indicating comparative retail prices for a carton of cigarettes in various provinces and neighbouring U.S. jurisdictions. We see how retail prices in Ontario and Quebec remain lower than in some neighbouring U.S. states, such as Michigan and New York. There remains an opportunity for us to impose a much more substantial increase in tobacco taxes, without generating the risk of contraband. In terms of the Western Canadian provinces, we also see substantial price differentials on the Canadian and American side.
We are disappointed that, in the four years since the February 1994 rollback, there has not been an increase in cigarette-related tobacco taxes in the western provinces or Newfoundland. We are also disappointed by the fact that roll-your-own tobacco and leaf tobacco did not receive a tax increase, or that no steps were taken to eliminate the sale of tobacco from duty free stores, as done by the European Union, effective 1999.
We have distributed to members of the committee copies of a mock-up package. We have put forward this measure as a recommendation to the government to have a stronger dissemination of information to consumers -- both in terms of the poisonous content of the product and in terms of the health warning. On the inside of that package is a visual representation of one of the health effects, which warns, in this case, of gangrene. You will notice that on the front there is a small example <#0107> and it could be improved -- of how there could be a province-by-province-based tax-paid marking. This would help respond to concerns and to potential and actual situations of interprovincial smuggling. Revenue Minister Herb Dhaliwal has announced that he is considering that. There are discussions with provinces, and we commend him and the government for that initiative.
[Translation]
We support the provisions in Part 4 of the bill respecting tobacco taxation on specified Indian reserves, to be imposed by a council. This will improve efforts to reduce tobacco consumption among Aboriginals which is at the present time much higher than in the general population. This is due to the availability of lower-cost cigarettes. These measures will help control smuggling because prices will no longer be different on reserves, and this will also provide revenues to the council.
[English]
Before I take your questions, I wish to make two comments, the first being with respect to tobacco sticks. This bill starts to close the loophole allowing tobacco sticks to be taxed at a lower rate than cigarettes. Tobacco companies are very innovative at doing things to protect their sales. They came up with this product simply to avoid the cigarette taxation rate. It is a pre-formed stick of tobacco, and they sell it along with a paper tube. A little device is provided to the consumer to insert the tobacco into the tube. One company had this product and were gaining sales in this category, so Imperial Tobacco responded in late 1997 with their own product, which has a stick of tobacco with a filter attached. All the consumer need do, in order to have a cigarette, is attach a little piece of paper over the filter. According to Imperial Tobacco, this should be categorized as a tobacco stick. I think legally it should be categorized as a cigarette. Revenue Canada's interpretation, at least for the moment, is that it is a tobacco stick and therefore it is entitled to a lower rate of taxation.
We have a loophole. Thank you to the government for starting to close the loophole. It is our hope that by the time the next budget comes around, the loophole will be closed completely.
With respect to contraband and the role of manufacturers, an exposé on the fifth estate in January 1998 documented very disturbing information in terms of the links between manufacturers, executives, and smuggling. At the time, our organization and others called for a criminal investigation of tobacco companies, and that remains our position in terms of that and in terms of the seriousness of the contraband situation in years gone by.
I welcome your questions.
The Chairman: Sir, when Jake Epp was Minister of Health, the government raised taxes substantially, and then in 1994 they were rolled back. The roll-back occurred because of the smuggling, as it were. I agree with you, and I am completely in support of getting rid of this product, but there is a degree to which you can tax, as we have discovered. You can only tax so much, and then you have the contraband problem. I am from Manitoba, and even there people were fined and sent to jail for smuggling across the border from the States and bringing in products from Ontario.
Recognizing that you cannot prohibit people from smoking, what are the ways by which people will be discouraged from smoking, other than by taxation? If I were a smoker, I would take my cigarettes out of their original package and put them into a cigarette case, in order not to have to read the warnings on the cigarette package. Knowing that prohibition does not work, knowing that high taxation does not work, what do you think is the long-term program for having people stop smoking?
Mr. Cunningham: Smuggling was a very serious problem in 1993; 25 to 30 per cent of the Canadian market in that calendar year was contraband. We recommended alternative measures to a tax roll-back that could have been implemented to control contraband.
In Canada, 90 to 95 per cent of the illegal product we saw actually originated in the factories of Canadian manufacturers. They were complicit. They exported product to the United States knowing full well that it would come right back into Canada as contraband.
A more substantial increase today than we see in this bill would not lead to contraband, given that price levels in neighbouring U.S. states exceed those of Ontario and Quebec. There is no need for us to have lower taxes.
We recommend a comprehensive strategy to reduce smoking. Taxation, yes, is one. Plain packaging and stronger package warnings are another. We favour extensive education programs. In that respect, I would thank senators and the Senate for passing Bill S-13, the Tobacco Industry Responsibility Act, which is a recognition of the benefit of that type of initiative in reducing smoking, especially among young people. In terms of reducing smoking in workplaces and public places, that has an impact. In terms of a comprehensive set of measures, we endorse them all. Taxation is only one of them.
Senator Moore: How does this smuggling work? Obviously the incentive is money, profit, but you say that product goes from Canada to the U.S. and then back into Canada. Using your map, can you give me an example of a province that would ship product to the U.S. -- show me which state -- and then smuggle it back into Canada?
Mr. Cunningham: There are essentially four major manufacturing facilities in Canada, three of which are in Quebec -- two in Montreal, one in Quebec City -- and one that is in Guelph, Ontario. One scenario might be where cigarettes go from a Montreal factory to upstate New York.
Senator Moore: At what price?
Mr. Cunningham: They would be exported without adding Canadian and/or American taxes. This is how it worked prior to the tax roll-back. We are talking about $8 or $10 a carton. They were exporting at cost. They were not even paying American taxes, in many situations. They were exporting to so-called duty free markets, which were essentially non-existent. Apart from a traditional level of demand for Canadian brands of three-quarters of a billion cigarettes per year, we saw how manufacturers increased their exports to 18 billion per year in 1993 without any increase in demand. Once the taxes were rolled back, exports declined as well. It was reported that 80 per cent of the contraband came back into Canada through the reserve at Akwesasne, which straddled the Ontario, Quebec and New York state borders. From there, the contraband went to various parts of Canada. However, a larger percentage of the cigarettes were smuggled into Quebec.
Senator Forest: Was it smuggled both ways across the border?
Mr. Cunningham: No. It went from Canada to upstate New York.
Senator Moore: With no Canadian or American taxes?
Mr. Cunningham: Correct.
Senator Moore: Is that normal?
Mr. Cunningham: If cigarettes are being shipped to a duty-free market, yes, that would be normal.
Senator Moore: What do you mean by a duty-free market?
Mr. Cunningham: It is at the border. It is traditionally very small, not something that would support such a massive quantity of cigarettes. You can export things to the United States in certain quantities without Canadian or American taxes being paid. The problem here was that the quantities were completely illegitimate.
[Translation]
Senator Rivest: The measures announced by Mr. Landry involving the imposition of a tax on distributors and wholesalers seem to be a step in the right direction. Do you think that this might encourage the importation of American cigarettes to Quebec?
Mr. Cunningham: No, the same taxes have to be paid on products imported from the United States or from any other country.
Senator Rivest: I understand, but what about on cigarettes that are smuggled in?
Mr. Cunningham: No, I think that these measures will improve the situation. You mean illegal imports?
Senator Rivest: Yes.
Mr. Cunningham: No, because the product is taxed when it enters Canada. It will be more difficult to sell it on reservers and this will reduce smuggling opportunities.
Senator Rivest: The start-up has been difficult because aboriginal spokespersons have come out against this measure. I do not know how it will be implemented.
Mr. Cunningham: The retailers have their own licence and if they break the law, they lose their licence.
Senator Rivest: As for education in schools, has the Canadian Cancer Society put in place specific anti-smoking programs?
Mr. Cunningham: Yes.
Senator Rivest: In the provinces?
Mr. Cunningham: Yes.
Senator Rivest: Are you satisfied with the way in which this message is being conveyed to children and young people?
Mr. Cunningham: We feel that more could be done to increase anti-smoking education programs aimed at young people, and that is why we are supporting Bill S-13. There are different ways of communicating with young people, for instance through schools, television, movies, billboards, et cetera. In California and in Massachusetts, a well-funded anti-smoking program has been very successful, and it is being maintained year after year.
Senator Rivest: There has been an increase in smoking among young people, among young women in particular, who continue to smoke in increasing numbers despite these programs.
Mr. Cunningham: Several factors influence the level of smoking uptake. One of the most important is price. A survey was done in Quebec which showed that smoking increased among students from 19 per cent to 38 per cent between 1991 and 1996.
Senator Rivest: The law prohibits the sale of cigarettes to young people of less than 18 years of age. In Quebec, you cannot walk into a corner store -- I expect the same thing is true in the rest of Canada -- without having young adolescents ask you to buy a pack of cigarettes for them. Is that illegal?
Mr. Cunningham: Provincial laws vary, but the federal law prohibits adults from doing that in a public place.
[English]
Senator Forest: I am very interested in the map that compares cigarette prices between provinces and border states. I am from Alberta, where the price per carton is $41; and in Montana, just below us, it is $24. It is just the reverse in the east. In Quebec, for example, the price is $30, compared to Maine at $36. I am wondering about the cause and the implications of this.
Mr. Cunningham: In 1994, tobacco taxes were rolled back by the federal government and by five provinces. However, the four Western provinces and Newfoundland did not roll back provincial tobacco taxes. As we see, there is a substantial price differential, whereby the prices are much higher than in neighbouring U.S. states.
Ontario and Quebec were among the provinces that had the deepest cuts. We saw the retail price go from about $48 per carton to about $23, although we have had some increases since then. That is the explanation.
Senator Forest: For example, with Montana at $24 and Alberta at $41, I know we do not have a large population, but do we have substantial smuggling?
Mr. Cunningham: No. The tobacco manufacturers admit that there is no significant level of smuggling today going into Canada from the United States, if we look at a percentage of the market. There is a small level of interprovincial smuggling from Ontario into Quebec. In British Columbia, I have seen reports which are more serious. Nevertheless, in terms of a percentage of the market, it is very small and nothing anywhere approaching what we saw prior to the 1994 tax rollback.
The Chairman: We appreciate your coming, sir. As you can see by our questions, we are essentially on your side.
Senator Cools: Might I ask about the report on Supplementary Estimates (A)? I have to speak to this in the chamber. Apparently it is being translated somewhere. I would like this committee to bring it forward now and approve it so it can be in the chamber tonight. Then I can speak tomorrow to Bill C-46. We have been waiting for it for a week.
The Chairman: I recall that we put it on hold because you were too busy to deal with it.
Senator Cools: Yes. The debate in the chamber was put on hold.
The Chairman: Tabling the report is not a big issue.
Senator Cools: We can have that report adopted by the committee before it goes in. That will be with us this afternoon. It must be introduced tonight.
Second, I am looking at the schedule as planned for today. My understanding, based on what we had agreed last Thursday, was that we were to hear witnesses at 2:45 p.m. and then, at the conclusion of witnesses, we would go into a clause-by-clause study of the bill. According to the latest notice, we have a brief, technical session with representatives from Quebec between 3 and 4 p.m. The problem is that I was planning to be out of this meeting.
The Chairman: We had agreed that we would hear from them. We thought that they could come earlier but that is the best time for them to appear. We will adjourn then at 2:45, meet with the folks from Quebec, and then come back into the meeting on a formal basis at four o'clock to do a clause-by-clause study.
These witnesses want to go through the technical aspects of the bill. We agreed simply on the basis that it would be more appropriate to meet with them rather than not meet with them. If we did not meet, it would become a political issue.
Senator Cools: I have no problem with that.
The Chairman: They would not meet with us in a public setting, so we will adjourn the meeting.
Senator Cools: So it is not a briefing session.
The Chairman: It is a review and then we can ask our questions. They will approach it from their point of view.
Senator Rivest: They want to explain how the existing program works and the technical difficulties. The people are coming from the délégation du Québec here in Ottawa. They are civil servants.
Senator Cools: I have another committee meeting regarding social affairs at 4 p.m.
The Chairman: We made everyone aware that we are meeting all day today until 7:30, that we are not going to adjourn. We are going to go right through. That was the intention all along because we are trying to be as cooperative as possible to ensure that this bill is addressed properly.
Senator Cools: I am not quarreling with your cooperation.
The Chairman: We must recognize that it is the deputy minister who is coming from the Province of Quebec.
Ladies and gentlemen, we must adhere to a tight time frame. I would ask that we proceed now.
Alice McCaleb, from the Kamloops Indian Band, please introduce the people who are with you and then proceed with an opening statement. The floor will then be turned over for questions.
Ms Alice McCaleb, Member of the Kamloops Indian Band: I very much appreciate this opportunity to speak with you today, honourable senators. With me is my attorney, Kelly Harvey Ross, and Roger Obonsawin.
Kelly Ross will be making the submission first.
Mr. Kelly Ross, Advisor, Kamloops Indian Band: I wish to submit into the record the written submission. I believe that the senators have copies.
I propose to go through the executive summary and then lay out what I consider to be the main issues facing the Kamloops Indian Band membership in its dispute with the chief and council of the Kamloops Indian Band at this time.
On June 11, 1998, Cora Joan Anthony, a member of the Kamloops Indian Band, commenced a judicial review in the federal court, pursuant to sections 18 and 18.1 of the Federal Court Act, with respect to the Band Council Resolution passed by the chief and council of the Kamloops Indian Band, dated June 27, 1997. A copy of the filed pleadings and the supporting affidavit of Cora Anthony are attached for your review and consideration at a later date.
The grounds of review are as follows: The respondent, pursuant to section 18.1(4)(a) of the Federal Court Act, acted without jurisdiction and acted beyond its jurisdiction; the respondent, pursuant to section 18.1(4)(a) of the Federal Court Act, failed to observe a principle of natural justice, procedural fairness or other procedure that they were required by law to observe; the respondent, pursuant to section 18.1(4)(a) of the Federal Court Act, erred in law in making a decision or an order, whether or not the error appears on the face of the record; and the respondent failed to follow sections 4.1, 4.2, 10.3, 12 and 13 of the band's by-law, entitled "Kamloops Indian Band Rules Governing Band Meetings By-law No. 1996-2," and passed pursuant to sections 81(1)(c), (d) and (g) of the Indian Act.
It is respectfully submitted that, as it stands now, the respondent has violated the minimal standards governing principles of procedural fairness and natural justice, which all federal boards, commissions and tribunals are required to follow when the deprivation and confiscation of a person's personal property are at issue.
In particular, when the respondent passed the resolution at midnight on June 24, 1997, with only 27 band members present, it violated the notice provisions; the requirement for a quorum; the right of a band member to make answer to a motion that would deprive a band member of his or her personal property, as contained in the Kamloops procedure by-law, therefore, denying band members the right to be heard and make submissions on the resolution.
The concerns of the members of the band can be summarized as follows: The Supreme Court of Canada has held that the personal income of status Indians living on an Indian reserve is personal property, and is therefore exempt from personal taxation.
The respondent has never consulted with the membership of the band with regard to Part IV of Bill C-36 at any time and has never explained the consequences of Part IV until June 10, 1998, by way of an information package.
The respondent has had a draft copy of a by-law, entitled "Kamloops Indian Band Sales Tax By-law 1998," in its possession since February 4, 1994, but has never shown the same to the band members for their consideration and debate at a band meeting.
At the band meeting of June 24, 1997, there was never any mention of the taxation by-law.
Although required to do so pursuant to a band by-law, as mentioned in paragraph 5, the respondent failed to give advance notice that the issue of taxation of band members was to be discussed and voted upon at the June 24, 1997, meeting.
As a result, band members were never given an opportunity to fully debate the taxation by-law.
As per the procedure by-law, there is requirement for a 50-person quorum. When the taxation by-law was brought up by the chief councilor, at approximately midnight, there were only 27 persons present. The general custom, when quorum is lacking at a band meeting, is to turn the same into an informational meeting only.
Currently, there are 120 members of the band who oppose the taxation by-law and are of the view that the respondent has never received the necessary authority from the band members.
It is respectfully submitted that the statutory exemption from taxation afforded by section 87 of the Indian Act can only be curtailed after proper notice, debate and informed consent by the members of the band, if any.
This is the minimal standard to ensure that the common law principles of procedural fairness and natural justice are met.
The facts are set out in paragraphs 8 through 28 of our brief. I will summarize them quickly and highlight the pertinent facts with regard to the issues of procedural fairness and natural justice.
The committee should bear in mind that, under the band's own by-laws regarding band meetings, the band is required to give advance notice of the meeting's agenda. They failed to do so.
With regard to a quorum, 50 persons are required to vote upon any motions pursuant to the band's procedural by-law. That quorum was lacking on June 24, 1997.
Third, the income of a status Indian living on a reserve is exempt from taxation, period. If consideration is being given to curtailing that exemption from taxation -- in this case that of the Kamloops Indian Band -- we respectfully submit that they must be given notice and an opportunity to be heard.
