Proceedings of the Standing Senate Committee on
Legal and Constitutional Affairs
Issue 7 - Evidence, May 16, 2001
OTTAWA, Wednesday, May 16, 2001 The Standing Senate Committee on Legal and Constitutional Affairs, to which was referred Bill C-12, an act to amend the Judges Act and to amend another act in consequence, met this day at 3:35 p.m. to give consideration to the bill. Senator Lorna Milne (Chairman) in the Chair. [English] The Chairman: Honourable senators, I see a quorum so this meeting of the Legal and Constitutional Affairs Committee of the Senate is now met. We have before us, appearing on Bill C-12, Mr. Denis Guay, Acting Commissioner for Federal Judicial Affairs; Richard Drouin, Chair, Judicial Compensation and Benefits Commission; Debi Lapierre, Executive Director, Judicial Compensation and Benefits Commission; and Wayne Osborne, Director, Financial Services. Mr. Drouin will make the presentation. Please proceed. Mr. Richard Drouin, Chair, Judicial Compensation and Benefits Commission: Honourable senators, I am also accompanied by André Sauvé, who is the actuary that the commission has hired to deal with the business of the commission. In introduction, I would like to say that this commission was set up following legislation passed by the government in 1998. It is a commission that was set up for a period of four years, starting in September 1999. My colleagues, Ms Eleanore Cronk and Mr. Fred Gorbet, are both members of the commission and I have been appointed as the Commission for the Compensation and Benefits of Judicial Compensation and Benefits Commission. We are in office until August 31, 2003. However, legislation called for us to file a first report and recommendation to the government on or before May 31, 2000. We therefore set the commission up and had it running during the fall of 1999. We invited the public in general to make submissions to the commission. During the spring of 2000 we held public hearings, one in February and the other in March. Of course, the conference and the judiciary were both intimate parties to the work of the commission, together with the Department of Justice. We then filed our report on May 31, 2000. Following this report I believe the rest is history. We are now before the Senate committee following the introduction and adoption of a bill in the House, which bill is now before the Senate. Madam Chairman, those are my words of introduction. I leave it up to the members of this committee to follow up on more specific questions concerning the report or our mandate. [Translation] Denis Guay, Acting Commissioner for Federal Judicial Affairs: It is a pleasure to be here to answer questions concerning Bill C-12, an Act to amend the Judges Act and to amend another Act in consequence. Under clause 74 of the Judges Act, the Commissioner for Federal Judicial Affairs is responsible for the administration of part 1 of that act which provides for the remuneration, indemnities and pensions for Canada's Superior Court judges. [English] Consequently, our office will be responsible for the implementation of Bill C-12 once it is approved by Parliament. I will be pleased to answer any questions regarding that. The Chairman: Do senators have any questions? Senator Cools: I am sure there are many questions. However, I think many of us were expecting more of a presentation from the witnesses. I am sure that the witnesses are aware that this is the first report and the first bill coming out of a relatively new process. I would have thought that they would give us a bit more information on the actual functioning of the compensation commission. It is a new process and is now a permanent creature. I was hoping for a bit more of a presentation. I am sure many of us have questions. The Chairman: I must say that I agree with Senator Cools. Perhaps you could go into a little more detail as to exactly how you arrived at these particular figures that you used as benchmarks. Senator Cools: Tell us how the commission arrived at the numbers and the representations that were made to the minister. I assure the witnesses, this is a mystery to many of us. Mr. Drouin: I would gladly furnish more details. Senator Cools: We would love to have them. Mr. Drouin: The information is in our report. It is very comprehensive. It gives all the information, as well as a number of recommendations. There are 22 recommendations in our report. How did we arrive at those recommendations? I will touch on how that was done. During the fall of 1999, we invited public responses to the commission as to how members of the public feel about the remuneration of judges. The conference of judges and the council were both very intimate parties to the deliberations. It is a commission of three members. One commissioner is appointed by the judiciary and another is appointed by the federal government. These two commissioners then make a recommendation to the Governor in Council concerning who will chair the benefits and compensation commission. The main thrust of our report and discussions had to do with remuneration and pensions. Our first recommendation deals with remuneration. In following up with previous compensation and benefits commissions that have taken place before ours, some of the criteria used included benchmarking with some public servants, in particular deputy ministers at level three. Also, a study was made and presented to us as to the compensation of lawyers across Canada. This came from the Department of National Revenue and gave the income of a certain number of lawyers in Canada. In our report we give some figures as to the evolution of remuneration compared with DM-03s. The table on page 30 of our report compares the salaries of superior court judges with the midpoint salaries of the DM-03s since 1980. To give you a few examples, in 1995, for instance, superior court judges