I also wish to bring to the committee's attention the two notwithstanding clauses that are in conflict. In particular, section 87 of the Indian Act is set out in paragraph 26 of the submission. It states:
Notwithstanding any other Act of Parliament or any Act of the legislature of a province...
Clause 59.1 of Bill C-36 begins as follows:
Notwithstanding section 87 of the Indian Act...
With respect to the two notwithstanding clauses highlighted above, it is respectfully submitted that the band members, on a plain reading, are still exempt from taxation. The rationale of this submission is this: As stated in section 87 of the Indian Act, "Notwithstanding any other Act of Parliament" must include Part IV of Bill C-36.
In the case of Nowegijick v. The Queen , the Supreme Court of Canada decided that if there is any ambiguity between two statutes, or if there is ambiguity in a statute dealing with status Indians, in particular dealing with the taxation of status Indians, any ambiguity must be resolved in favour of the Indian. We respectfully submit that clause 59.1 is in conflict with section 87; that section 87 has precedence over clause 59.1 at this time; and that the band members are still exempt from taxation, on a plain reading of the two pieces of legislation.
With regard to natural justice and duty of fairness, at paragraph 38 of our submission, we set out the three factors that must be considered when trying to determine whether procedural fairness and natural justice are required by an administrative body.
The existence of a general duty to act fairly will depend on the consideration of three factors: the nature of the decision to be made by the administrative body; the relationship existing between the body and the individual; and the effect of that decision on the individual's rights.
The Supreme Court of Canada, in Cardinal v. Kent Institution, stated that whenever these three elements are to be found, there is a general duty to act fairly on a public decision-making body.
With regard to the nature of the decision, the decision made by the respondent was of a final and specific nature, directed as it was at curtailing the tax exemption afforded to the band members of the Kamloops Indian band, pursuant to section 87 of the Indian Act.
The second element to be considered is the relationship between the applicant and the respondent.
In the case of Leonard v. Gottfriedson , it was stated:
...the chief and councillors of a band are in a position of trust relative to the interests of the band generally, the band's assets and the members of the bands.
It is respectfully submitted that the chief councillor breached his position of trust by failing to give advance notice of the possibility of the curtailment of the band members' right to be exempt from taxation which, it is respectfully submitted, falls within the general interests of the band members, on the purchase of tobacco, fuel and alcohol, and by failing to give band members an opportunity to be heard and make presentations on Part IV of Bill C-36 and the taxation by-law at a band meeting.
It is respectfully submitted that the impact of the resolution on the applicant can be dealt with summarily. There is a right to procedural fairness only if the resolution is a significant one and has an important impact on the individual.
Section 87 currently talks about the personal property of an Indian being exempt from taxation. It does not talk about the property of an Indian band per se. It is quite clear that it is the personal property of an Indian that is exempt from taxation. Under section 87, we are dealing with an individual's right to be exempt from taxation. The impact of this resolution and Part IV of the proposed legislation is to curtail that exemption, without procedural fairness or natural justice being afforded to the band members.
In the case of Sheard v. Chippewas of Rama First Nation Band Council, at issue was a resolution passed by the chief and council to forcibly remove a non-band member who was white and was married to a band member. With this resolution, they attempted to remove the white non-band member from the reserve. The couple made an application to the Federal Court to quash the decision on the basis of lack of procedural fairness and natural justice. As stated at paragraph 47, the application was granted and the resolution was quashed.
The main points out of that case can be found at paragraph 48 of our brief. The court was of the view that there was no evidence that the resolution ever became a by-law pursuant to section 81 of the Indian Act. The non-status Indian was removed the day that the resolution was passed.
The court was of the view that the resolution was administrative because there was no legislative authority for it.
Senator Moore: Could you take us through the issue, starting at paragraph 46 of your brief once again, please. I am not clear on the significance of it.
Mr. Ross: The resolution that was passed by the chief and council in this particular case is an administrative issue; an administrative act. It is not law. Without the authority of law, the chief and council could not remove the white non-band member. The chief and council purported to have the authority, pursuant to the resolution, to expel this person from the reserve. The Federal Court said that the resolution is administrative only, not a judicial act, because it is not pursuant to any law. The only way that they could possibly remove the individual was through a band by-law, which was not approved by the Minister of Indian Affairs under section 81 of the Indian Act.
Does that clarify the matter?
Senator Moore: Yes, it does.
Mr. Ross: In the Sheard case, the court was also of the view that, because the rights of both the status Indian and the non-status Indian were affected, the applicants were entitled to the minimum level of procedural fairness. They were entitled to have received notice of the October 1995 meeting, to have been informed of the nature of the complaints, and to have been given the opportunity to respond.
To put that in the context of the Kamloops Indian band members, because the rights of the Kamloops Indian band members were affected, that is, their section 87 exemption was to be curtailed, the band members were entitled to the minimal level of procedural fairness. They were entitled to have received notice of the June 24, 1997, meeting if the taxation issue was to be raised; to have been informed of the nature of the meeting and the possibility of the curtailment of their tax exemption; and to have been given an opportunity to respond to, debate, and vote upon the same. They were not given that opportunity. In a nutshell, those are the band members' concerns at this time. The resolution on taxation without representation was passed in the dead of night, without quorum. Many band members and, we hope, this committee, will view this as anti-democratic.
When you are dealing with the taxation-exemption status of a person and that exemption is to be curtailed, the person ought to be entitled to minimal standards of procedural fairness and natural justice to make submissions.
At paragraph 49 of its ruling, the court stated that, since there was no notice of the meeting or disclosure of the information relating to complaints, and since the applicants were given no opportunity to respond, the matter was similar to the one in Cardinal v. Kent Institution, where the Supreme Court of Canada found it necessary to affirm that the denial of a right to a fair hearing must always render a decision invalid, whether or not it may appear to a reviewing court that the hearing would likely have resulted in a different decision.
The Supreme Court found that a right to a fair hearing must be regarded as an independent and unqualified right, which finds its essential justification in the sense of procedural justice, which any person affected by administrative decision is entitled to have.
The court continued in paragraph 51, with regard to the taxation by-law, that there was a lack of notice; there was no information with regard to the taxation by-law until June 10, 1998; there was no opportunity for the band members to respond to or debate the taxation by-law at the June 24, 1997, meeting; and that in light of a prima facie case, that the resolution would be quashed by the Federal Court trial division.
For your information, a judicial review began on June 11, 1998. That was in light of getting a copy of the resolution and the by-law only a week beforehand. That is the rationale for the judicial review.
My clients would like to see Part 4 of Bill C-36 rejected without amendments. In the alternative, we would like to seek some amendments to Part 4 of Bill C-36, which would require the chief and council to put the issue of taxation to a referendum under the band's referendum by-law. That referendum would be secret and, pending the outcome of that vote, the by-law may or may not be approved. In short, those are the remedies that they are seeking. Those remedies are set out in the written submissions.
Our proposed amendments to clause 59 would be in keeping with the band council resolution of June 27, 1997, that it is the Kamloops Indian Band that would impose the tax, not the chief and council. If you read the resolution of June 27, 1997, carefully, it says that the Kamloops Indian Band would impose the tax, not the chief and council. That is the direction.
If you read the resolution on a plain reading, it is the Kamloops Indian Band, the members, who would impose the tax through a referendum vote. The chief and council do not have the sole authority. In my submission, that is clearly set out in the resolution of June 27, 1997.
This concludes my submissions. Thank you for the opportunity to make these submissions this afternoon.
Senator Forest: This morning, our chairman brought this matter to the attention of the minister. However, I believe the minister misunderstood the import of the question as to whether the taxation referred to the band or to an individual member. This is the point that the witnesses are making.
The Chairman: I asked the minister this morning if individual people protected by the Indian Act are exempt from taxation on reserves. He agreed with me -- correct me if I am wrong -- on that issue but he felt that this was not contravening the act. The real issue behind all this was to allow the bands to raise taxes within the band as a step toward self-government.
Senator Forest: I believe that the crux of the matter here is that the individual member cannot be taxed, whereas this is being done by the bands.
I wanted to raise the point that you had raised this morning. Certainly, in my understanding of law -- and I have dealt quite a bit with individual rights -- there cannot be two conflicting "notwithstanding" clauses in legislation.
The Chairman: That is right.
Senator Forest: In order to be legal, that part of the bill would have to be addressed.
The Chairman: We must decide how we wish to deal with that and, if we wish to deal with it, how we can obtain an opinion.
Second, these witnesses have said that it takes a quorum of 50 people and that only 27 people were present. How do we verify that?
Third, does that then become a legal interpretation? Must we ask counsel for a legal interpretation? How do we approach it?
Senator Bryden: Your brief is well prepared, however, it would be more appropriate as a brief to a court.
There are facts alleged here which we have no way of verifying. The chairman has already indicated that. We are not in a position to call further evidence to try to verify the statement.
You referred to the notwithstanding clauses in your submission. You indicated that band members, on a plain reading, are still exempt from taxation. You went on to say that the rationale of your submission is that, as stated in section 87 of the Indian Act, "notwithstanding any other act of Parliament", must mean Part 4 of Bill C-36. Your opinion is that if there is any ambiguity between section 87 of the Indian Act and Part 4 of Bill C-36, any such ambiguity must be resolved in favour of the Kamloops Indian Band.
My point is that Bill C-36 is not yet law. If Bill C-36 becomes law, your position would be that the courts will determine that the two cannot stand together and that section 87 of the Indian Act would prevail.
Mr. Ross: That is correct.
Senator Bryden: If your interpretation is correct, then Bill C-36 would be inoperative in this instance. I will not make a legal argument. You have had a chance to prepare and I have not. However, I believe that section 83 of the Indian Act provides for the raising of funds from members of the band for band purposes.
The Iroquois spokesmen who were here the other day claimed that they did not think that that was what this was for. I must say that it is virtually impossible for this committee to go back and dissect all this and put it all back together, particularly in light of the fact that you are quite convinced -- and probably rightly so -- that if what you are saying is correct, then it will not hold up, in any event.
The Chairman: I understand that and do not necessarily disagree, but we rejected the so-called "Son of Sam" bill on similar grounds. Are we to allow a bill or parts of a bill to go through despite the fact that we are not sure that it is constitutional to do so? In order to do our job, it behooves us to examine this issue and ensure that, first, it does not conflict with the Indian Act, and, second, that we can verify that there was not a quorum. Those are the two issues. We may simply need an interpretation from legal counsel as to the constitutionality of this "notwithstanding" issue, at least for the record. That would not be a difficult thing. I am not sure, but I think that is part of our responsibility. I do not think we should allow it because we do not have time to deal with the issue here. It is important that we deal with it.
Therefore, if you have evidence as to the quorum, or lack thereof, that you could submit to this committee, please do so. We will also have to decide how to proceed on this "notwithstanding" issue.
Senator Cools: Perhaps we could discuss how we will proceed on this particular point without tying up the witnesses' time.
Senator Moore: Ms McCaleb or Mr. Ross, could you tell us how many members there are in the Kamloops Indian Band?
Mr. Ross: There are approximately 900. At this time, I would like to take the opportunity, if I could, to answer the chairman's query about the evidence. Cora Anthony has submitted a sworn affidavit to this committee, along with the pleadings. In her affidavit, she states that there were only 27 bands members present at that meeting. I realize that that may not be sufficient for the chairman's consideration, but there is evidence before the Senate that there was a quorum lacking, in the form of a sworn affidavit which has not been filed yet in the court but which will be filed with regard to the judicial review.
The Chairman: It would be nice if there was a list you could have submitted.
Mr. Ross: Unfortunately, the way the minutes went, there was an initial taking of names at the commencement of the meeting but then the quorum ran down. Unless there is an actual request for a quorum count to be made, none is made.
The Chairman: There was no recorded vote?
Mr. Ross: No. If I recall correctly, it was only a showing of hands; the majority carried; and that was it.
Senator Moore: Is every one of those 900 people entitled to one vote?
Mr. Ross: Under the band procedure by-law, persons over the age of 18 are entitled to vote, for a total of 536 eligible voters out of the 900 band members.
Senator Moore: Do you have any idea as to how many of those 536 received notice that this item would be on the agenda and voted upon?
Mr. Ross: Zero.
Senator Moore: How much notice should have been given?
Mr. Ross: Two weeks.
Senator Moore: With respect to the quorum -- and the chair touched on this -- the quorum is 50, and that is in the by-laws?
Mr. Ross: Yes.
Senator Moore: Do 50 have to be in attendance at the start, or throughout the whole, of the meeting?
Mr. Ross: My understanding is that it is like a running start. When they hit 50, they hit the quorum and there is a quorum present. There could be 40 members present and then 10 persons drift in and they hit the quorum number. When they hit 50, it is my understanding that they have the quorum present and are then allowed to start voting on the motions presented in the agenda.
Senator Moore: So the meeting can begin officially without the minimum 50 band members in attendance, if the example you gave is correct.
Ms McCaleb: Chief Jules has been questioned about this before by the band membership. As we read it, there have to be 50 people present, in body, to be able to vote. You can start the meeting, but if there are any issues to be voted upon, there must be 50 eligible voters present in body.
Senator Moore: Whether at the start of the meeting or in the course of the unfolding of the meeting, before any vote is taken, you must have a minimum of 50 band members who are eligible to vote in physical attendance, not by proxy.
Ms McCaleb: We have band meeting minutes where Chief Jules has taken a general band meeting and made it into an information meeting because there was not a quorum. This is why we have questioned him many times. It depends, I suppose, on whatever he has on his agenda to move forward because sometimes he applies it and sometimes he does not. He has been questioned several times on this issue. We have always taken our stance from band membership. There must be 50 people present in person, eligible and of voting age, to be able to vote on any issues he wants to bring to the floor.
Senator Moore: You are a member of the Kamloops Indian Band, Ms McCaleb?
Ms McCaleb: That is correct.
Senator Moore: Do you hold any office within the band?
Ms McCaleb: No, I am just a band member.
Senator Moore: Mr. Ross, are you legal counsel to the band?
Mr. Ross: No. I am legal counsel for Cora Anthony.
Senator Moore: The lady in the action in the federal court?
Mr. Ross: Yes. She was unable to attend today, and I am representing her. I have also been retained by Alice McCaleb, but it was decided that only Cora Anthony would be named in the application for judicial review.
Senator Moore: Did you receive a notice of the meeting, Ms McCaleb?
Ms McCaleb: Are you talking about the June 24, 1997, meeting?
Senator Moore: Yes.
Ms McCaleb: I would have received a notice of it, yes.
Senator Moore: Do you normally receive an agenda as to what is to be considered at the meeting?
Ms McCaleb: Yes.
Senator Moore: Was this item on the agenda?
Ms McCaleb: No.
Senator Moore: Is it usual for items of this significance to be added after the meeting starts? Do you go to meetings regularly?
Ms McCaleb: I do.
Senator Moore: You pay attention to band business, do you?
Ms McCaleb: Yes, I do, because I myself have a business on the reserve, and I have to be aware of any changes that will be made by by-laws, so yes, I do follow them. I take a look at the agendas to see what the issues are going to be.
Senator Moore: You received a notice of this meeting but it did not have the agenda items on it, is that right?
Ms McCaleb: It had nothing concerning taxation on it.
Senator Moore: Did you go to the meeting?
Ms McCaleb: No, I did not.
The Chairman: The notice is in the attachment to the affidavit.
Ms McCaleb: We were supposed to have a meeting, as you see, on June 23. That meeting was cancelled because they did not have a quorum. They went on to June 24, and they did not take care of the business of the June 23 agenda. They just went on to June 24. Nothing in there told the membership that they would be voting on this or even what it was.
Senator Moore: Why are we facing this situation? Why do you think this happened to an item of such significance in terms of the operation of the band within the Indian Act?
Ms McCaleb: It happened because he never informed us.
Senator Moore: I know, but why? What is going on here?
Ms McCaleb: I found out about it through Nelson Riis' announcement in the paper that the Kamloops Indian band would be collecting the 7 per cent sales tax from non-status and status Indians, and that Chief Jules had signed an agreement with the federal government to be able to do so.
I called Mr. Riis' office to ask him if I could see that agreement. He sent me Bill C-36, Part 4, and I said, "What is this?" He said, "That is the gut of the agreement." I said, "What does this mean?" He said, "The Finance Committee met with Chief Jules. If you do not understand who they are, Alice, they are MPs from across Canada. Myself and several other MPs asked Chief Jules if he had the consent of his people and if they agreed. He said, `Yes, we have had several meetings concerning it, and they all agree'."
I asked for the minutes of that Finance Committee meeting, and he gave them to me. I went through those minutes and then sent out letters to this Senate committee, to the Honourable Paul Martin, to the Finance committee, to Nelson Riis' office, to the Minister of Indian Affairs and Northern Development, Jane Stewart, and even to Prime Minister Chrétien's office, because the things he stated are not validated.
We had no idea what Bill C-36 meant, and it was never explained to us. About three weeks ago, I saw for the first time the band council resolution that the chief and council signed. A person received that on May 20, and she showed it to me. We then made copies of it.
Senator Moore: It is almost one year old.
Ms McCaleb: Absolutely no one has seen this before.
Senator Bryden: The situation we are in is becoming more clear to me. I do not know that it is open for us, as a committee, to go behind the representations that were made as to the position of the band. That is what we are hearing now. We are hearing that what was represented to the Department of Finance and the Finance Committee was not in fact what happened. It was misrepresented.
I suggest that this afternoon we try to obtain an opinion from the appropriate person in the Department of Finance stating that what is being purported to be done in the bill in fact is constitutional and legal and is not in conflict. We do not have to make a ruling, per se, but we need to know that we are not doing something illegal or unconstitutional. It may be in question, but we cannot go against it.
The Chairman: That is exactly my point.
Mr. Ross: With regard to the issue of the legality of Part 4 of this legislation, it may be that it is legal. I am assuming that it is, but the reality is that it is politically incorrect. It is anti-democratic in its process from beginning to end. That is the heart of this issue.
When the resolution was passed on June 24, 1997, and hidden from the band members until June 10, 1998, a copy of the taxation by-law that was to be used to collect the taxes was not even given to the band members. They do not have it to this day. In my view, that is fundamentally anti-democratic. It is unfair to the band members to be forced to pay a tax on which they have had no say, no debate, and no vote.
If the House of Commons or any provincial legislature were to try to impose a tax in this way, there would be an uproar. I suggest that this is happening to the Kamloops Indian band. There is an uproar, and it is starting to cross the country from the West Coast to the East Coast. That is what the representations to this committee from the various First Nations have been about. There is a groundswell of opposition to this piece of legislation, about the way it was handled.
At this time, we would ask that our submission be reviewed in detail, if at all possible, by the members of this committee. We would like you to deal with the quorum issue. In Cora Anthony's affidavit at paragraph 8, she states there were only 27 bands members present.
Senator Sparrow: Who sets the guidelines to the rules of order for band council meetings? Does that fall under the regulations of the Department of Indian Affairs?
Mr. Ross: Yes.
Senator Sparrow: Your band, then, does not set the quorum as such. The quorum is set by regulation; is that correct?
Mr. Ross: There are two issues. There is the regulation that governs band council meetings, which is under the Indian Act, and then the band can make its own by-law dealing with band meetings. There are band council meetings, and then there are band meetings of the members themselves. There are two distinct meetings governed by two different pieces of legislation.
Senator Sparrow: Who established the quorum of 50?
Mr. Ross: The band did.
Senator Sparrow: Is that in written rules and orders?
Mr. Ross: Yes. It is in the affidavit of Cora Anthony, and it is attached to our submissions.
Senator Sparrow: Would the Department of Indian Affairs have played a part, or do they play a part, in that meeting? Are they in a position to say that that was not a legally authorized meeting or a resolution?
Mr. Ross: My understanding is that the Department of Indian Affairs was not involved in this process because this is a money bill. As such, there may have been a question of procedure in the House of Commons about a money bill originating from the Minister of Indian Affairs rather than from the Minister of Finance. I do not know the ins and outs. All I know is that they thought it was safe to attach this legislation to a money bill, first, to adhere to the rules and procedures of the House of Commons, and, second, to make it safe from attacks such as this and get it through the House.
Senator Sparrow: If some authoritative body could say that, by this procedure, the band passed a resolution illegally, or at least countermanded their own orders, that is enough to throw the provision out of the bill. If that is the case, we are talking about calling someone from Finance to testify before the committee. In turn, Indian Affairs may be faced with the actual legality of the resolution. I think that is rather crucial.
Would you consider that, Mr. Chairman, as well?
The Chairman: I do not think we can proceed until we get opinions.
Senator Cools: Perhaps, Mr. Chairman, we could take a few minutes to discuss how we will proceed as soon as these witnesses are through.
The Chairman: Senator Bryden suggested that we have someone from the Department of Finance attend here to give us an opinion about the constitutionality of this issue, as well as someone from Indian Affairs to give us, as Senator Sparrow stated, an opinion regarding this issue of quorum and whether or not it is legal. Hopefully, we can get two opinions on each area. I think we must. I do not think we can let this go.
Senator Cools: I am raising this matter now so that we can have the committee contact the department and Indian Affairs so that we can bring them here soon.
Senator Sparrow: I must admit that I have not studied the bill, but why does it refer only to Kamloops? Why does it not refer to all Indian bands throughout the country, if it is an issue? What is the precedent?
Mr. Ross: I have no answer for you, other than to say that the precedent is the West Bank and the Cowichan Indian Band. In 1997, there was similar legislation dealing with tobacco and fuel. I cannot speak to the process there, but that is the precedent for this particular legislation. Why it is not geared toward all Indian bands throughout the country, I cannot say. That may be out of the Minister of Finance's ministry.
I now wish to introduce Mr. Eugene Meehan.
The Chairman: Would you like to proceed, Mr. Meehan?
Mr. Eugene Meehan, Legal Advisor, Kamloops Indian Band: I am working with legal counsel on this particular case and making these submissions to you.
You are correct in that, in the overall context, pursuant to section 87 of the Indian Act, Indians are exempt from federal income tax with regard to property on the reserve. With regard to section 83, certain Indian bands have the power to put through money bills with, possibly, a view to self-government.
Our concluding remarks are that, as we are prepared to put aside our legal hats, we would ask you to put aside your honourable senatorial hats and consider what this case is really about. This case is really about democracy. The American Revolution was fought on the basis of no taxation without representation. That is what this case is about. We do not need another American Revolution. We want a Canadian solution, and we are looking to you honourable senators for one. Taxation without representation is the legal equivalent of the cabinet passing, out of session, federal GST and provincial sales taxes without consulting the population or the members. It will not fly.
Some of the factual matters can and will have to be dealt with in another forum, but what can be dealt with here by you today is the constitutionality of these provisions. Lack of appropriate representation means lack of constitutionality. That is why we are here before you today. Your job is not, as the chairman said, to let something through that is unconstitutional. Lack of representation means lack of constitutionality.
Mr. Ross: Unfortunately, I must leave now. I have a prior appointment. I should like to thank you for your time and look forward to the possibility of further submissions, if that is required.
Senator Sparrow: Before you go, are you suggesting as a group today that Part 4 be removed from this bill entirely, or is there an amendment that will satisfy that?
Mr. Ross: Part 4 must go, from my client's perspective.
The Chairman: At least it should be delayed.
Mr. Ross: Yes, until there is an opportunity to deal with the question.
Mr. Roger Obonsawin, President, O.I. Group of Companies: I should like to table at this time submissions opposing this bill from the Carrier Sekani Tribal Council, which was submitted June 13; as well as a resolution from the Ontario Chiefs Assembly that was held in West Bay First Nation from June 2 to 4, 1998. I should like those to be included in the record.
We have been down this road before as a company, as native people. These bills are making us a nation of outlaws. Our biggest growth industry right now in Indian country is opposing the unilateral edicts imposed upon our people with no consultation and total disregard for historical commitments.
The question was asked: Why is this happening? The Minister of Finance has decided -- and I can quote him saying this a number of times -- "We will force Indians to pay tax." Is this a way to run a country?
More and more of us are marginalized every year and forced to live outside the mainstream because of these types of initiatives. What you have in front of you today may appear to be a godsend to you, namely, an Indian chief requesting taxation for his community. What a breakthrough! You also have in front of you today, however, submissions from a significant portion of his own citizens opposing that proposal.
The topic being considered is taxation. Yes, we only have to look at the Boston Tea Party. In the history of taxation, nowhere in the world has taxation worked if its citizens oppose it. If you pass this bill without proper consultation with First Nations communities, and without building consensus, you will be directly responsible for greatly increasing the number of lawbreakers within our communities. I say that because I know that is happening. This will divide us even further.
Is that all there is to First Nations and Canadian government relations? Does the Canadian government, with the help of a very few individuals, simply impose upon our people, while the rest of us resist? What route are we taking? Has not the experience of residential schools, Oka, Gustafsen Lake or Ipperwash, taught us anything? Over and over again, the Supreme Court of Canada directs the federal government <#0107> that is, in Sparrow and so on -- to consult with the Indian people before imposing changes on them that will affect our lives. Over and over again, the government ignores this and ignores it at a price.
More and more of us are disregarding the laws of this country, not because we want to do so, but because we have no choice. If you approve this bill today, you will not only make a significant portion of Chief Jewel's community into lawbreakers, but also continue with a process that is happening across this country, alienating First Nations communities.
This is true because the bill talks about self-sufficiency. You do not build self-sufficiency through taxation; you build it through producing resources and selling goods and services. That is self-sufficiency. That is what we are working on, not a sham.
As this groundswell grows, if this bill passes, you will have contributed to us breaking laws that we feel are unfair to us. We will continue to fight those federal policies until they change the policy and how they deal with native people.
Senator Sparrow: Could I have an example of the lawbreaking to which you are referring?
Mr. Obonsawin: I was one of the band members that occupied Revenue Canada.
I am a lawbreaker. The Prime Minister sent us a letter saying that he had properly consulted on this issue. Through freedom of information, we are now in court challenging the Prime Minister on that very point. There was no consultation, Mr. Chairman. I was a lawbreaker because they broke the law. They broke their own rules. There was no consultation, and the Freedom of Information Act has proven us correct on that. The Lands Management Act had no support in the communities, and we had to force the issue. How often do we have to do that? Yet, we are tagged as renegades. No more, Mr. Chairman.
The Chairman: There are two individuals here who can give us an interpretation with respect to those two questions that we have asked. Thank you very much for your attendance here today. As you are aware, we are attempting to address those questions as quickly and as fairly as we can.
Mr. Meehan: Would you be able provide those legal opinions to us as well?
The Chairman: I am hoping to call those people, with the consent of the committee, right now.
I would ask Mr. Yvon Carrière and Mr. Marc Grandisson to come forward.
Mr. Marc Grandisson, Senior Tax Policy Officer, Intergovernmental Tax Policy Division, Tax Policy Branch, Department of Finance: It appears that two major issues have been raised: the issue of the quorum at the June meeting and the existence of two "notwithstanding" clauses.
On the quorum issue, it is important to not become confused between the meetings referred to here. As the previous witnesses said, the meeting where the quorum issue arose was a band members' meeting, not a band council meeting, and that is why they are saying that the band by-laws or band regulations for internal meetings applied, not the Indian Act.
This goes back to the government's policy with respect to the First Nations exercising taxation powers. As a previous witness also said, the precedent for that came in the Westbank and Cowichan legislation enacted last year. At the outset, when the government expressed its willingness to negotiate such agreements or to pass such laws, it had to decide how it would deal with the First Nations. It was decided that we would take a government-to-government approach, meaning that we do not ask governments to pass referendums before passing taxation legislation because usually governments do not pass taxation as such for the pleasure of taxing but to provide improved goods and services to members and their citizens. We assumed that the First Nations would want to tax for the same reasons. Therefore, as with any democratic government, the importance here is that band members, if they are not happy with the way the band council has decided to tax, can vote against the band council at the next election and repeal the by-law imposing the tax.
We were required to pass the legislation. We asked the band council for a letter of intent that the band council was asking the federal government to enact legislation enabling the band council to pass a by-law imposing such a tax.
The June 1997 band meeting was called by the band council, with no involvement from the Government of Canada. We never asked the band council to call a band meeting. The First Nation did.
The issue of quorum here is irrelevant, because that meeting was irrelevant as far as legalities are concerned. Bill C-36 requires that the band council, not the band members, pass a by-law imposing the tax. This is the only legal requirement from the band government. They have not done so yet, and a band by-law has not been shown to anyone because the bill has not been passed, so they do not have the power to impose a by-law yet.
If Bill C-36 becomes law, the band will then be in a position to have the legal authority to pass a band council by-law. Once again, the elected government of the band would be passing a by-law. The by-law will be under the rules of the Indian Act, meaning that the duly convened meeting of the band council and the quorum of the band council will be required. We are still talking band council, not members.
That by-law must be approved by the Minister of Finance for the tax to be in place, and a tax-collection agreement will be required between Canada and the First Nation. Once again, this agreement is not available yet because the authority to sign such an agreement is contained in the bill. There are many things that need to happen for that tax to be introduced. All those things can only happen if the bill is passed.
The meeting of June 1997, where taxation was or was not discussed, is something internal to the band, and the federal government has no part in it. The results of it were irrelevant to the decision to enact legislation to enable the band to impose a tax.
Coming back to the quorum issue, it is not really relevant to the bill. No one ever said that taxation was easy, and we cannot put on First Nations a burden higher than that on ourselves with respect to the imposition of taxes. If we had to reach unanimity or have a majority of electors vote on each tax that we want to change or implement, the power of the government to rule would be harmed. The government from the Kamloops Indian Band, the band council, must be judged at the next election on how it introduced the tax and how it has spent the money on providing better services to its members. It is very much a government-to-government approach. That is why we are saying that any quorum issue that may have arisen from the June 1997 meeting is irrelevant, as far as we are concerned.
Senator Sparrow: In the provisions of the bill itself, why does it only refer to the Kamloops Band, then?
Mr. Grandisson: As was also expressed by a previous witness, in the past, even optional, enabling legislation which could apply to all bands in the country has been opposed or more difficult to introduce. Bands themselves felt that the chances of success for a First Nation to have such a law introduced were greater on a band-by-band basis. That is why last year only the Cowichan Indian band and the Westbank Indian band came forward and requested that we enable them to impose a tax.
We proceeded in that fashion. This year, the Kamloops Indian Band has asked us to do so.
Senator Sparrow: How many Indian bands are in the country?
Mr. Grandisson: There are approximately 600.
Senator Sparrow: Therefore, we are talking about 600 pieces of legislation.
Mr. Grandisson: No, not necessarily, we are talking about only the ones that are interested in taxation. Clearly, after a while, if more bands come in and it becomes more efficient, and if the First Nations themselves ask for more of a framework legislation as you suggested earlier, that would clearly be the course to follow.
Senator Moore: You say that the bill contains enabling legislation, which, if it became law, would permit the band council to pass a by-law.
Mr. Grandisson: Yes.
Senator Moore: That is not the members, but the council only.
Mr. Grandisson: Yes.
Senator Moore: Is that by a certain majority?
Mr. Grandisson: It must be a majority of the band council.
Senator Moore: That is a majority of one? And then they could levy the tax?
Mr. Grandisson: Yes.
Senator Moore: Then it comes back to the Department of Finance?
Mr. Grandisson: Yes.
Senator Moore: If that happens, they can levy the tax.
Mr. Grandisson: Plus reaching a collection agreement with Canada. The implementation of the by-law requires that an agreement be reached with Canada.
Senator Moore: You said that normally when a government imposes taxation, and they do not govern well, then the people will vote them out in the next election. That is the council. Normally, you run for election on the basis of undertaking to do certain things or to bring in certain measures, such as taxation. Did that happen here?
Mr. Grandisson: I am not aware of that.
Senator Moore: You do not know?
Mr. Grandisson: No.
Senator Moore: It seems to me that it is in reverse. If people were running for office and you knew what they intended to do, if they do it, fine. If they do not do it, or do not do it well, then we vote against them to change it. We do not give them carte blanche to do whatever they wish. We do not like it when legislation has been passed without our say as a collective group, whether it is a ward in a city or a band on a reserve. Is my thinking off-kilter here?
Mr. Grandisson: You have a good point, except that if we decide to deal with First Nation governments as governments, as we deal with the provinces, we do not, before we reach an agreement, go through the electoral platform of the winning party to see what they have promised in the election campaign. Therefore, I agree with you that this is a process that is usually taken, that the program of the selected party gets implemented.
Senator Moore: It is usually in their program. If it were something significant, you would not dare. It would be political suicide.
Mr. Grandisson: That goes directly back to where we are on this issue in taking a government-to-government approach. If the band council goes, as you called it, on the suicide decision-making progress, then it is their business. If we take a government-to-government approach, we cannot go and see all the electoral platforms from the previous election, which may have been a couple of years ago, and see whether this was mentioned. If we are treating them as a government, that is what happens and they must pay if they introduce the tax in a fashion that their members do not agree with.
The Chairman: Let us turn to the second question, as far as constitutionality is concerned.
Mr. Yvon Carrière, Counsel, Tax Counsel Division Law Branch, Department of Finance: I will deal with the notwithstanding argument. It is true that section 87 of the Indian Act has a provision, which says that that provision applies notwithstanding any other act, but it is not that unusual to have a general notwithstanding provision and then have a particular notwithstanding provision that says notwithstanding the previous provision, here is the law now. This is what section 59 of the bill purports to do. If we took any other position, then it would be impossible to amend section 87 of the Indian Act because any other provision that would amend it or repeal it would be inoperative.
I do not know if my explanation is clear enough or satisfies you.
The Chairman: You are essentially saying that, notwithstanding the notwithstanding, this is okay.
Mr. Carrière: I am saying that there are two principles here. The later provision normally has precedence. If you have a notwithstanding clause and some time later you pass another notwithstanding clause, the later one has preponderance. Also, the more particular one is paramount. This provision specifically refers to section 87 of the Indian Act, so that would be an expression of Parliament's intention that this section be given preponderance.