were paid $155,800 while the midpoint for DM-03s was $155,300. We then took the latest figures for the years 1999 and 2000. In those years, DM-03s were remunerated on a basis of $188,000, while judges were receiving $178,000. This is something at which we worked quite thoroughly. Our report deals with the details of what I am mentioning to you now. The other factor we took into consideration was the salaries of private practitioners. On page 44 of our report we have set out a comparison of judges' salaries with the salaries of practitioners at the seventy-fifth percentile of the comparative population. On the basis of salary only, we find that judges are below the practitioners. Referring to the table on page 44, the average income for practitioners in the whole of Canada is $230,000. In terms of judges' salaries the latest data available to the commission was for 1997. The salary then was at $172,000. This means that these judges are earning 25 per cent less than the practitioners. We then compared the figures with the largest metropolitan areas and did a similar study. We show, for instance, that in the Toronto region the figure was minus 49 per cent. However, for the first time, the commission decided to take into consideration the estimated benefits deriving from the annuities of the judges. It was discovered that when this was added to the compensation package the difference between the judges and the practitioners was of a lesser amount. In Alberta and Ontario there is a difference to the advantage of the practitioners while in the other provinces it is to the advantage of the judges. Senator Cools: On that subject matter, I suppose he is ad libbing really, so we can - The Chairman: Feel free to interrupt, Senator Cools. Senator Cools: It has always been my understanding that, for most persons appointed to be judges, the salaries they receive as judges represent significant increases over what they had been earning before. This information has been put on the record of this committee, previous committees and the National Finance Committee. In addition, it is also quite well known, by those of us in the game of politics for a long time who know a bit about these appointments, that there are many candidates in search of every single judicial appointment. There is no shortage of persons wanting to be appointed. When one sets out to arrive at a number, I wonder whether a more objective standard should be evolved because I suppose people who cost jobs are always faced with enormous challenges. What is any particular job worth? I wonder about the credibility of this. Mr. Drouin: Do you mean the material? Senator Cools: I am referring to the underlying premise from which one approaches this because I do not want to question your material. I find it not fully credible that some of these judges are really struggling to make ends meet. This is the premise, according to you, that the commission set out to use as its methodology for arriving at a quantum. Some other countries use different standards that consider salaries, for example, of ministers and prime ministers and that try to keep all of these salaries in some sort of a balance. For example, what is the salary of the Prime Minister? We have the information. I am moving on the premise, Madam Chairman, that all of us here have read the report and some of us are well acquainted with the report. I am trying to determine a benchmark standard for arriving at a proper quantum for a judge. I may be philosophizing a bit, but I have many problems with the standards that are being used. I read much of the press coverage when your commission was coming forward with the report. There were some astounding statements in the press. There were some statements, for example, where I gathered that some judges believed their basic salary should be anywhere from $400,000 to $700,000 a year. I was astonished by that. I was hoping that somewhere in your remarks today you would address my concerns. It simply is not credible. Mr. Drouin: The figures that you mention never came before the commission as being a serious requirement. You refer to the press that you were reading. I suppose that was at the time we received the conference on the council's proposals. The headlines were more on the line that the judges were asking for an increase of 27 per cent in their salary. Those are the figures that did come before the commission because that was the demand put before the commission by the conference and the council. Senator Cools: The particular numbers that I cited, Madam Chairman, were contained in a National Post article on February 15, 2000 in an article by a woman named Luiza Chwialkowska. The article commented that judges complain that their salaries are far out of line with those of senior lawyers and that, according to the judge's figures, the top paid third of lawyers in Ontario earned on average $381,239 a year, with some earning more than $700,000. I want the committee to know that this was something in the public domain. The Chairman has now told us that these numbers were never put before the commission. Mr. Drouin: Pardon me, Madam Chair. No, I said that there was never a requirement from the judges to receive a salary of $700,000. The article said that some lawyers in the private practice do earn $700,000 - and that is quite possible. I will say that there is nothing wrong with that, but the judges never came before the commission requiring or asking anywhere near that type of figure. Senator Cools: I am comforted. Perhaps we should get clarification on this, but the article does say that judges complained that their salaries were far out of line with those of senior lawyers. I have already put it on the record. The article reads, on the face of it, that these complaints came from judges and were put before the commission. I cannot defend a