Mr. Meehan: Honourable senators, I object to the legal advice that has been given to you and that is because it is not legal advice. Two things were said, the first being that the only requirement of the federal government is to pass legislation. That is not the case at all. The federal government has no requirement to pass any legislation. That is a political decision by the government. Second, the statement that we are taking a government-to-government approach with the Indian band is taking a suicide approach. That is not a legal opinion, that is a political statement on behalf of the government.
Both legal counsels were here to give you legal advice and legal opinion on constitutionality. Not once did I hear the Charter of Rights and Freedoms cited. We would simply say, on behalf of the Indian band, please consider a referendum. Significant matters in the future of this country are decided on the basis of a referendum. This is a special matter calling for special circumstances.
The Chairman: For your information, we are not taking their statements as fact or saying that we have accepted them. We are taking it as information. I hope that you appreciate that.
Mr. Meehan: I appreciate that but I would hope that you would take the statements as representative of the content of the statements rather than as legal advice.
[Translation]
Mr. Gérald Larose, President, Confédération des syndicats nationaux: First, I want to thank the committee for allowing us to testify before it. I am accompanied by Mr. Éric Morin, President of the Youth Committee at the CSN, by Pierre Bonnet, from the CSN Research Service, and by Pierre Patry, President of the Fédération nationale des enseignants et des enseignantes du Québec (national federation of Quebec teachers), an affiliate of our organization.
We do not come to Ottawa everyday, and certainly not to testify before a Senate committee, and this is already in itself an indication of the importance we attribute to the topic we are going to debate. We are concerned by this matter because the CSN is an organization which represents hundreds of thousands of parents. Our organization also has 245,000 members, 20 per cent of whom work in the field of education.
University professors represented by a union are affiliated to the CSN. We represent the majority -- that is 85 per cent -- of lecturers in Quebec universities, the majority of CEGEP professors, and the majority of support staff working in CEGEPs, elementary schools and high schools. Thus, this matter is of concern to our members in their daily lives.
When we testified before the House committee, we were fully confident that a way could be found to settle the existing dispute over the millennium scholarships. To our astonishment, Bill C-36 was passed without any substantive amendments and over the objections of all parties in Quebec, where a coalition had been formed. This coalition was made up not only of political parties, but also of groups working in education. It included university rectors, federations of education administrators, union and student organizations and even manufacturing sector associations. All of these parties supported the recommendations that we forwarded to the House committee.
As a rule, a government brings in legislation to resolve problems. Had specific problems been identified in the area of access to post-secondary education in Quebec, problems associated with a lack of economic support, then we would have understood the need for Bill C-36. Had Quebec students been heavily burdened by debt, then we would have understood the need for Bill C-36.
It is clear to everyone that access to post-secondary education is not a major problem in Quebec. As a society, we have instituted a number of measures to facilitate access to post-secondary education. Students have access free of charge to a network of CEGEPs, which offer two- or three-year post- secondary study programs. Tuition or administrative fees average $110 per year. We have fought long and hard to keep university tuition fees down. In Quebec, tuition fees average $1,700 whereas the Canadian average is $3,200. We have also developed a bursary and loans program which means that on average, students graduate with a debt load of $11,000, compared to the average Canadian student debt load upon graduation of $25,000.
These are all choices that we, as a Quebec society, have made and financed partly through federal funding.
In recent years, Quebec, like many other societies, has had to contend with cuts to education as governments struggle to get their finances in order. A total of $1.5 billion was cut from the college sector and a further $329 million from the university sector. To some extent, these cuts have impeded access to post-secondary education.
Also in an attempt to bring its deficit under control, the federal government cut transfer payments to the provinces, which in turn led to provincial cuts to education. Our position is that if funds are available, they should be spent on maintaining the integrity of secondary, college and university institutions. Moreover, the student bursary and loans program could be improved, but given the traditional expenditures in this area over the last ten years, an additional 5 per cent has been spent on average to enhance this program. Since a major effort has been made in this area, if funds are available for education, we feel that the money should be poured largely back into the network of educational institutions.
In our opinion, Quebec is not in dire need of Bill C-36. We would have liked to see funding made available to Quebec through a process which has proved to be highly effective for 38 years, a process set out in the Pearson-Lesage agreement. Pursuant to this agreement, when there is money available for students, it can be channelled to Quebec through the province's loans and bursary system.
This approach was consistent with our stated goals. We can understand that to mark the new millennium, the government wishes to launch a Canada-wide student initiative. That is something that we could discuss, but we are not questioning the government's decision to act. That is its choice.
There are ways of making this government initiative more visible. For example, a number of scholarships awarded to Quebec students could be identified as federal government scholarships.
Despite considerable opposition, the government went ahead and passed Bill C-36 without amendment, duplicating in the process a sophisticated system of loans and scholarships. We have been advised that a federal scholarship program will mean the loss of 1,000 student scholarships per month, simply in terms of administrative costs.
In our opinion, available funds should be earmarked for student democratization, not for merit scholarships.
This is our last avenue of appeal. The Senate should do everything it can to ensure that administrative practices that have stood the test of time and that were the focus of a federal-provincial agreement between the Lesage and Pearson governments are maintained. This matter is too important and funds too scarce to do otherwise. We are talking about Quebec's share of compensation, an amount totalling approximately $650 million. This is a substantial sum of money. Every effort should be made, not necessarily by causing an uproar, but simply by turning to a process that has worked for 38 years, to ensure that Quebec society can achieve its goals and that the Canadian government can in turn achieve its own goal, namely to mark the new millennium. I will leave it at that. If you have any questions, I will be happy to oblige.
Senator Rivest: Thank you for coming. I realize that you represent persons who are heavily involved in education, particularly at the college and university levels. The fact that the head of the CSN has taken the time to appear before our committee gives our colleagues some indication of how very important this issue is to Quebecers.
In your submission, you mentioned the right to withdraw from this scheme. I totally agree with you on this, particularly since, as you pointed out, Quebec has always had exclusive jurisdiction over education. I thought that education was one field where the government could unequivocally invoke its right to withdraw. However, this would no longer appear to be the case today, either for philosophical reasons or because of the vision of Canadian federalism that seems to dominate in Ottawa.
The CSN believes that Quebec should be allowed to withdraw from this program. The students that testified before the committee are of the same opinion, as is the Quebec government. In a letter sent to Mr. Bouchard after talks broke off, Mr. Chrétien stated that the Quebec government could in fact request the right to withdraw from the program, but that this request would not be granted. Apparently, this is no longer done. However, he did say that the resolution passed by all political parties represented in the National Assembly was in fact valid. What are the CSN's feelings about the problems associated with the foundation?
Mr. Larose: Along with all political parties in Quebec, we too debated the position adopted by the National Assembly. Overall, the parties felt that an existing system should not be duplicated. Therefore, Bill C-36 should contain a special provision whereby any available new funds can be channelled through the existing system. In my view, this is the same as allowing Quebec to withdraw with compensation. Similar issues were debated in the early 1960s when Senator Joyal was the head of the FAGEQ. Mr. Lesage sought the support of students to win the battle. This debate has already been settled.
Senator Rivest: Even Senator Joyal agreed to this?
Mr. Larose: Yes, we were all on the same side. I hope we still are. Our sense is that there is another concept of federalism out there, but that debate is for another day. Only recently have we been able to settle the manpower question. I do not know if you want us to take up the battle once again, but my impression is that this is something similar issue. I cannot understand why, after resolving the manpower issue, the federal government would present us with a case of even more blatant intrusion into a provincial area of responsibility. Money is scarce and the government should not waste it this way by duplicating a system that has already proven effective. We cannot stress too often that Quebec society has assumed its responsibility toward less fortunate individuals who do not have access to post-secondary studies.
Senator Bolduc: Suppose the provinces do not want to have the right to withdraw, as you have suggested, although in my view, this is the ideal practical solution. What about a kind of administrative right of withdrawal? If foundation officials are reasonable, they will realize that Quebec already has in place a system that works and they will try to come to an agreement with the Quebec government. Given that the foundation provided for in the bill is an independent body, the government will no longer have the authority to negotiate once the foundation is up and running. Any agreement will be concluded by the foundation.
What if, through some administrative procedure, the foundation were to guarantee compliance with the parameters of the National Assembly motion? Would that be considered a practical, reasonable solution, albeit one that is less satisfactory to you? The provincial government could make the selections and the federal government could issue cheques to those persons selected.
Mr. Larose: I have a problem with that, from a diplomatic as well as a democratic standpoint. I cannot imagine the Quebec government having to negotiate its priorities with a private corporation. That would be quite a slippery slope. I am surprised that the federal government is willing to go along with that. It is bargaining on a philosophical level with the fundamental principles of our democratic society. This disturbs me a great deal.
Senator Bolduc: In practical terms, we are talking about $600 million over ten years. That represents $60 million a year and, when added to the $250 million invested annually in the system by the Quebec government, this gives us a grand total of $310 million. Obviously, you would be getting more money. If that money is invested in higher education, institutions would have more room to manoeuvre. That would be one positive benefit. However, in terms of principles, you do not seem too pleased with this suggestion.
Mr. Larose: No. How many thorny problems would the government then be tempted to have private companies handle through a contracting-out process? This would be a step backward, not forward, for democracy. I cannot support such a move.
Senator Bolduc: In 1964, the federal government came to an agreement with the provinces whereby they could withdraw with compensation. In the ensuing years, even with equalization payments, no conditions were ever imposed on the funding of university education. The Quebec government receives the funds and if it needs money for scholarships, then the money goes to scholarships. If it needs money for institutions, then the money is spent on institutions. This same goes for research.
The millennium scholarship fund signals a change in the constitutional policy adopted 35 years ago. Henceforth, the message that is being conveyed is that post-secondary education and student financial assistance are top priorities, provided a student has the necessary qualifications, merit and so forth. In your view, does this not represent a major shift in constitutional policy?
Mr. Larose: I would say that this is counter to our own interests. Allow me to remind you that there is a consensus among students, unions, employers organizations and university rectors. We all agree on one point: if the federal government returns the money to the province, funds will be reinvested in the network and there will be some left over to improve the system. We are even in agreement as to improving the system a bit.
Everyone agrees that where financial assistance to students is concerned, we have done more than anyone. This is not the number one priority. Should the federal government force us to provide more assistance to students, we will feel that it is not minding its own business. It is in fact undermining us, because its money is also our money.
We do not agree with using our money in an ineffective way. We think that in the field of education, at this time, after close to $2 billion in budget cuts, funds should be reinvested in that area. We feel students would be better served if money were reinvested in the system rather than being allocated to bursaries for students. That is our analysis.
Senator Rivest: We are trying to convince our colleagues. We are trying to explain to them in concrete terms -- with euphemisms, of course -- that in this area, we are unique. This seems quite obvious to me and you have demonstrated it very clearly. We have our own distinct situation in the field of education, and they want to sabotage it.
In the letter sent by the Prime Minister of Canada to Mr. Bouchard after negotiations broke down, he states rather abruptly, and I quote:
It is unfortunate to note that neither your negotiators nor your minister have made any other proposal than the right to opt out with compensation.
Later on, there is a nice paragraph:
Nevertheless, we examined the motion passed on May 14, 1998 with close attention.
It says that, as though they were two different things. He does not assess the quality of the motion. He finds it interesting. You pointed this out quite clearly. To make respect possible -- if we do not want to call this the right to opt out, because we cannot -- we need an opening and a legislative base in Bill C-36 through some kind of amendment. I am a very optimistic person but this morning I have become very pessimistic because a good fellow like the Minister of Finance tells us that in practice no amendment is possible. It seems that Mr. Chrétien is adamant about the bill remaining at as it. I told him that Mr. Larose was coming and that someone should perhaps warn him that he was going to be up against a brick wall.
Where is this going to lead us? This is not really a question but a comment because I know that you agree with me. I will let my colleagues on the other side attempt to find a solution, because we may wind up wasting money when we know there are needs to be met in education.
Senator Joyal: First off, I would like to say that when we were both activists in Quebec colleges, there were two priority objectives that remained constant, and one of them was access to education. At that time, there were no public college or university systems. All of the universities in Quebec were private institutions.
Moreover, tuition fees were general fees in the system and relative to Quebecers' ability to pay, they certainly interfered with access to education. The CSN which was at the time headed by your predecessor, Jean Marchand, had embraced those objectives. I am happy to hear you address the same issue today. Mr. Pépin who succeeded him, as well as Mr. Rodrigue and yourself have always defended those objectives. There is a historical continuity I am happy to note.
Today, we are faced with a specific problem. The role of the Canadian government is to redistribute resources in Canada according to priorities defined in its mandate. Following this, it will on a regular basis go to the electorate to have its mandate renewed or rejected. How can the role of the Canadian government be reconciled with the worthwhile, indeed fundamental, objective of the Quebec government which is to maintain the priority of its definition of the education system in that province?
We advocate a very simple formula, like the one we recommended 34 years ago, which is transfer payments in the form of tax points and cash. As you pointed out, over the past 34 years a total of $1.4 billion have been transferred. This certainly allowed the Quebec government to put in place its bursary program, while in the rest of Canada there are loan programs. This allowed the Government of Quebec to improve access to higher education and to confirm that principle as the cornerstone of the development of the education system in Quebec.
At the time, Quebec chose to set up a much more generous system for students than the rest of Canada which chose the loan route. That was the basis of the right to opt out, a situation which is somewhat comparable to the Canada Pension Plan versus the Quebec Pension Plan. In Quebec, this gave us the opportunity of making development objectives our priority.
In the case we are concerned with today, the universities in Quebec seem to favour, as Senator Bolduc said, giving the Government of Quebec a certain leeway. We could have the following scenario: the Government of Quebec could leave its bursary system intact, and simply identify the amount corresponding to the federal bursary and recover the corresponding amounts to reinvest them elsewhere, in a zero-sum operation. The Government of Quebec could leave the bursary system as is and not improve it simply by subtracting the corresponding federal amount.
Senator Rivest: I would just like to clarify something. If you look at the meaning of the resolution passed by the National Assembly, that is not it. It states what they will be doing.
Senator Joyal: No, but I am describing hypothetical solutions to see how we could protect Quebec's elbow room in its entirety.
In the letter which the Premier of Quebec and Ms Marois sent to students last Friday they point out that there will be a corresponding amount that would be used to improve the loans and bursaries system, the other amounts being redirected to priorities, be they equipment, access to programs, et cetera. There are various ways of using the corresponding amounts and it is of course the Government of Quebec that would do so.
In practice, could the Government of Quebec keep its leeway and define its own priorities while letting the Canadian government keep its ability to redistribute funds to students? The money would still reach the students in the context of the choices the Quebec government would have made.
We could go further by doing what the National Assembly has proposed: it's a matter of identifying the overall budget. You did so yourself, it is relatively easy. We can take the Quebec student demographic and compare it to the Canadian figures -- as the National Assembly said. This might be favourable to Quebec. Rather than having 24, we might have 26 or 27. Let us use a demographic figure, either the Canadian population or the student population as a starting point.
Secondly, let us make sure that the list of eligible students is the Quebec list and that Quebec assesses the needs. The criteria Quebec uses are good ones, in my opinion. Moreover, the bill stipulates that insofar as possible the foundation should use the provinces' evaluation criteria. In a way, it specifies that clearly.
Thirdly, this would allow the government to acquire the visibility it seeks, in a general way, and to make the choices that need to be made. Is there no solution to this problem? I am trying to see how we could arrive at some concrete solution that would allow us, should there be additional funds, as you said, to use them as quickly as possible because the system needs them.
Mr. Larose: When we began to work as a coalition, we first of all analyzed the objectives of the Canadian government. Was its objective to meet needs in the province of Quebec? People feel that there is a problem with student indebtedness in Canada. I myself have received groups of students who come from the rest of Canada and some of them have a $40,000 debt by the time they graduate. I think there is a problem in this regard in Canada. There is no doubt about it. However, it is not true that we have a corresponding problem in Quebec.
So we noted that there was a very specific, explicit objective which is linked to the year 2000. The Canadian government wants its presence to be felt by Canadian students. It has a right to its objective. We agree that the Canadian government should pursue that objective. After that, however, we said, "Time out". What is wrong with using a formula that has been around for 38 years? What is the problem with that? I feel that when the government -- the sovereignist Government of Quebec for that matter -- agrees with us on measures to make the Canadian government visible, that is a kind of small revolution. They agree. Why pick a fight? We have been using these mechanisms for 38 years. There is money which comes from your level and we distribute it. So as far as I can see there is no problem, why fix it when it isn't broken? That is our position. Doing things otherwise will be complicated, very complicated.
I must acknowledge that I have had to reacquaint myself with the loans and bursaries system. I can tell you that it is a state-of-the-art system. It is a program which we have fine-tuned over the years. Three other measures will be applied to allow access to people in special conditions. It is quite a complex mechanism. I do not think we should reinvent the wheel. We agree with the federal government's objective, but let us not cause trouble! We could continue for another 10 years, and add it to the other 38 years that have already gone by, that would be 48 years. I do not like to pick fights anymore than the next person, even if my profession requires that I provoke discord sometimes. But on this point, I would like us to agree, not wrangle.