journalist's mistakes, but if you are saying that is a mistake it should be clarified. Mr. Drouin: No, it is not a mistake. Senator Cools: This particular article was widely read across the country and was quite shocking to many. Mr. Drouin: I think, Madam Chairman, if I can clarify, the first presentation by the judges that came before us was a requirement for a 27 per cent increase. That I remember because it came out as a very hard headline. Of course, in wanting to get the 27 per cent, witnesses can argue that practitioners can earn as much as $700,000. There is nothing wrong with the article because I think it is a true statement that some practitioners do earn $700,000 or even more. Through the normal channel, which is the conference and the council, the judges' demands given to us were for an increase in salary of 27 per cent. The Chairman: You have based this comparison table that I have before me on a comparative table on a seventy-fifth percentile of private practice. Mr. Drouin: Yes. They were asking to base it on the eighty-sixth percentile. We brought it down to the seventy-fifth percentile because in discussing it among ourselves and with the actuaries and the experts, we thought it was a good benchmark. Basically, the legislation calls for the commission to deal with the prevailing economic conditions in Canada, including the cost of living. We then considered financial security of the judiciary along with judicial independence. Third, we considered the need to attract outstanding candidates to the judiciary. I would say that several of the previous commissions took this matter into consideration, although not as a very objective criteria, saying, "We will align them with the third level of deputy minister and that is it." We did not do that. As previous commissions had done, we evaluated what deputy ministers receive. As all of you will probably recall or know, they received large increases during two or three years of the past few years. The second criteria was the one related to private practitioners. It was suggested to us that we should take into consideration other countries such as the U.S., Australia and the U.K. There were figures given to us from the U.K. and Australia which would have justified giving larger increases to Canadian judges. However, we found that we were not sufficiently informed as to the job description, if I can use that phrase, of judges working in the U.K. or in the U.S. Therefore, we felt that we were not well enough equipped to take those figures into consideration. If we had done that, it would have provided an additional justification for increasing the salaries of Canadian judges. We took into consideration these two criteria, but without trying to make a mathematical reference to say that it was X per cent of this or 100 per cent of that." We looked at both of them and made a judgment call, saying, "We think this would be good." As a result, we arrived at an increase of 11 per cent instead of the 27 per cent that was requested. Senator Cools: I have a couple of questions about the bill. The Chairman: Senator Cools, I also have Senator Moore on my list. Senator Cools: I will come to a conclusion soon. The legislation says that one of the commissioners should be a representative of the judiciary. Mr. Drouin: It is "appointed by," not representative. Senator Cools: The minister makes the appointment, but they are chosen. How does the judiciary choose its individual? What is the process for coming to that choice? Mr. Drouin: I would not be able to tell you because I was not part of this. That is because the appointment of the chair comes after the appointment of the two other members. Senator Cools: Who chooses the person who is the appointment from the judiciary? In other words, it is supposed to be the judiciary's person. Mr. Drouin: Yes. Senator Cools: The minister appoints that person, but suppose the judiciary chooses them. What is the process by which the judiciary chooses that individual? Mr. Drouin: First, there is no process established by legislation. Although I was not part of this process in any way, I will just say that I think both the conference and the council have a process in their organizations for appointing someone to this commission. It was not part of our commission's mandate to examine that process. Senator Cools: That was a huge gap in the previous legislation. There is so much that one cannot get to everything. I wonder, Chairman, if at some point in the future we could consider how that individual is chosen. When you say the judicial council, you are saying the chief judges. It is another way of saying the chief judges, or some chief judges, or maybe a chief judge would make that choice. The Chairman: Senator Cools, I suggest that is outside the scope of this legislation. If such other legislation comes before us, we should consider it. Senator Cools: But it is within the scope. If you consider clause 18 of the bill, you will see that the scope of the commission is contained in proposed section 26.3 of the Judges Act. What we see here is that with the creation of this commission, with its enormous expansion and scope, it is beginning to be given powers to make identifications of representatives of the judiciary. The Chairman: The powers are to identify those to whom costs shall be paid. Senator Cools: In proposed subsection 26.3(2) the scope is expanded again to include claims against the Consolidated Revenue Fund. Proposed subsection 26.3(3) is a clause which is truly representative of that fact. The Chairman: Again, it concerns payment, does it not? It concerns payment from the Consolidated Revenue Fund. Senator Cools: That is extraordinary. That is an entirely new concept in the Judges Act. Mr. Drouin: Can I clarify this point? Senator Cools: I wish you would. The Chairman is dismissing it. I wish you