Senator Bolduc: Concerning what you were saying about loans and bursaries in our province, one of the problems that was raised was the fact that our reimbursement methods and the timing of the reimbursement weren't sophisticated enough. There are some students for whom it is costlier to go to university than for others. Some faculties are more expensive -- take dentistry, for instance.
However, we must also take into account the fact that at the end of their studies, 10 years later, those graduates generally earn more than the ordinary student in the system. We have to be careful. If we adjust the reimbursement methods, there should be a way of seeing to it that doctors, lawyers and dentists, ie the groups whose studies cost the most, if we consider them in the costs, the 40,000-dollar debt might go down to 22 or 23,000 because they are in the category of those who are most capable of reimbursing their debts. If we reschedule debt reimbursement, a recent graduate who is practising a less lucrative profession, for instance social work -- I think it pays less than dentistry, I am sure everyone will agree -- could have a longer period to reimburse his or her debt. This is one of the adjustments Quebec wanted to make and wants to undertake. I think that this is in keeping with what the federal government wants to do.
I agree with you when you say: why change something that is constantly being improved, a system that works?
Mr. Larose: We had no problem and so we did not need a solution. You are creating a problem and looking for solutions that are going to be complicated to apply. Let's not create a problem and we won't need a solution. Everyone agreed on the declared objective of seeking visibility. That is good federalism.
Senator Lavoie-Roux: I would simply like to thank the CSN for its presence here. We knew that you were a member of the coalition. Unfortunately, I did not have the time to read all of your brief but I did read the conclusion. I must tell you that I read the first paragraph of your conclusion to my friends opposite in the Senate. It was practically verbatim. This project is all the more indefensible when you consider, as everyone has said and reiterated, that there is already a loans and bursaries system in Quebec. In fact last year I was a member of a committee which looked at post-secondary education and went throughout Canada. People everywhere told us that in Quebec students were in a better position because it was the only province with a loans and bursaries system, and they envied students in Quebec. All of a sudden, I do not understand why Quebec and the federal government are competing to duplicate something which already exists in Quebec.
I believe I understood that today the premiers will make representations for an increase in transfer payments. The provinces and the citizens deplore the fact that the education system, especially at the post-secondary level, is deteriorating because the resources have vanished. All of the provinces must also deal with what is happening to the health care system. I am sure I do not have to spell things out. If they have too much money, let them use it for the health care system in the provinces. There was nothing to prevent the provinces from setting up their own loans and bursaries system. I think some provinces grant loans, yes. The provinces could have set up a system of bursaries with the money the federal government gives them through transfer payments.
I do not know if we are going to be able to convince the government. I think that we should continue as long as possible trying to at least pass some amendments. As to the substance of the debate, I think we have here at the table the best witness, Senator Bolduc, who has experienced all of these things. Thank you for coming and we will continue to fight to the extent that we are able.
Senator Joyal: You have headed up the CSN for a number of years now and your main responsibility is to negotiate and resolve sometimes very difficult conflicts, and in spite of that, you manage to get the job done. I do not want to mention any by name, but the Métro case springs to mind, and here I am thinking of conflicts that go on for ever in the courts and which are extremely unpleasant all around.
Do you know Mr. Monty, the chairman of the foundation? Have you ever negotiated with him?
Mr. Larose: Not directly, no.
Senator Joyal: You have a general idea of how the business was run and how it developed; like me, you live in Quebec.
Is there not some way, in practice, leaving all the constitutional matters aside, to come to an agreement if we respect certain points? As someone was saying earlier, the overall amount is not really where the problem lies as such, nor is it with the last point of the agreement, since the visibility the federal government seeks is accepted by the Government of Quebec. The law mentions that insofar as possible, we should take into account the list of needs prepared by the provinces according to the criteria they put in place when such lists already exist, as is the case in Quebec. Is the gap not relatively small? We could come up with some kind of administrative agreement that would satisfy both the Canadian government and Quebec. Is that possible, in light of your practical experience with some major conflicts, much more complex than this one, with all due respect to the students and the administrative questions that may crop up in the course of putting all this into place?
Mr. Larose: The gap may seem narrow but at the same time it is huge. You are referring to labour relations. Senator Rivest knows this area extremely well because he had to deal with a multitude of cases. I have somewhat a similar feeling as when we deal with section 45 of the Quebec Labour Code namely that when there is a change in the legal structure of the business, will the collective bargaining continue to exist or not. Should we sign with the subcontractor or the client? I have the feeling that we want to set aside section 45 and hand this over to the subcontractor. I can sign whatever I want with the subcontractor, but who is the real decision maker? I feel that, with regard to education, the real decision maker is the Government of Quebec. In this case, the Government of Quebec must negotiate with the Canadian government.
I do not feel quite comfortable to go and negotiate with the subcontractor that could be replaced as of tomorrow morning anyway. Now it is Mr. Monty, but before it was Mr. Landry. In this matter, we are on shaky ground. In a democratic society, such prerogatives belong to the government.
If Mr. Monty would agree to say that the federal government exercise power in this way, we could talk to Mr. Monty, but in my opinion it is the Canadian government which is responsible.
Senator Rivest: I listened to Mr. Monty Friday night on the program Maisonneuve à l'écoute. He said that he was there as an administrator and that he would stay out of politics.
Senator Joyal: I worked with your predecessor, Mr. Marchand when he was Minister of Labour during the dispute with the Lapalme strikers. Do you remember that episode. Monseigneur Lafontaine acted as an intermediary between your union and the Canadian government in order to find a solution to this extremely intricate dispute.
I do not want to emphasize this particular point but if we try to solve all legal matters on the basis of legal concepts, we can complicate things unduly and make then more difficult to solve which could take up to 30 years. If we want to find a solution to a problem where we recognize that all the elements of the solution are on the table, only a matter of principle remains and I know that it is important. However, there may be a solution and I am not trying to deal with it since we are not in a room discussing a solution. There could be an agreement whereby the Canadian government would recognize the exclusive jurisdiction of the Quebec government according to article 92(13) of the Constitution. It is possible to sign agreements which recognize the respective jurisdiction of the parties while accepting ad hoc and circumstantial amending formulas.
Please forgive me for using a sexist expression but when two mountains want to meet, it is an impossibility, however two people can meet and come to an agreement. There could be a way to reach an acceptable compromise between the Quebec government, whose exclusive jurisdiction to make choices would be recognized, and the Canadian government and his jurisdiction to reallocate the funds it collects as a result of its taxation power in Canada. It is in this context that I am thinking of a form of compromise that could be acceptable to the interested parties. One may not have to adhere to the most rigid principles when attempting to see how the problem in fact can be settled.
Mr. Larose: We are confronted with a problem of union recognition, as we say in our vernacular. The interested parties do not want to recognize their responsibilities. When a boss does not to recognize a union, it is extremely difficult to negotiate. In this instance, the federal government does not recognize the union. The real union, is Quebec under the circumstances. It would prefer to negotiate with somebody else. If there is no such recognition, there is no possible agreements between the parties. I submit that there is no problem. The problem does not exist, we are creating it. To solve the problem that we created, we are going to talk to Mr. Monty who, in a way will not be able to give us satisfaction because he will be unable to say, "Yes, I recognize the Constitution and so on but this has nothing to do with the matter." The decision lies with the Canadian government.
There is no problem so let us not create one and we will not have to find other solutions especially since our predecessors, when Canada was a pastoral country, found a solution that worked for 38 years. Our Prime Minister wants Canada to be visible and we will certainly accommodate him according to his contribution. He were quite clear about that. Some are trying to pick a quarrel with us because there are no other problems to solve.
Senator Joyal: Senator Rivest was telling us that he listened to Mr. Monty. Let us suppose that he was taking his position, namely that he does not want to negotiate. The Prime Minister of Canada, in his letter of last may expressed regret that the negotiations had stopped. To elaborate on your example, does this not show a will on the part of the Canadian government to recognize the other party? Mr. Monty refuses to get involved and wants the political problem to be solved by governments. The Prime Minister of Canada stated in his May letter that he was ready to support the negotiations. The resolution adopted by the National Assembly seems a base for a reasonable discussion. Should we not invite them to sign an agreement on the basis of the recognition of their mutual responsibilities?
M. Larose: Of the Canadian government and of the Quebec government, I agree.
Senator Joyal: Exactly.
Mr. Larose: The problem lies with a piece of legislation that was passed; I do not know really know how it works.
Senator Joyal: The legislation has not been passed. The bill was passed in the House of Commons and it is now before us.
Mr. Larose: That's right. I am not sure whether or not I am revealing secrets, but after each of the negotiations sittings, the coalition held a conference call with its negotiators. Day by day we followed the progress of the negotiations. Once the National Assembly's position was known, everybody agreed on its interpretation. We said, let us ask the Canadian government to submit a proposal that would take these positions into account. The Canadian government said that there was no proposal, that there will be none, that all there was is Bill C-36.
We were then forced to agree that there wouldn't be any negotiations. We were open to all kinds of solutions as a result of a government to government negotiation. The Canadian government had to put forward a proposal whereby the existing system would be the tool to implement it. It was not very complicated. I understood that the Canadian government didn't want to change at all the proposal on the table, namely Bill C-36. We could see then that there wouldn't be any negotiations.
Senator Joyal: The only think I should like to add is that in the Prime Minister's letter, mention was made however that a series of meetings were scheduled for the 15th and the 17th of May. I assume that what you are stating is the position of the Canadian government. It is possible that in subsequent meetings -- there are all kinds of people that meet around the negotiators, you are one yourself and there are others -- at one time or another, and then things seem to be rolling again. You know how it works, there are all kinds of representations from various people around the table and sometimes in a situation which appears to be deadlocked, things end up by moving again. Wouldn't it be desirable for the discussions to resume as soon as possible since, according to your interpretation, it would appear that one side was not willing to move things forward? In all this debate, there are all kinds of middle of the road arguments or options which are put forward and which sometime manage to reach a consensus.
Mr. Larose: Since I have had some experience with those things, I would say that, yes, it is possible for negotiations to resume but not with the government representatives. It is understood that their mandate is expired. The meeting must take place at the higher echelons, namely the respective ministers. If Mr. Pettigrew and Mr. Chrétien want to bring the matter to their level, and I will submit that this is a constitutional matter, they will be applauded. They are the ones who can change the course of things and make the openings.
[English]
Senator Moore: Mr. Larose, at the outset you said that there are a number of ways in which the federal government could have the visibility in this program in Quebec that it would like to have.
Could you give some examples of how that visibility could be attained?
[Translation]
Mr. Larose: The method is quite simple. It was suggested for example that if there were $3, $5 or $10 million in scholarship funds for Quebec students, that is the bursaries which the Quebec government gives to its own students, we could draw for instance the equivalent of $3, $5 or $10 million which would be identified as being awarded by the federal government within the framework of the Millennium Foundation.
[English]
Senator Moore: Do you mean that they would match the money?
Senator Bolduc: No. That is not what he said.
[Translation]
Mr. Larose: No. Let us suppose that there is a $10 million in scholarship funds a year awarded to students by the federal government. The Quebec government could randomly choose as many students as necessary to reach the total of $10 million and tell those students that their scholarship was awarded by the federal government. Then we have total visibility.
[English]
Senator Moore: Have you any other examples?
[Translation]
M. Larose: In my opinion, this is the best way to make the Millennium Scholarships visible. We did not feel that a televised campaign was necessary, it was rather a matter for the students getting the money to know that it came from the federal government.
[English]
The Chairman: Thank you very much. We appreciate your attendance here today. It has been very helpful.
The committee adjourned.
OTTAWA, Monday, June 15, 1998
The Standing Senate Committee on National Finance, to which was referred Bill C-36, to implement certain provisions of the budget tabled in Parliament on February 24, 1998, met this day at 4:35 a.m. to give consideration to the bill.
Senator Terry Stratton (Chairman) in the Chair.
[English]
The Chairman: We will now go into clause-by-clause consideration of the bill.
I propose that we consider Part 1 of Bill C-36. We have circulated for honourable senators' edification the amendments that were brought forward in the House of Commons. These amendments cross all the various parts of the legislation.
We may want to take a quick scan of those amendments and see if we have any concerns with respect to them.
Senator Cools: I move:
That Part 1, clauses 2 to 46, now be considered.
Senator Lavoie-Roux: I have an amendment to move in relation to clause 8.
The Chairman: We are looking at Part 1, clauses 2 to 46. Are there amendments to those clauses? If senators wish, we can go part by part; however, if we took, as an example, Part 1, clauses 2 to 46, we could then pick out anywhere that we felt required amendment.
Senator Cools: Where an honourable senator has an amendment, perhaps we can move the clauses from Part 1.
The Chairman: We do not know until we go through them.
Senator Bolduc, do you have any amendments?
Senator Bolduc: Yes, I move that Bill C-36 be amended in clause 10(a), on page 7, by replacing lines 38 and 39 with the following:
Canada, the needs of the Canadian economy and the management of investments; and
This would address the qualifications of the directors -- three qualifications instead of two.
Senator Lavoie-Roux: This makes sense. These people must administer $2 billion and there may be further money added to this amount.
Senator Cools: Senator Bolduc is asking that clause 10 be amended so as to assure the public that members of the board of directors have knowledge in investment management.
Boards of directors are generally expected to be competent in the management of money and with the financial resources that are placed at their disposal. It is my perception that the construction of the section on the appointment of directors already contemplates that the directors must be competent. That would be my primary submission.
Subclauses 10(a) and 10(b) and the rest of the relevant portions of the bill are based on a premise that a director must be competent to manage the affairs of the business, corporation or foundation. Competence is assumed.
Senator Bolduc: I do not wish to debate that. For me it is obvious that a group of people who have $2.5 billion must know something about investment. That is all I wish to say. This is a basic requirement, as it was in the requirements under Bill C-2. I do not wish to make a big fuss about that.
Senator Lavoie-Roux: It makes such good sense.
Senator Bolduc: It makes sense; however, I do not want to debate that for five hours.
Senator Cools: It would appear, though, that you do wish to debate it.
Senator Bryden: It is not quite the same thing as under Bill C-2, because this is a $2.5-billion fund that will all be spent within 10 years, and the funds, presumably donated by the private sector, will most likely be tied to certain purposes. The principal objectives and qualifications of the board really do relate to the dispensing of the funds and therefore to a knowledge of education and so on. For that reason, I do not support the amendment.
Senator Forest: I appreciate the intent of the amendment, but, it seems to me, Mr. Chairman, that if they are knowledgeable about the needs of the Canadian economy and about post-secondary education, they would also have a knowledge of management of investments. It seems to me that it could be included in that.
The Chairman: My only concern would be that since we are on the field of education, we need to extend this and get as much money out of this as possible. That is where I see a benefit to having people with a background in investment. You cannot say it is only $2.5 billion as compared to the Canada Pension Plan. It is a significant sum of money, and it should be extended it as far as possible to achieve as much possible for students.
All those in favour of the amendment, please raise your hands.
All those opposed?
The amendment is defeated.
Senator Bolduc, do you have more amendments?
Senator Sparrow: Can we move approval of clauses 2 to 10 now?
The Chairman: I do not think it is appropriate to do that now.
Senator Sparrow: At some point, we have to get rid of them. Let us start at number 1 and see if there are proposals for amendment before we go to number 2.
The Chairman: I am trying to speed it up a bit. If we have to go through clause by clause, it will take us longer.
Senator Sparrow: We have to go back to clause-by-clause study anyway.
The Chairman: I understand that, but at the end of clauses 2 to 46 you can table a motion to approve them.
Senator Cools: We have to approve it right here.
Senator Bryden: I agree with the chairman. It should be possible for us to go through these carefully, and if there are amendments to clause 3, we can deal with them. After dealing with them, we can have a motion to pass all of the clauses.
The Chairman: Before we get to that, we have to go through each potential amendment for each clause within that group of clauses 2 to 46. That is my suggestion. Is that agreed?
Some Hon. Senators: Agreed.
Senator Bolduc: I have a few other amendments. I have an amendment to clause 29. We have discussed it a lot and everybody here is familiar with it. Subclause (1) currently contains the following words:
If the Foundation is satisfied that it is consistent with its objects and purposes to do so, the Foundation may enter into an agreement with a provincial minister...
I move:
That Bill C-36 be amended in clause 29, on page 14, by replacing lines 40 and 41 with the following:
"do so and if it is requested by a particular provincial minister, the Foundation shall enter into an agreement with the provincial minister respect-".
We have discussed that at length.
The Chairman: Is there debate?
[Translation]
Senator Rivest: I should like to mention to our colleagues that this amendment would totally reflect the views expressed by the Honourable Jean Chrétien, Prime Minister of Canada, in the letter he sent to the Quebec Premier, the Honourable Lucien Bouchard.
Mr. Chrétien stated that a careful study of the resolution, passed by the National Assembly leads us to conclude that it contour very positive and valuable intention which quite meet the desired objectives.