would clarify this because it is an extraordinary step. The Chairman: Mr. Drouin, please. Mr. Drouin: In that proposed section, Madam Chairman, the representative of the judiciary identified under proposed subsection 26.3(1) is really their lawyers, not the commission nor the commissioner. Proposed subsection 26.3(1) states that the commission may identify those representatives of the judiciary participating in an inquiry of the commission to whom costs shall be paid in accordance with this section. That refers to their attorney. Senator Cools: I understand what it says. I understand the consequences it would have. I am questioning the basis for it. It is expanding the scope of the commission. It is allowing the commission to have entitlement to the Consolidated Revenue Fund which, indeed, is revolutionary in terms of the Judges Act. I was hoping that these matters would not appear in the legislation. I thought that some sort of explanation could be provided. Mr. Drouin: I was trying to clarify the issue. Senator Cools: I know that you were. I take that with the earnestness that you intended. I see that Mr. Guay may have an answer as to that particular use of the proposed subsection entering into the act. Mr. Guay: I believe that, tomorrow, your committee will be undertaking a clause-by-clause study of the bill. That question could be asked tomorrow of the Department of Justice. The Chairman: Representatives from the Department of Justice will not be here when we do our clause-by-clause study of the bill. Senator Cools: My understanding is that these clauses make their way into bills with the due co-operation of the Commissioner for Federal Judicial Affairs. This is what we are told, time and time again. Could you give me the premise and the public policy intention behind proposed sections 26.3(1) and, particularly, 26.3(2) - which is now creating a new set of entitlements paid directly out of the Consolidated Revenue Fund? This is, indeed, novel. Mr. Guay: As Mr. Drouin mentioned, that section provides for the payment of a legal representative of the judiciary who will make representations to the commission. With that section, the government is saying that the government will pay half of the costs for legal representation of the judiciary before the commission. Senator Cools: With all due respect, Mr. Guay, it is saying more that the government will underwrite certain expenses. It is also saying that there will be certain entitlements to be paid out of the Consolidated Revenue Fund, which is novel in the history of the development of this act. The act itself was created as a way of charging the Consolidated Revenue Fund. Many of the authorities are contained therein. I wonder why is it that a new authority for a new charge or an additional articulation of a charge against the Consolidated Revenue Fund is needed in the statute. Mr. Guay: I admit it is a novel thing. However, there was a recommendation, which was mentioned by Mr. Drouin, about payment. I refer to Recommendation No. 22 of the commission which the government refused to implement. Mr. Drouin can explain Recommendation No. 22. After that, I will answer the question. Mr. Drouin: Because parties before the commission were paying their own representatives to make their cases before the commission, we felt the government should also pay part of the expenses incurred by the judiciary to make its case before the commission. This is something normal with this type of funding. A process established by legislation causes a party to incur costs in making its case before the commission. Therefore, we recommended that there be partial funding of the costs. That clause in Bill C-12 addresses that matter in a different way because the government has accepted paying 50 per cent of the costs that the judiciary incurs in appearing before the commission. Senator Cools: Am I not right when I say that there is a section of the Judges Act which already wraps its attention around the question of payment and that proposed subsection 26.3 is an additional one? Section 53 of the Judges Act speaks to the issue of the payment under the act. That is the instrument for entering the Consolidated Revenue Fund. I propose that this new section 26.3(2) is a new method. I submit that is separate and distinct from section 53. Mr. Guay: Yes. Senator Cools: Good. We are getting somewhere, Mr. Guay. Mr. Guay: It is different from section 53 because section 53 deals with the salary allowance and annuity of judges. Senator Cools: It also deals with other amounts. Mr. Guay: It deals with other amounts, yes. We have to share in payment, which is provided in section 26.3, for legal representation of the judiciary before the commission. Senator Cools: Would I be allowed to correct you, Mr. Guay? Section 53 says all payments and all salaries under the act; it does not say "for judges." Over 40 years ago it used to say "of the judges," but those sections disappeared. That section was expanded to include salaries of staff and everyone else. Perhaps we should put section 53 on the record. It says: 53.(1) The salaries, allowances and annuities payable under this Act and the amounts payable under sections 46.1 and 51 shall be paid out of the Consolidated Revenue Fund. Therefore, section 53 is not peculiar to the judges. It has been expanded already beyond the judges. My question to you is: Why is there an additional expansion under proposed section 26.3 to make direct charges against the Consolidated Revenue Fund in addition to the charges in section 53? I think that is an important question. It is not easy to grasp and I beg the indulgence of the committee on this point. Mr. Guay: Senator Cools, there are many sections in the Judges Act that provide for payment. For instance, sections 73 and beyond deal with our staff and our office. We are paying the staff of our office. Senator Cools: What is this in section 73 about paying? Mr. Guay: Section 77 deals with the commissioner's staff, which is part of the public service. Senator Cools: Section 77 is not about payment at all. Mr. Guay: It says that it is part of the public service. Senator Cools: It say that the staff of the commission are part of the public service. It is not about payment. Mr. Guay: We have to pay those people. I can give you other examples. Under the second part of the act which deals with the Canadian Judicial Council, section 62 says: 62. The Council may engage the services of such persons as it deems necessary for carrying out its objectives and duties, and also the services of counsel to aid and assist the Council in the conduct of any inquiry, or investigation described in section 63. Senator Cools: I am not questioning that. Section 53 is the authorizing section which allows charges under this act to be charged to the Consolidated Revenue Fund. The term "Consolidated Revenue Fund" does not occur anywhere else until suddenly it appears in proposed section 26.3. If we cannot have an answer today, I understand and I am sensitive, but I would have thought the committee should have a fulsome explanation of it. Mr. Guay: Wayne Osborne, who is our director of finance, will respond to your question, senator. Mr. Wayne Osborne, Director, Financial Services, Commission for Federal Judicial Affairs: Essentially, the way that we have understood that section, as explained by Mr. Drouin and Mr. Guay, is to reimburse the legal fees incurred by the judiciary in making representations to the commission. You are right in saying that it is a novel approach. Senator Cools: It is extremely novel. I think the committee should know clearly that it is very novel because it is now creating a direct claim on the Consolidated Revenue Fund, in addition to the general authorizing claims on the Consolidated Revenue Fund. It is very profound. Mr. Guay was right. There was a time when section 53 used to refer only to the salaries of judges. Originally, that section was intended to pay the salaries of judges. It was never intended to pay the salaries of other reasonable and good people. My concern is that I see a novel departure. I was hoping there would be an explanation for it. Mr. Osborne: The only possible explanation I could give would be that putting it into the act makes it easier from an administrative standpoint to obtain the funds to pay those fees. Senator Cools: You have a point there. You are saying that it allows for a greater expansion under section 26.3 of the Judges Act. Mr. Osborne: That is for a specific purpose. Senator Cools: That is at this point in time for that purpose, but I have no doubt that many new purposes will come. Mr. Osborne: As far as we are aware, it is to be able to reimburse those expenses. The Chairman: That is probably beyond the scope of these gentlemen we have before us. Senator Cools: It would be at their initiative, though. We are told that this bill is the implementation of this report. The concept originates with these gentlemen's work. The Chairman: The government did not accept the commission's Recommendation No. 22. In response to Recommendation No. 22, the government said that there is no constitutional obligation on the government to pay legal or other representational costs to the judiciary incurred as a result of participation in the commission process. As a policy matter, the government recognized the public benefit of judicial participation in the commission process and made an $80,000 ex gratia payment to the representatives of the judiciary as a fair contribution to the participation of the judiciary before the commission. It has been done before as a policy matter. I assume this time they are putting it into the act. Senator Cools: I think we may discover that proposed subsection 26.3(2) has a slightly different origin than that. What this is doing is creating entitlements. The language of the proposed subsection 26.3(2) states: (2) A representative of the judiciary identified under subsection (1) who participates in an inquiry of the Commission is entitled to be paid, out of the Consolidated Revenue Fund, one-half of the costs determined under subsection (3) in respect of his or her participation. I am not taking any issue with the quantum or the amount of money for the payments. I am taking issue with a direct charge against the Consolidated Revenue Fund. The Consolidated Revenue Fund is a real parliamentary matter here. The Chairman: They are moving it from a policy matter into an entitlement. Mr. Drouin: I want to clarify that the process put in place in the proposed section 26.3 calls for the Federal Court to determine the amount of the costs. That would more or less refer to any time the federal government, or the government per se, is before a court of justice, or before a commission, there is a process to establish that the costs are reasonable. All I am saying is that there is a safeguard. Senator Cools: You are being very earnest and I think very fair-minded. I am not questioning that. What I am questioning is the parliamentary technique here of making a charge against the Consolidated Revenue Fund. That is a very important parliamentary matter. That is what I am raising with you. I am not questioning the fact that the minister, in her wisdom, saw fit to pay X dollars and not Y dollars. I am questioning this new creature here of a direct statutory charge against the Consolidated Revenue Fund. It could easily have remained an estimated charge under the Department of Justice. This is a matter, Madam Chairman, that needs study at some point in the future because the bill is a large bill. You cannot raise everything. You know how difficult it is. I find this a little - not strange, but unique and novel. I am not absolutely convinced it