By forcing the foundation to negotiate, as per Senator Bolduc, we would in fact reflect the wishes of the Honourable Prime Minister of Canada.
[English]
Senator Bryden: Once again, this is not new ground for any of us. The position, which I think was stated clearly by the minister today, is that this is intended to be an enabling clause, which, indeed, as Senator Rivest says, makes it possible for the foundation to enter into such an agreement, but it does not make it mandatory.
It is our position that you cannot make it mandatory without putting in a whole lot of statements as to what would happen if you do not enter into it, so we do not support the amendment.
[Translation]
Senator Rivest: Does this mean that the foundation could be implemented in Quebec, based on the special reality of Quebec, without the consent of the Quebec government? If we use the word «may», this means that without an agreement, things will work the same.
[English]
Senator Bryden: I do not agree with that. There may never be an agreement. There will be, I assume, a great deal of pressure on both sides to find some way to spend $600 million.
Senator Rivest: But if there is no agreement, the federal government will move ahead.
Senator Bryden: I do not know the answer to that.
Senator Bolduc: I should like my honourable colleagues to realize that not having any agreement will be full of political consequences.
Senator Bryden: I am sure, Senator Bolduc, that there are other people as well aware of political consequences as we are.
Senator Cools: I would like to speak to Senator Bolduc's second amendment. I oppose his amendment on the grounds that any bill which sets up a foundation should certainly leave the ultimate management and administration of the foundation to its board of directors. The current construction in the bill gives ample room for the foundation to enter into the agreements as it wishes. I really do believe that we should respect the corporate and democratic processes that will ensue within the foundation itself.
Senator Tkachuk: I would ask the mover of the amendment perhaps to explain clause 29.
I agree with Senator Bolduc that it is full of political peril, but if Saskatchewan says that its students should be given scholarships on the basis of need rather than merit, and the Province of New Brunswick says that it wants its scholarships to be given only on the basis of merit, we have two opposing views. If you are the top student in your field, you will get it. Does the legislation apply to the people who live in the province? In other words, can a student from a wealthy family, and who has a 98-per-cent average at a school in Saskatoon, apply to a New Brunswick university? In New Brunswick, they award scholarships on the basis of merit, whereas Saskatchewan only grants them to people who have no money. If a person from the province of Quebec applies to the University of Saskatchewan, is he disqualified if he has money? That is what this seems to imply. I do not know how they will ever come to an agreement. I know all the provinces disagree.
Senator Bolduc: I do not want to revisit the whole discussion we had this afternoon. That is exactly what we discussed with representatives from the Quebec government. They gave us a technical explanation of the bill. They are of the opinion that the criteria for awarding scholarships are already in other clauses of the bill. We cannot touch that.
I would go further than the proposal I made a few moments ago. There was unanimous agreement in the Quebec National Assembly with respect to three principles. I asked the technical advisor about this and suggested that, if we could include those parameters in clause 29 in the law, that would perhaps circumscribe the area in which a grant could be made. He said that even then they would not accept it. In my opinion, he went to the wall. I thought that if we could set those parameters in the law, that would solve the problem. He did not agree, so I will not go as far as that today.
If a provincial minister requests an agreement, the foundation would have to agree, after negotiation, with the provincial minister. In that agreement, they would settle the problem of interprovincial mobility. We already have that in Quebec. We have scholarships. Some are for people coming from outside the province, I suspect, not only for the people of Quebec. We also have agreements with nine or 10 universities in the United States. They come to Laval in Montreal, and they pay the same fees as other students. When we send students to Massachusetts, for example, they pay the same price.
Senator Tkachuk: To whom would the law apply? Perhaps Senator Bryden can answer that question. If the Province of Saskatchewan says that its criterion is need, and the Province of Ontario says that its criterion is merit, to whom does the law apply -- the student or the school? In other words, if a student is discriminated against because his parents happen to be able to afford university, can he then apply to Ontario? Is he disqualified from receiving a scholarship simply because he is smart and has money, which would make this a bursary and not a scholarship?
Senator Bryden: The scholarship applies to the students, not to the province or to the institution. The governing objective is in clause 5. I think it answers your question directly. Clause 5(1) states:
The objects and purposes of the Foundation are to grant scholarships to students who are in financial need and who demonstrate merit...
There are two qualifications.
Senator Tkachuk: In clause 29, the criterion for the determination of financial need and merit does not lie with clause 5; it lies with the foundation in an agreement between the provinces. It is contradictory. One province may say that need is based on being 18 years of age and having left home and that, therefore, the parent is no longer responsible. Another province may say that as long as the parents have money, it does not matter if the student is over 18 years of age. The province may still want to have a needs test for those parents.
I do not know how that will work. That is what I was trying to get at.
Senator Bryden: We have discussed this quite a lot.
Senator Tkachuk: I know, but you still have not given me an answer, so the discussion obviously did not help.
Senator Bryden: The best explanation I can give is that, under clause 29, as long as you stick with the two qualifications in clause 5, which are the objectives, then it is open for the foundation and the provinces to negotiate the scale of need and the level of merit. That is the substance of the discussion we had with the officials from Quebec.
Senator Tkachuk: But every province can be different.
Senator Bryden: They have to be consistent so there is no duplication. We do not want to go back and rebuild the whole system. They should not be dramatically different.
Senator Tkachuk: Let me be specific. Let us assume my parents make $50,000 per year. Under the provincial agreement with Saskatchewan, I am not qualified because my parents make $50,000 per year. However, in Ontario, the qualification is $75,000 per year. Does the law prohibit me from applying in Ontario and taking advantage of their definition of need, or does it apply to the very school? How does it work? Can I apply to Ontario?
Senator Bryden: It is like the tax roll laws. Where you ordinarily reside determines whether you get a scholarship. Where you exercise that -- whether you take it to Ontario -- is a different matter.
Your parents making $50,000 would not necessarily determine your financial need. I am sure other circumstances are considered. Are you living separate and apart from your parents? Are your parents divorced and paying two alimony cheques? Many factors would go into that determination.
Senator Tkachuk: That is my point. I would be discriminated against because my own province had different criteria from another province.
Senator Bryden: I do not believe so. If you go through the bill carefully, the intention is that it be as even as possible but that it avoid duplication while providing for flexibility.
The Chairman: Is there any other debate on this amendment? Seeing none, all those in favour of the amendment?
All those opposed?
I declare the amendment defeated, on division.
Senator Lavoie-Roux: I hope I have a little more luck, but if it has already been decided that the vote will go against all the other amendments, we may as well quit right now.
Honourable senators, I move:
That Bill C-36 be amended in clause 8, on page 5, by replacing lines 6 and 7 with the following:
"(b) five persons, two of whom shall be students attending an eligible institution".
Do not forget that there will be at least 15 members on that board -- that is, if we follow the constitution set out. They have asked to have more than one student on the board. We could have students from two different provinces. Together, they can discuss whether whether or not something should go ahead.
Senator Bolduc: That is actually in the bill.
The Chairman: The amendment to subclause (b) would state "five persons, two of whom shall be students..."
Senator Lavoie-Roux: Exactly.
[Translation]
Senator Rivest: This is to assure that the students are represented.
[English]
That is common sense. Are you in favour or against it? All those in favour of common sense?
Senator Lavoie-Roux: It will not jeopardize the whole bill if we put two students instead of one on a board that has 15 members. The people who have the most interested here are the students.
The Chairman: Perhaps Senator Bryden can give us some background as to why there is only "one student"?
Senator Bryden: This clause of the bill sets up the initial members. One is the chairperson of the board, who is appointed by the Governor in Council. The Governor in Council then appoints five people to the board. Of those five, one shall be a student attending an eligible institution. That means that there will be four others.
That does not prevent the Governor in Council, in his discretion, making another student appointment. This is merely a guarantee that one of the initial five people who is appointed to set up the foundation will be a student.
This is an exceptionally important bill and particularly important to students because they are affected. In a country this size with its diverse population and the institutions involved, including institutions of higher education, a guarantee of one student member out of the five initial appointments is reasonable and not unreasonable.
Senator Lavoie-Roux: Why not two, then?
Senator Bryden: Why not five?
Senator Lavoie-Roux: I am not asking for five; I am asking for two.
Senator Cools: Senator Bryden has eloquently made the point that there is nothing to stop the appointment of more than one student, but at least one position must be filled by a student.
Senator Lavoie-Roux: I would remind you that this request was repeatedly made by students. I think it is logical.
The Chairman: It is on the record, senators.
All those in favour of the amendment please say "Yea".
Some Hon. Senators: Yea.
The Chairman: All those opposed, please say "Nay".
Some Hon. Senators: Nay.
Senator Lavoie-Roux: You should be ashamed of yourselves!
The Chairman: The amendment is defeated, on division.
Senator Lavoie-Roux: I have another amendment.
I suggest that Bill C-36 be amended in clause 27. I am making an effort to speak English so that you will understand. Apparently, however, it does not help.
The amendment involves paragraph (c). I move:
That Bill C-36 be amended in clause 27, on page 14, by replacing lines 20 to 22 with the following:
"institution; and"
[Translation]
...to carry on their studies in order to get a degree, a diploma or a certificate.
[English]
This would remove the restriction that it shall only apply to the first university cycle.
Representations were made to us by students that the master's level --
The Chairman: Does this involve the doctorate level or the master's level?
Senator Lavoie-Roux: Only the master's level is involved. The students felt that it should be included. When you go to university today, it is almost imperative to get a master's degree in order to obtain employment.
Senator Rivest: In regard to globalization, this is very important.
Senator Lavoie-Roux: We will remove the restriction: "...other than a degree, certificate or diploma for a program beyond the undergraduate university level".
[Translation]
We would simply remove the restrictions to the first university cycle, namely the first part of the sentence: to carry on studies in order to get a degree , a diploma or a certificate.
[English]
The amendment would remove the end of that sentence. I do not think I have to explain it again because explanations have already been given on a few occasions in committee.
Senator Bryden, do you have an objection to that?
Senator Bryden: Of course!
Senator Lavoie-Roux: I knew you would.
Senator Bryden: I wish the discussion would pass from me to someone else here.
Senator Forest: It has passed. I agree that there is a need for bursaries and scholarships at all levels of education, but where we are trying to make university or post-secondary education accessible to young people, the first degree is most important. If we can get them through that, hopefully, they will receive more funding later on and we will have more funding to expand the program. I agree that students need assistance, but I think we must spend this money on the first priority.
Senator Bryden: I should like to make a factual comment regarding information I received this morning. Within one year, NSERC, the national research foundation that grants scholarships, will have a maximum of $500 million. They have half-a-billion going into post-secondary education. That is only one agency. There is some help, Senator Lavoie-Roux.
The Chairman: As an example, the Medical Research Council, funds something in the neighborhood of $8.26 per capita. The United States provides $66. If you apply to the medical research council for a grant to do a study, your chances have now dropped to one in five; they used to be two or three in five. The argument in the medical field does not hold water. That is the concern that we are experiencing with regard to this. That is my editorial comment regarding that matter.
If you defeat this amendment, then it behooves us to pursue, rather vigorously, the fact that we are dramatically underfunding these levels of masters and doctorate studies. These people are going south. They are leaving our country. That is our concern.
If there is no further debate, I will put the question.
All those in favour of the amendment please so indicate.
All those opposed?
The Chairman: The motion is defeated, on division.
Senator Rivest: No abstentions?
The Chairman: Senator Milne is not a voting member.
Senator Lavoie-Roux: I have had such luck that I will refrain for the time being. I am glad I am not sitting on the other side because they cannot make a motion to improve the bill. I have never seen such behaviour in all my political life.
Senator Bolduc: I have an amendment to add a new clause 42.1 to page 19. The motion reads:
That Bill C-36 be amended, on page 19, by adding the following immediately after line 23:
"42.1 The Board shall appoint an investment committee, which shall
(a) perform the duties delegated to it by the Board;
(b) approve the engagement of investment managers empowered with discretionary authority to invest the assets of the Foundation;
(c) meet with the officers and employees of the Foundation to discuss the effectiveness of the Board's investment policies and the achievement of the Foundation's objects;
(d) require management to implement and maintain appropriate procedures to
(i) monitor the application of the Board's investment policies, standards and procedures, and
(ii) ensure that the Foundation's agents comply with this Act and the Board's investment policies, standards and procedures; and
(e) review, evaluate and approve management's procedures referred to in paragraph (d)".
Since it is an investment group with investment responsibility, we thought it appropriate that there be an investment committee. We are using the Canada Pension Plan Investment Board as precedent.
Senator Bryden: Is this a new subclause (3)?
Senator Bolduc: Yes, under clause 42.1. The bill will be improved if we had statutory legitimacy for an investment committee.
The Chairman: Is there any discussion?
Senator Bryden: Briefly, I will give somewhat the same reply I gave in relation to the knowledge and qualifications of the board members, but with one addition: The board and the foundation have the characteristics of a person for legal purposes, so it clearly is not prohibited, if it is in the interests of the purposes of the foundation, for them to create an investment committee.
Senator Bolduc would prefer to have it included in the bill but, as the bill stands, that would not be prevented from occurring.
The Chairman: Since the foundation will be dealing with $2.5 billion, would you not want the assurance that there will be an investment committee?
Senator Bryden: In some instances, that could be useful and advisable.
It is also sometimes advisable to have the board take control of that situation itself in hiring their managers to manage the investments and so on. I am not disagreeing with what you are saying, except that I do not take the position that it requires an amendment to enable the board to do that.
Senator Cools: Precisely. The board can do that without this amendment.
The Chairman: However, there is no assurance that the board will do it. That is Senator Bolduc's concern, and I think it is quite legitimate.
Is there any other discussion on this amendment?
Senator Tkachuk: It is a legitimate concern, because in clause 42, it does say "shall appoint an audit committee." However, they need not say that because they could appoint an audit committee without it being in the bill, could they not?
Senator Bryden: Perhaps someone knows Canadian corporate law better than I do. It may be that a Canadian corporation, or an organization that has the traits of a Canadian corporation, is required to have an audit committee. I stand to be corrected.
Senator Tkachuk: A public corporation would be required to have an audit committee, but not a non-profit corporation, at least if not provided for in the legislation.
Senator Cools: With all due respect to the concerns being expressed, I view clause 42(1) as a plus, because it fits in not only with the public law, the administrative law, and the functioning and administration of corporations, but it also fits quite nicely with Parliament's concern for financial responsibility. To my mind, it reinforces the concept of Parliament's superintendance over financial matters. I see that as slightly different from the amendment.
Senator Tkachuk: That is a stretch, Senator Cools.
Senator Cools: As the Standing Senate Committee on National Finance, and we have a duty to see that the government spends money well. I have no problems whatsoever with this clause in the bill.
The Chairman: In this case, it is not so much spending money wisely because everyone believes that, if we can reach agreement, the money will be spent wisely in the investment in students, it is, rather, the investment of that money, in both the short and long term, over the life of this legislation, that is of real concern.
To go into it blindly, without establishing such a committee, is very short-sighted. If you do not deal with this issue quickly, particularly with the events in Asia, you could make some serious errors. I think it is absolutely critical that this be included in the bill. If it is not, then the committee could, because it is an education committee based on awarding scholarships, focus on that end of things rather than the issue of, "Here is $2.5 billion, and let us make it work for us as best we can."
Our concern is that we can see that skew occurring without enough attention paid to the other side. That is absolutely critical.
Senator Bolduc: Mr. Chairman, I have had some experience with other institutions, private institutions, for example, insurance companies. Here, as you know, educators will probably be in the majority on that board, and they are not famous for their investment knowledge. I have sat on a few boards of insurance companies, and even there, few people were knowledgeable in investment. It is important for an insurance company to not only sell policies but it should also have an investment plan or strategy.
I thing it is prudent to have that. I will say no more than that. I spoke on that on the debate on second reading in the house.
Senator Bryden: It is legitimate to raise the point. Like Senator Bolduc, I am a member of some investment and pension committees for large corporations. In a proper situation, there are investment committees. In others, the board, by executive committee or whatever, deals directly with the managers. What I am saying is that this board is not prevented from doing that. I know what Senator Bolduc and Senator Stratton are saying.
Senator Bolduc: My main concern is that the board will simply hire someone from an investment agency to look after this aspect. That is what they do most of the time. That is not a good way of handling their responsibilities. This happens even in multinational corporations. I happen to be member of a few such boards. They often invest with investment counselors from various houses and then compare their results. That is one way of doing it, but it is not the best way. That is why I thought this proposed amendment would improve the bill.
The Chairman: We should go on the record quite strongly to say that we recommend this amendment. When the Australian dollar is under 60 cents, when the Canadian dollar is under the assault that it is now, when the Asian economy, instead of improving, is worsening, and when the Japanese yen is dropping like a stone as compared to the U.S. dollar, there are serious concerns, honourable senators. If you are not on top of this issue, quickly and continuously, with a committee, you can go and lose a lot of money very fast. Ultimately, that is our concern and it must be expressed.
All those in favour of the amendment?
All those opposed?
The amendment is defeated on division.
Senator Bolduc: I have one last amendment, but it is perhaps the most important one. It is on clause 133, the very last clause.