is the road we should have gone down. As I said before, I am not questioning quantum or the propriety of making payments. The Chairman: I think it is probably someone else's turn. Senator Cools: I am sorry to give you such difficult questions. Senator Moore: Mr. Drouin, at the outset the report talks about the structure of the committee and one nominee by federally-appointed judges and another by the Minister of Justice. Who appointed whom of your other two commissioners? Mr. Drouin: The appointments are made by the Governor in Council. Senator Moore: Who nominated whom? Mr. Drouin: The nomination for Mr. Fred Gorbet is a nomination by the federal government. Madam Eleanore Cronk is a nomination by the judiciary. Madam Eleanore Cronk has since resigned from the commission for personal reasons. Therefore, there is a vacancy at that level. Senator Moore: In the table on page 30 to which you referred earlier, it says that the salary of superior court judges is $165,500. At page 44, it says that the salary is $172,000. Is that supposed to be $165,500, like the other number for 1997? Where does that come from? Mr. Drouin: Perhaps Mr. Sauvé could answer that question. Mr. André Sauvé, Actuary, Commission d'examen de la rémunération des juges de 1999: The figure for 1997 includes an increase that was to become effective afterwards, but which had already been granted. Senator Moore: The figure in the table on page 44 is $165,500, plus an increase to bring it up to $172,000. Is that correct? Mr. Sauvé: That is correct. That is the increase that was expected or granted in 1997. In order to make sure that we were not giving an increase that was already granted, we took it into account. Mr. Drouin: This was for purposes of comparison. Senator Moore: Can you explain to me what is meant by the seventy-fifth percentile in the comparative population? What does that mean? Mr. Sauvé: Out of the group of lawyers in private practice that was deemed to be the group from which recruitment of judges would take place, we simply took the salary at which point 25 per cent of the lawyers are paid more and 75 per cent are paid less. That is the seventy-fifth percentile. Senator Moore: You drew the line there. You did not do any research with respect to the Territories or with regard to the large metropolitan areas in each of the provinces? Is there a reason for that? Superior court judges are appointed across the country, as you know. Did you not think that it was necessary to do that research? Mr. Sauvé: These numbers were reported by Revenue Canada. For jurisdictions in which there was not a sufficient number of lawyers, there was simply not recorded information for purposes of confidentiality. We did not necessarily have numbers for all those areas. For instance, we did not have numbers for P.E.I. Senator Moore: These numbers all came from the Department of National Revenue. Mr. Sauvé: They did. Senator Moore: You know the amounts and not the names. You know the province or the city. Is that correct? Mr. Sauvé: That is correct. Senator Moore: Do you say there were no such numbers for those areas? Mr. Sauvé: They had a minimum number of observations that they needed before they would disclose the information, for confidentiality purposes. Mr. Drouin: There are only five practitioners in Yukon. They probably - and I am just guessing - would not divulge the figures for fear of identifying the revenues of these people. Senator Moore: Following on the questions of Senator Cools, you spoke about the identification of representatives of the judiciary. Does that mean legal representation only? Does that mean legal counsel or does it mean a PR firm they could hire? Mr. Drouin: We took that as being legal representation. Senator Moore: Why do you not say that? I am just asking the question. I do not know where you were going with this, Senator Cools, but I have seen many cases argued in court in Nova Scotia where a party to a case will hire a public relations firm to give a spiel. The Chairman: This is not the wording of the witnesses. Mr. Drouin: If I could clarify, in a case or a subject like that, actuaries as you would know, would take a great part and could be qualified as representatives. Senator Moore: Then it is not just legal representation that is intended. Mr. Drouin: No, I correct my statement saying it is just the lawyers. I would think actuaries first, but certainly not public relations officers in my view and in the commission's view, I would say. Senator Moore: It should be tightened up. Senator Banks: We have established that Senator Cools was questioning not the payment or the propriety of the payment but the means by which the payment was going to be made. I wish to pursue Senator Moore's line of questioning. Mr. Drouin, you mentioned earlier that you had invited public participation. Did you have much public participation? Did the public participants have any standing? Is the possibility of compensation for persons appearing before the commission to argue on one side or the other payable only to the representatives of the judiciary? That is to say, did you hear from any interested parties who demurred from the recommendations of the judiciary on the one hand and the government on other? Were there third, fourth and fifth parties and should they be entitled to payment? Mr. Drouin: It depends on the extent of representation that they would make. However, let us just review this. We have placed advertisements in about 30 newspapers across Canada. From that we received 20 submissions. Of those 20 submissions - and I would not like to be taken to the letter, but I would say that there were four or parties that did attend the public hearings. In the four or five parties that attended the public hearings, you had representation from the appellate court that was asking a differential on salary. Justice Robert from the appellate court of Quebec was representing the appellate court level. Members of the Canadian Bar Association also made a submission and appeared before the commission. The bulk of the work was done by the Government of Canada, the Minister of Justice, the conference and the council that acted jointly before the commission. No other party sought payment of fees or representational fees. There was a group of judges from Alberta or Manitoba that did hire legal representation for a specific reason. There was no request for representational costs in that case. Senator Banks: When you attached, as a benchmark, the salaries of deputy ministers, level three, was that done on the basis of advice from personnel firms saying that this was an approximately commensurate job and responsibility? Is that the level of competitiveness at which this should be set? Mr. Drouin: Historically, that has been the case. The preceding six, seven or eight commissions dealt with that. However, we have not done an objective and precise comparison. That is something we review with private practitioners to see where they feed in. Following a recent report the government did increase the salaries of the DM-03s for April 2000. That changes the figures that we have in our report. We were basing our report on the 1998 figures, however the increase has gone from a midpoint of $188,250 up to $203,300 as of April 1, 2000. That is without the at-risk pay, which can normally be up to 20 per cent. If we only take the usual figure, which is 10 per cent of the salary, on average, being paid as at-risk pay, it would bring the midpoint to $219,000 for a DM-03. That is as of April 1, 2000 for what we recommended as being $198,000. Senator Banks: How many members of the commission are lawyers and do you know, off the top of your head, what the salary of the Prime Minister of Canada is? Mr. Drouin: I would make a guess of around $240,000, but I might be wrong. It is not that? Okay. Senator Cools: The figure is much lower. You can drop it down by $100,000. Senator Banks: I know it is an odious comparison. I was asking rather frivolously. Senator Cools: You said that as your standard you used the average revenues of a lawyer in private practice. To follow up on Senator Banks' question about the comparison to the Prime Minister's salary, what is the average of salary of what we used to call the public bar? You used a reference to the private bar, meaning lawyers in private practice. What is the average salary of the lawyers who are practising at the public bar, meaning Department of Justice lawyers? The data shows that many judicial appointments these days are coming from the bar associations and the departments. Why was the standard of the Department of Justice, or the public bar, not used? Mr. Drouin: There are many ways of looking at this. We tried to do it in the best way possible. Seventy per cent of judicial appointees come from what qualify as practitioners in our report. That was the basis of our evaluation in dealing with the private practitioners. We are not categorically saying that they should be paid the equivalent of the private practitioners. We are just considering benchmarks, trying to find ways of finding reasonability in what we are proposing. Senator Cools: One could have used these standards. Since you used the standard of DM-03s, you could have also used the standard of the public bar. This fact transcends this study. There are a fair amount of studies on the sources of judicial appointments. Large numbers of them are coming from the public bar. When one sets out to choose a quantum, it seems that this choice is as good as that choice in terms of trying to ascertain a reasonable amount. The question returns as to what is a reasonable amount. I know that you have presented the wages or the earnings of members of the private bar. All the data that I read on the average salaries of lawyers around the country indicated that they are far lower than the numbers that you provide to us. [Translation] Senator Nolin: My question is about justices working in the Territories. When you examined their remuneration, especially that of the three main judges, why did you not recommend they get the remuneration of a chief justice of a Supreme Court or Appeals Court? Their workload is similar to chief justices of the Court of Appeal and of the Superior Court of Prince Edward Island. Why not offer the same remuneration as that of those judges? Mr. Drouin: I will give you a simplistic answer: we were not asked about that. You are talking about the judges who get a $12,000 bonus? Senator Nolin: That amount represents isolation pay, but for the basic remuneration, the work of those judges is actually similar to that of puinés justices. Mr. Drouin: That is the very essence of our report. Concerning the remuneration of justices, historically speaking, since Confederation, there has always been uniformity of salaries across Canada. If you look at our tables, in comparing with the private sector, you will see that there is an enormous fluctuation relative to the different parts of Canada. The remuneration in Toronto and Calgary is of course very high, and in the rest of Canada, to varying degrees, it is lower. We mentioned that fact. It would be interesting to do a region-based study. Historically speaking, this matter of the uniformity of judges' remuneration across Canada had not been addressed till now. In some places, it is a disadvantage and in others it is an advantage. Senator Nolin: I liked your report on the matter of the Appeals Court justices who, once again, asked for a median salary between theirs and that of the Supreme Court justices. I tend to agree. It is appropriate for Appeals Court justices to be earning remuneration similar to that of Superior Court justices as some Superior Court justices, as