I move:
That Bill C-36 be amended in clause 133, on page 79, by replacing line 35 with the following:
"133. Sections 2 to 46 and 127 to 232 come into force".
The Chairman: Senator Bolduc, we are jumping to Part 13.
Senator Bolduc: It is related.
The Chairman: Is it related back to Part 1?
Senator Bolduc: Yes. In other words, it is only with respect to the international management of financial institutions that the Governor in Council has the capacity to decide the day the law will come into force. That is the meaning of clause 133.
I would suggest that we could add to that clause 2 -- that is, the clause that creates the foundation -- and then all the clauses related to Part 1 of the bill, in other words, clauses 2 to 46, should come into force. Instead of having only the international financial institution come into force on the decree by the Governor in Council, Part 1 would also do that.
Do you understand what I mean? In other words, they would create the foundation immediately. We have put on the table many propositions, many witnesses have made suggestions, and we have studied that bill thoroughly. If we do that, it will give the government perhaps two or three months -- for example, no later than September, or something like that. The government's books would not change. The $2.5 billion would be there anyway, but we could improve the bill. It would be possible for the government to put pressure on the foundation to make a deal with the provincial governments. That would help greatly. Otherwise, we are in a straitjacket here.
This matter is a very sensitive one in Quebec. I told you that. You heard all the witnesses who spoke about that. It seems to me that the possibility exists to put into force that section relating to the millennium scholarship, on the authorization of the Governor in Council, in three months, for example; the pressure would then be on the foundation and the provincial governments to make a deal.
I am sure the new chairman of that company, whom I happen to know very well -- he is a wise man, a good man, the man for the situation -- would negotiate a good deal with the government, and then the problem would be partly solved. It would not be solved completely, because you heard what Mr. Larose said, but at least we would have a deal.
Senator Cools: Mr. Chairman, this does relate to the substance of what Senator Bolduc is saying, but what we are considering right now is Part 1, clauses 2 to 46.
Senator Bolduc: That is what I am amending.
The Chairman: The only way to deal with Senator Bolduc's amendment is to go to this particular clause. I know it is not within the clauses 2 to 46.
Senator Cools: We have to bring it into the text of the motion.
Senator Bolduc: I do not wish to put you into a straightjacket. Maybe we should wait and you should consult the Minister of Finance. He did say a few things this morning and you should have a chance to consult.
Senator Cools: My question is procedural. The question that is before us is Part 1, clauses 2 to 46.
The Chairman: I would suggest that we table this amendment for the moment because as we proceed, and because this clause affects so many parts of the bill, there may be other amendments moot to this particular clause. When we get to Part 13, we will go back and deal with this amendment.
There is a conundrum here. Senator Bryden, have you seen it?
Senator Bryden: The only point I would raise is that clause 133 deals with sections that deal with international agreements and so on. There is a reason for holding it open. There were people, even on your side, who spoke on this bill, and they asked: Why are we not making this money available now, and why do we not make more available? There are at least as many provincial ministers of education, I believe, who would be very disturbed by putting this out as a Governor in Council decision as would be pleased by it.
Senator Bolduc: My answer to that, Mr. Chairman, is that the money would be available to them today. We can put the foundation on track now, but what I ask for is a delay of two to three months to put pressure on the system. I am not asking to keep the money for the whole year. I understand what the Minister of Finance meant when he said he has budgetary commitments. I believe what he said, when I read between the lines, that it would help him, perhaps, if we could do that. I do not wish to push you to the wall. Just wait, and perhaps you can have a consultation with him.
The Minister of Finance -- when I asked him about the motion -- would agree with Mr. Chrétien, and, of course, that the motion from the legislative assembly was a good basis for discussion. If that is so, I suspect that Mr. Monty will try to make a deal with the provincial government. If we exert a little pressure for two or three months, until September, they may handle something. We never know.
Senator Bryden: One tends to read into a conversation what they want to get out of it. I found that the minister was saying there will not really be pressure to negotiate a deal until this proposed legislation is passed and the foundation is in a position to do its job. That was my impression.
Mr. Chairman, how do you wish to deal with this?
The Chairman: I would ask the committee. The amendment is before us. Do you wish to vote on the amendment as presented right now?
Senator Cools: Then we must move the question before us, because what is before us right now is the consideration of Part 1, clauses 2 to 46. We must move the other part of the bill.
The Chairman: Only that clause specifically as it relates to Part 1.
Senator Cools: We still must move it before us right now, what we have agreed on, clauses 2 to 46.
The Chairman: We understand that, but we are saying that the amendment relating to clause 133 affects a certain clause in Part 1. That is all we are dealing with. I do not think we have to change our original outlook. I think that as we proceed we need to agree that we are dealing with clause 133 as it affects clauses 2 to 46 and 127 to 132 coming into force.
Senator Bolduc: In other words, it would add clauses 2 to 46. It is as simple as that.
The Chairman: I think we can deal with that.
Senator Bryden: To be very clear, that means nothing happens until the Governor in Council would proclaim this; that is, no foundation would be set up, no membership would be elected, and there would be no negotiation, because they have no basis on which to negotiate.
Many people will be questioning what we are doing. It is mostly people on your side who are asking why we would keep that for regulation, why the Governor in Council should decide when this will happen. Normally, when a bill is passed, unless there is good reason -- which I assume there is because of the international agreements on 127 and 132 -- it becomes effective on proclamation.
Senator Bolduc: Yes, but there is much legislation which comes into force after an order in council.
Senator Bryden: This is basic. We are deciding that we will delay the setting up of the Millennium Scholarship Foundation and the fund for three months.
Senator Bolduc: We can deal with this in the house. That would give you time to consult with the minister. I am not inflexible.
Senator Bryden: We will certainly not agree to amend it here. However, I will raise this issue with the minister and it is possible that it can be dealt with when it goes to the house.
The Chairman: We will likely bring it forward again then.
Senator Bryden: That is right.
The Chairman: Is there any further debate on this amendment?
There being none, will all those in favour of the amendment, please say "yea"?
Some Hon. Senators: Yea.
The Chairman: Will all those opposed please say "nay"?
Some Hon. Senators: Nay.
The Chairman: The amendment is defeated, on division.
Are there any other amendments regarding Part 1?
Senator Tkachuk: I have one amendment. I move:
That clauses 2 to 46 of Part 1 of Bill C-36 be deleted on the basis that it is against the spirit of section 92 of the Constitution Act describing provincial powers.
This part of Bill C-36 deals with education. It deals with the scholarship of students. It involves not only scholarships themselves but also bursary programs. The bill does not award scholarships based on merit. Rather, it is basically student welfare. For example, if you have good marks, you will get a cheque from the government, not because you are the best in the field but because you do not have adequate financial means.
That seems to me to be direct assistance to the population in my province and in other provinces to attend university or another post-secondary institution, which is, frankly, not within the purview of the federal government to do.
I know that some provinces have agreed to this. My view of that is that everyone has a price, but that does not mean they are right; it only means they have a price. Some premiers have sold out to the federal government because the cheque is in the mail and because it is hard to argue against scholarships and giving money to needy students. Of course everyone wants to give money to needy students and to make university education as accessible as possible to the population of Canada. However, this kind of action by the federal government simply exacerbates tensions between the provinces and the federal government. It does nothing for national unity. It seems that the federal government is simply doing something to rub it in to those who want to be very protective about the jurisdiction that was granted to the provinces in the Constitution Act of 1867. I think this bill is a way to circumvent the Constitution and to allow the federal government to do something that it should not do.
I do not think it would be constitutional for the provinces to get together and form a national trust to form a militia. I do not think that would be legal because that is not their responsibility.
I did not listen to all the testimony today, but I was able to ask some questions this afternoon. There are no answers to many of the problems with this bill. It is a bad bill. It is badly written. It is disorganized. People do not know who qualifies. Kids will not be treated fairly.
I do not care what Senator Bryden or the government says about how great this is, I know that, by the time the provinces and the feds are through with this, the kid in British Columbia will be treated differently from the kid in New Brunswick, and that is not fair when it comes to handing out federal money. If the provinces want to treat their students differently, that is their business, but that cannot apply to federal tax dollars.
I know from the responses I got to the questions I asked on clauses 5 to 27 of the bill that it will be discriminatory. Kids in my province will be treated differently from kids in your province. That should not happen.
There is a way to get around this problem, and that is to allow the universities to administer the funds themselves. If they want to do good things for people, what is wrong with doing that? Send them a cheque and let them administer it. Arguing about investment and audits and bills does not help the kids who need an education. Send the provinces a cheque and let them administer the fund. Let the Department of Finance invest the money and write the cheques. Let the kids go to school, let everyone be treated fairly, and let each province determine how it will treat education rather than the federal government, federal bureaucrats or federal appointees.
I may be treading on old ground, but I do so because this is important to me.
I hope that at least my side will support this motion.
Senator Losier-Cool: Did I understand correctly that your amendment will completely abolish the establishment of the millennium fund?
Senator Tkachuk: That is correct.
Senator Losier-Cool: Then I did understand.
The Chairman: Is there any further debate?
There being none, will all those in favour of the amendment so indicate?
Will all those opposed so indicate?
The amendment is defeated, on division.
Are there any other amendments with respect to Part 1?
Hon. Senators: No.
The Chairman: If there are no other amendments with respect to Part 1, I suggest that we break for dinner after we have adopted those clauses.
Senator Bryden: I anticipate that most of the amendments that honourable senators want to bring forward have to do with Part 1 of the bill.
Senator Lavoie-Roux: You cannot anticipate anything.
Senator Bryden: If there are as many amendments regarding other parts of the bill, then we should break and have supper. On the other hand, if there are a limited number of amendments left, then why not finish now? I am in your hands. There will be no amendments from this side.
Senator Rivest: Are there other amendments on other parts of the bill?
The Chairman: Yes, there are other amendments.
I am concerned about Parts 4 and 10. Concerning Part 4, we should discuss the two representations from First Nations groups. I want to have a clear and full discussion on the legitimacy of their concerns.
I want to have a discussion on Part 10 of the bill, which would extend the bankruptcy provisions from 2 years to 10 years for students. Although the minister answered some of our concerns today, I am still concerned about it. I would like those concerns aired around this table.
Senator Bryden: The Senate is convening at 7:30 p.m. It is a question of timing.
Senator Lavoie-Roux: We are wasting time right now.
The Chairman: Senator Bryden, I suggest that clauses 2 to 46 of Part 1 be passed before we eat.
Senator Cools: Mr. Chairman, I move that clauses 2 through 46 be adopted, without amendment.
The Chairman: Is it agreed, honourable senators?
Some Hon. Senators: Agreed.
Some Hon. Senators: On division.
The Chairman: The motion is carried, on division.
Let us move on to Part 2.
Senator Bolduc would like us to deal with all the parts of the bill, except Part 4, at this time because he has a scheduling conflict. If we can go through all parts leaving Part 4 to the end, he will leave and we will deal with Part 4 later, if that is agreeable.
Senator Cools: I move that Part 2 of the bill, being clauses 47 to 57 inclusive, be passed without amendment.
The Chairman: Are there any amendments?
I want to ensure that everyone has an opportunity to present amendments. There being no amendments, shall Part 2 carry?
Hon. Senators: Agreed.
The Chairman: Carried.
Part 3 is under the title "Early Retirement -- Suspension of Separation Benefit." Does everyone understand what this is about? Are there any amendments to be proposed?
Senator Cools: I move that Part 3, being clause 57, be passed without amendment.
The Chairman: Is there any discussion? Is it agreed?
Hon. Senators: Agreed.
The Chairman: Carried.
As agreed, we will not deal with Part 4 at this time.
Next is Part 5, under the title "Canada Education Savings Grants." Are there any amendments to Part 5, clauses 72 to 75? Does everyone understand what is being proposed?
Senator Cools: I move that Part 5, being clauses 72 to 75, be passed without amendment.
The Chairman: Is it agreed?
Hon. Senators: Agreed.
The Chairman: Carried.
Next is Part 6, under the title "Administration Agreements with Aboriginal Governments," clauses 76 to 79 inclusive, amendments to the Federal-Provincial Fiscal Arrangements Act.
Are there any amendments?
Senator Cools: I move that Part 6, being clauses 76 through 79 inclusive, be adopted without amendment.
Senator Lavoie-Roux: What is it about?
Senator Cools: Administration agreements with aboriginal governments.
The Chairman: Honourable senators, is it agreed?
Hon. Senators: Agreed.
The Chairman: Carried.
Next is Part 7, which we will also leave for the moment.
Next is Part 8, under the title "Air Transportation Tax," clauses 84 to 90, amendments to the Excise Tax Act.
Senator Cools: I move that Part 8, being clauses 84 to 90 inclusive, be adopted without amendment.
The Chairman: Is there any discussion? Is it agreed?
Hon. Senators: Agreed.
Senator Cools: As long as there is a clear vote on the record.
The Chairman: We can pass unanimously.
Next is Part 9, National Child Benefit System, clauses 91 to 97, amendments to the Income Tax Act, and clause 98, amendment to the Children's Special Allowances Act.
Senator Cools: I move that Part 9 of the bill, the National Child Benefit System, being clauses 91 to 98 inclusive, be adopted without amendment.
The Chairman: Is there any discussion?
Seeing none, all those in favour? All those opposed?
Carried.
Part 10 of the proposed bill deals with student loans. I am referring to clauses 99 and 100, amendments to the Canada Student Financial Assistance Act; clauses 100 to 102, amendments to the Canada Student Loans Act; and clause 103, and amendment to the Bankruptcy and Insolvency Act.
I had concern, as did others, regarding the extension of the time frame from two years to ten years. A previous decision had been brought into force as of April 1. However, in virtually a little more than two years of it coming into effect, the time frame is jumping from two years to ten years. That causes me great concern because we have not allowed sufficient time for this process to be measured statistically, as has been brought forward by the Canadian Bar Association. We ought to have the fullness of time, or at least a little more time, for that to be measured more accurately.
We have statements made by various people to the effect that there has been a dramatic increase. However, we do not know if it is because of the dramatic leap in the cost of tuition or if it is just the dramatic leap in the use of credit on the part of consumers as a whole. We are hearing various opinions and opposing opinions as to what this should be.
I move:
That Bill C-36 be amended in clause 133 on page 79, by replacing line 35 with the following:
"133(1) Section 103 comes into force on the day that is two years after the day on which this act is assented to;
(2) Sections 127 to 132 come into force"
The idea is to allow more time.
Students currently in undergraduate programs could graduate next year before the millennium fund comes into effect. They are handcuffed now with high student loans. Outside of Quebec, the loans are $25,000 on average, which is staggering. I gave the example of a student who invested six years of his life in the faculty of architecture, only to be rewarded with a job of $20,000 per year. How on God's green earth will he repay that loan under the conditions that are imposed?
As the minister, Senator Bryden and others have said, measures will be brought forward through regulation to ease the burden on those students. However, those regulations can be changed instantly on the decision of the minister without coming back to Parliament. The Minister of Finance may change his opinion. The pressure could come to change this measure again. There is no assurance for students that they will have an easy go of it.
Simply stated, control over this provision is arbitrary. If the provision can be changed from two years to ten after the two years came into effect a little over two months ago, what will prevent someone from changing the regulations two months after the bill comes into effect? My argument is that there is nothing to prevent that from happening. Students are doomed to live with that situation. We are hitting them with the burden of a huge debt and with huge, escalating tuition fees, and then we will hit them with this ten-year period. It is unconscionable to do that and not give them anything. They will finish their graduate degree before the Millennium Fund comes into effect.
Senator Bryden: My position is well known. A large number of provisions have been brought in, including being able to deduct the interest from all student loans, both provincial and federal, from income tax.
Mr. Chairman, with respect to your example of the architectural graduate with the $25,000 debt, there is the ability to tie the amount of the debt to no more than 15 per cent of that person's income. There is the ability to make gratuitous payments, which would reduce up to 50 per cent of the entire amount of the loan. Those provisions are in place and are being contemplated.
One of your points is that some of this process is being left to regulation by the Governor in Council. The fact that regulations are being used and can be used next year to change things is not necessarily bad. You made the point about the volatility of the dollar and the volatility of investments, what is happening globally and what could happen to interest rates tomorrow if we jack them up to 12 per cent to look after the Canadian dollar. Managing by regulation is not always a bad thing.
It is clear from the tone of everything in the budget and most of what is included in this proposed legislation that this is a government -- not just the finance minister -- seized with attempting to advance the opportunity for students to compete in the new information society and the global economy.
I made the comment before in relation to offsetting the bankruptcy provisions that the department believes, having targeted specific corrective actions, that this is a good substitute for including the loan in the bankruptcy provision. It would be double compensation to include it.
The Chairman: My concern is that this position is open-ended on the government side. The opportunity is not great for those students who are there. That is the real concern.
Is there any other discussion?
All those in favour of the amendment, please raise your hands.
All those opposed?
I declare the amendment defeated, on division.
We are now dealing with Part 10, being clauses 99 and 100 regarding amendments to the Canada Student Financial Assistance Act; clauses 101 and 102, amendment to the Canada Student Loans Act; and clause 103, amendment to the Bankruptcy and Insolvency Act.
Senator Cools: I move that Part 10, being clauses 99 to 103 inclusive, be adopted without amendment.
The Chairman: All those in favour?
All those opposed?
Carried on division.
That was Part 10. We turn to Part 11.
Senator Cools: I move that Part 11 of the bill, "Employers Premium Refund," being clause 104, be adopted without amendment.
Senator Rivest: Without amendment, again? Is it possible to have an amendment somewhere?
The Chairman: Perhaps Senator Bryden could explain this section.
Senator Bryden: This clause excuses both the employer and the employee from EI premiums for young Canadians between the ages of 18 to 24 who are hired between 1999 and 2000. It does not, however, allow an employer to dismiss an existing employee in order to make use of this provision.
The Chairman: The only concern about this part is enforcement of the provision if a permanent employee were to be dismissed. That was the only issue that was a hot item.
Senator Bryden: In some instances, it will be covered by a collective agreement.
Senator Tkachuk: What is your reason for this clause?
Senator Bryden: The clause is designed to help introduce 18- to 24-year-olds into the workforce. I know where you are leading and I will not enter into a debate on that, either.
Senator Tkachuk: I am simply asking whether this discounting of the EI premium will give impetus to employers to create jobs? That is in variance to what the Minister of Finance was saying for the past couple of years. He said before that this was a payroll tax, and that higher payroll taxes do provide an impediment to creating employment. He changed his mind because of the surplus in the budget, but now he is again saying that lower EI premiums will create jobs. Is that what he is saying? I do not wish to put words in his mouth. I find this contradictory.
Senator Bryden: Since you were not here this morning, you probably should read the transcript. I do not wish to misquote him.
Senator Tkachuk: What was the answer?
Senator Bryden: I do not believe he was asked that question, and I would not wish to conjecture on his behalf.
The Chairman: He was not asked that question this morning. He focused on the three items that we raised.
Senator Tkachuk: If a person is unemployed and is 19, there is an incentive to hire him or her. If the 19-year-old's father has just lost his job at 52, that does not matter? Age is the only consideration.
The Chairman: This is discrimination by age.
Senator Tkachuk: We are providing incentives here on the basis of an insurance premium, which is a payroll tax. We are doing this by decreasing the tax so that a young person will get a job, rather than someone who may be more qualified, but who is a year or two older.
Senator Bryden: The minister did say that they had checked to see whether this provision was discriminatory on the basis of age, and they were informed that it was not in violation of the Canadian Human Rights Act.
If this brings thousands of 18- to 24-year-olds into the workforce because employers are creating so many jobs, it may be that the next experiment would be with 58-year-olds, Senator Tkachuk.
Senator Tkachuk: They should lower premiums to create employment so that all people will have jobs. This kind of action has failed before. Governments have previously used this kind of government intrusion into the economy which is discriminatory against some group. If this is not discriminatory because of age, what if it were because of gender? Would it be okay to have a similar provision if there were a large group of women of that age who did not have jobs?
Senator Bryden: We could have a good discussion about this, because there are many affirmative action programs. It seems Senator Tkachuk does not recognize affirmative action.
Senator Tkachuk: Do not put words in my mouth. I want words from your mouth, instead. Do not tell people what I believe.
Senator Bryden: I have provided the best information I can.
Senator Tkachuk: I want this on the record.
The Chairman: If we have this wonderful stockpile of money which will hit $16 billion, then the best way to create jobs is to dramatically drop the Employment Insurance premiums. I know you will not do that, so it is pointless to discuss it. I do want it on the record that we think that is the most effective way, however.
Is there any other discussion regarding this part?
Senator Cools: I move that Part 11, regarding the "Employers Premium Refund," being clause 104, be passed without amendment.
The Chairman: All those in favour?
All those opposed?
The motion is carried on division.
We move to Part 12, regarding supplements and allowances; clauses 105 to 119, amendments to the Old Age Security Act; clause 120; amendment to the Income Tax Act; and clauses 121 to 124, amendments to the War Veterans Allowance Act. Is there any discussion?
Senator Cools: I move that Part 12, being clauses 105 through to 124 inclusive, be adopted without amendment.
Senator Lavoie-Roux: I will abstain, because I do not think that this part, which is very important for a large part of our population, has been studied seriously. All the witnesses we heard were speaking on the Millennium Fund. We did not hear from anyone from that important group.
The Chairman: Could someone explain the benefits of these clauses?
Senator Bryden: First, the time for filing for the Guaranteed Income Supplement is coincidental with the tax here. This extends that time for filing for three months. That applies not only to the GIS and the Old Age Security Plan, but also to the Veteran's Allowances. That is the principle thing that it does.
I did not mention this before, because it did not come up, and I may regret mentioning it now. There is a provision, however, for the rounding-down of the claw back.
The Chairman: If you had not mentioned it, Senator Bryden, I would have.
Senator Bryden: If $150.90 is to be deducted from the GIS cheque, to date only $150 has been deducted. The amount of the claw back is calculated in broad categories, rather than the precise amount earned. The implementation of this so-called more streamlined and more user friendly system has caused a change so that it costs $1 -- or some amount of money -- to do this automatically. The total figure is about $8 million.
The minister has given an undertaking that that will not proceed. They will introduce a bill in the fall -- and they have time to do it because it does not take effect until next July <#0107> which will state that the impact of that rounding down, or the automation, will not have any effect on seniors.
Senator Tkachuk: Why do we not just amend it here? What he wants will get done, and we can get rid of that provision.
Senator Bryden: He is saying that it will not become effective until later.
Senator Tkachuk: He always says, "I made a mistake but we will wait later." Why does he not just do it right the first time? Then we would not have to do this stuff.
Senator Bryden: Not everyone is perfect, Senator Tkachuk.
Senator Tkachuk: The Minister of Finance did not say that until there was heat in the House of Commons. He then said, "Oh, oh. They caught me". That is what this was about.
Senator Bryden: I do not know if I would put it that way.
Senator Tkachuk: That is the way I will put it.
Senator Bryden: That is fair. The memorandum is that the bill would remain intact, but the government would introduce amendments in the fall to undo parts of Bill C-36, which would not come into effect until July 1999 in any event. It is on the record, and he will do that.
That is being done. Rather than hold up this bill for amendment and send it back, he is saying that he will do this, and no one will be adversely effected.
The Chairman: Thank you. Are there any questions?
Senator Tkachuk: This would be for proposed sections 105 to 124. We could table this whole thing, could we not?
Senator Cools: No, we could not.
Senator Tkachuk: Perhaps we could delay it until the fall. He can then do what he wants to do, which is the right thing.
Senator Cools: There is a question before us.
The Chairman: The question is before you, and you wanted the question put. However, if a senator wishes to table or propose an amendment, he or she should have the right to do that.
Senator Cools: He would have had to move an amendment.
The Chairman: I asked if there were amendments and you suggested, Senator Cools, that I should first put the question on the adoption of the part and then ask if there were any amendments. That is the procedure we have adopted, Senator Cools. I am now asking if there any motions in amendment.
Senator Tkachuk: I move that we delete those clauses.
Senator Cools: I clearly understood that the honourable senator had no motions to put.
Senator Tkachuk: I made my argument earlier as to why these amendments were put forward. The question should be put, and then the motions can be put on the record.
The Chairman: All those in favour of Senator Tkachuk's amendment to table part --
Senator Cools: Not to table, to delete.
Senator Tkachuk: Yes, to delete it. Get rid of it.
The Chairman: All those in favour of the amendment, please say "Yea."
Some Hon. Senators: Yea.
The Chairman: All those opposed please say "Nay."
Some Hon. Senators: Nay.
Senator Tkachuk: All those for senior citizens? All those opposed?
The Chairman: The amendment is defeated, on division.
Senator Cools: I move that part 12, clauses 105 through to 124, be adopted without amendment.
The Chairman: All those in favour of the motion?
Some Hon. Senators: Yea.
The Chairman: All those opposed?
Some Hon. Senators: Nay.
The Chairman: The motion is carried, on division.
Next, Part 13, "Financial Assistance to International Financial Institutions and Foreign States".
Senator Cools: I move that Part 13, "Financial Assistance to International Financial Institutions and Foreign States," being clauses 125 to 133 inclusive, be adopted without amendment.
The Chairman: Any discussion or amendment? The only concern that anyone expressed regarding this was the human rights issue.
Senator Bolduc: We told the minister what we had to say, however.
The Chairman: Yes.
Senator Cools: I move that Part 13, being clauses 125 to 133 inclusive, be adopted without amendment.
The Chairman: All those in favour, please say "Yea".
Some Hon. Senators: Yea.
The Chairman: Opposed?
Some Hon. Senators: Nay.
The Chairman: Carried, on division.
We are left now with Part 4 and Part 7.
Part 4, the Kamloops Indian Band. Two issues were tabled and discussed by the band and by the Department of Finance. One was the question of quorum, and one was the question of the Indian meeting of the band itself, versus the meeting of the council. Officials from the Department of Finance explained that they had legal opinion that, because it was a band meeting, it was a moot issue. The band council was the group responsible for making the decision, and they did that. That satisfied that part of the issue.
The second concern was the question of the Indian Act. The interpretation of the Indian Act -- and, I am not an expert on this issue -- involved the constitutionality of the whole issue as to whether the individual on a reserve was subject to a tax essentially imposed by the band council of that reserve. That became the issue.
While the legal counsel from the Department of Finance stated quite clearly that he did not perceive there to be a conflict, the band wanted to point out that there was a conflict. I am trying to give as honest an interpretation as I can, because Senator Bryden has led the way here.
The band's representation seemed to be focused on the legalities of the quorum and of the vote, not on the legalities of the Indian Act. They were not as comfortable with that. Is that a good summary? It has been pointed out to me by the researcher that the Iroquois band was concerned about the constitutionality.
The conundrum is whether or not to accept the opinion of legal counsel from the Department of Finance vis-à-vis the Indian Act. I am uncomfortable with it. I would like to table that portion of it, simply because we have not heard enough opinion as to whether or not this is constitutional. We had the opinion of one person from the Department of Finance. I would like to have someone who is an expert in the Indian Act come before us to tell us whether or not this is constitutional with the "notwithstanding" clause. The argument is that the "notwithstanding" clause in that act is overthrown by a "notwithstanding" clause in this bill.
Senator Bryden: This is not a constitutional issue, in the sense that, if there were something wrong with the provision in this bill, it would not be held to be ultra vires the Constitution. In section 87, the Indian Act essentially says "notwithstanding any other act of Parliament, the following applies." That is section 87. However, this bill also says, specifically in relation to the provision dealing with this tax transfer, that "notwithstanding any other act, this will apply." It replaces the GST.
My recollection, and I should not be taken as an expert, although I once thought I was, is that the position probably being taken by the Department of Justice is that the specific "notwithstanding" clause relating to a specific situation will override a general application in the Indian Act. The Indian Act is an act of Parliament; it is not a constitutional act. It can, therefore, be changed, just as any other act can.
Taking these two provisions together, my understanding is that in the first one Parliament specifically addressed itself to this tax, to this recommendation from this band; therefore, they are saying "notwithstanding what is said in the Indian Act, in this situation, this will apply." In almost every instance of which I am aware, that will supersede the general part of the act. If Parliament wished to, it could have repealed the general section. Instead of doing that, however, it picked the specific section. I have not a chance to research this, but I have had time to think about it. I feel comfortable that this is legitimate.
The other thing that makes me feel comfortable is that the person who brings the application before the court will argue exactly that proposition, only in reverse. He or she will argue that, in this instance, we are abrogating from the general provision by putting this section in, and we should not to that. Parliament's right to do that would not be in question; the question would be whether it should be done. That is my understanding of this. I do not know if Senator Rivest agrees with me or not.
I do not feel that we are doing something unconstitutional. I am agreeing with an interpretation that I grew up with: In a situation where the legislative body has the right to amend the general, it can do it specifically in relation to a specific instance. That is my understanding.
Senator Tkachuk: I am not too concerned. If there is a problem with this, I am sure the minister will address it in the fall, along with other parts of the bill.
The Chairman: One thing I appreciate about the First Nation people is that they to not quit. If they feel this should be changed, they will address it.
I accept Senator Bryden's wisdom, and I will not put an amendment forward, because I know it will not pass. I think we are dealing with a moot point here.
Part 4, Senator Cools.
Senator Cools: I move that Part 4, "Certain First Nations' Sales Taxes", Division 1 and Division 2, being clauses 58 through to 71 inclusive, be adopted without amendment.
The Chairman: All those in favour?
All those opposed
The motion is carried on division.
Senator Tkachuk: Can you make a notation? I do not want to give the impression that I do not oppose this motion. On the general principle of an omnibus bill, I do oppose it, but not because I do not like Liberals.
The Chairman: I hate omnibus bills.
Senator Moore: Now that we have passed Part 4, I did not wish to mention it beforehand because I did not want to influence your thinking, but I discussed the "notwithstanding" clauses with Senator Beaudoin at the break. He did not hear all the arguments; however, he was certainly of the opinion that when you have a specific "notwithstanding" clause dealing with a specific situation in a circumstance, it would supersede the general "notwithstanding" clause. That may make people feel better.
The Chairman: The last one is Part 7, Senator Cools.
Senator Cools: I move that Part 7 of the bill, "Tobacco Products", being clauses 80 to 83 inclusive, be adopted without amendment.
The Chairman: All those in favour?
All those opposed?
The motion is carried on division. Thank you, ladies and gentlemen.
Shall clause 1, the short title, be carried?
Hon. Senators: Agreed.
The Chairman: Carried.
Senator Cools: I thought I said 1. I am so glad you noticed.
The Chairman: Senator Cools wins the argument. She had previously moved approval of clause 1.
We must now approve the bill in its entirety.
Senator Cools: I move that Bill C-36 in its entirety be adopted without amendment.
Some Hon. Senators: On division.
Senator Cools: I move that we report the bill.
I wonder, honourable senators, if there is any possibility that we can report this bill this evening.
The Chairman: No. We do not have the report.
Senator Cools: There are no amendments; it is a one-liner.
Senator Lavoie-Roux: What have you been paid to get this bill through this quickly?
Senator Cools: We can report this bill this evening. It is a one-liner. It is no big deal.
The Chairman: I am trying to work out the logistics. We have two other items on our plate.
Senator Cools: We have two other items on our plate. We must look at the report on Supplementary Estimates (A), and we have the two supply bills.
I would not normally ask the honourable senators to report so quickly, because that would be difficult. However, this report is easy; it is a one-liner. We can have that. I wish to report this bill this evening.
Agreed?
The Chairman: Good point. All right, we report.
Senator Cools: We are off Bill C-36.
The Chairman: I have not spoken on Bill C-36 or given notice, therefore, I intend to speak on Bill C-36.
Senator Cools: This evening all that happens is that you place the report before the chamber. You cannot speak on the report.
The Chairman: I understand that. I am just giving notice that I have not spoken on it.
Senator Cools: That is agreed; we are reporting this evening.
We have the report of this committee on Supplementary Estimates (A) before us. We currently have two supply bills, being Bill C-45 and Bill C-46, before the chamber. This report should be adopted now, and should be introduced this evening in the Senate chamber, so that we can speak to it and dispose of it tomorrow.
Senator Tkachuk: Do as you wish, Mr. Chairman.
Senator Bryden: The work of this committee has basically been completed. If we could get both of these reports into the Senate, that would not stop anyone from speaking to them.
The Chairman: I understand that. I am not disagreeing. I ask the question because last week, with regard to the Supplementary Estimates, Senator Cools asked us not to report simply because she was so busy. I wish to ensure that both of these bills will be dealt with if they proceed. That is my concern. I wish to ensure that, if we bring these forward, there will not be outstanding issues.
Senator Cools: No. Absolutely.
The Chairman: You must move on your Supplementary Estimates.
Senator Cools: Therefore, I move:
That the report before us, being the report of this committee on Supplementary Estimates (A), be adopted.
Some Hon. Senators: Agreed.
Senator Cools: It was already agreed upon that we would report ten days ago.
The Chairman: I know that.
Senator Cools: Just one other item on the second bill, which is before us. The Supplementary Estimates bill is before us, then the bill on Main Estimates. I plan to speak to that bill this evening.
The Chairman: When did we receive that?
Senator Cools: We have had the Main Estimates. We did an interim report.
The Chairman: I was not here, I was travelling.
Senator Cools: We did the interim report on March 26. We can continue to study the Main Estimates, but the bill may proceed.
The Chairman: We did not wish to do a final report; we have not finished our study.
Senator Cools: I am not asking to do a final report. Bill C-45 must move ahead. We do not need to put in a final report. We can continue to study the Main Estimates, but Bill C-45 can move ahead. The reason I am raising this here is so that, when we speak to Bill C-45 in the chamber, we can say that we are continuing to study the Main Estimates. In the meantime, however, the government can have its money.
The Chairman: That is fine, as long as it does not hold up our study.
The committee adjourned.