you say in your report, are called upon to sit. Just think what a nightmare we would have with remuneration at an hourly or daily rate. I can imagine how much work people would have to do to compile the hours while wondering if those hours include court days, research days and so on. My question has more to do with the main justices of the three territories that do not get the same remuneration as the chief justices of the other courts. Why would their salary be different? Mr. Drouin: That may have merit, but the Minister of Justice has the last word on that matter. Senator Nolin: We accepted it. Senator Joyal: It is a pleasure for me to have Mr. Drouin here. It must bring back a lot of family memories. I would find myself remiss if I were not to note for the record today the contribution made by many members of Mr. Drouin's family to the work done by the Senate of Canada. I thank you, Mr. Drouin. I read your report with interest, all the more so because it was the Senate Committee on Legal and Constitutional Affairs that amended the Judges Act two or three years ago to include in the bill basic objective criteria to set remuneration. In particular, I read the recommendations in chapter seven on the method. I find it extremely important that the criteria and method, insofar as possible, be as clear and objective as possible to ensure the impartiality of the recommendation you make. I understand that one of the determining basic factors for remuneration is the salary of the members of the legal profession - you can not be appointed judge if you are not first and foremost a member of the legal profession. You recommended the development of relatively specific criteria so that if a new commission was to look at this matter again, it would not have to reinvent the wheel as the objective is to develop criteria. If the definition of criteria is properly done, then a commission undertaking to pursue your work would already have a relatively reliable basis. The department does not seem to have adopted this recommendation as precisely as you expressed it. I read the brief tabled by the Canadian Bar that our chair sent us. On page 2, the brief picks up this recommendation very specifically. Among the priorities in the development of methods, we have the determination of the salary of lawyers and their readjustment - taking into account the compensation that the actuary calculated according to the advantages recognized for the judges' profession, advantages that are not necessarily available in the private sector in any comparable way. Shouldn't the determination of this method be the most important recommendation, a part of the readjustment we find on the proposed scale that the Department of Justice should be holding to during the coming years to preserve the results of the work you have done? You say the triennial commission that preceded you did not work according to as clear a formal context as the one you imposed on yourselves. How can we be sure that a few years from now, the essential data will be gathered in such a way as to allow the Commission to work objectively? Mr. Drouin: It seems to me the Minister of Justice indicated in her statement that she intended asking the commission - as we are there until August 2003 - to look at two aspects. The first one has to do with the setting up of criteria and data that will allow a better evaluation of practitioners' remuneration. The second has to do with the pension plan. In the first case I understood that, for the minister, it was an answer to that chapter because the Judges Act provides that the minister may ask the commission to do certain work besides its main work that it accomplished during the first nine months. I do not have the statement of the minister in front of me, but at the end of her statement, she mentioned those elements concerning the more specific point you raised. Senator Joyal: At this point, have you not yet been asked formerly to continue with your work on that specific point? Mr. Drouin: No. Senator Joyal: As for the other criteria that may be developed, there is an aspect of judges' work that is difficult to quantify and this is it: it is relatively rare for judges to be appointed without having practiced before, over a reasonable period of time, their profession private practice in without having earned the recognition of their peers. A lawyer earning some professional recognition in his community, having accumulated a certain number of years in practice, is called upon to participate in paralegal activities that are part of a certain form of professional quality of life. When the same person is appointed judge, then he or she must abstain from a series of satisfying professional activities both on the personal as well as the financial level. A lawyer can be appointed to a board of directors, take part in public fundraising campaigns for certain causes dear to his heart and so on. So there is a form of social and professional fulfilment that are part of one's personal benefits at certain stages of one's career. When the lawyer is appointed judge, then she must abandon that part of her activity and avoid, insofar as possible, because she is being watched, placing herself in positions where her independence might be questioned. How do you quantify compensation for this "shortfall" which is actually real? All those who know members of the legal profession can see this for themselves. How do you quantify and reflect that in the salaries of the judges? Mr. Drouin: It is not possible to quantify that compensation. I completely agree with what Senator Joyal said, especially with his statement that the professions of advocate and judge have evolved considerably over the last 20 years. My father and my uncle, whose contribution to the Senate you pointed out, practised in an era that allowed them, when they had a case to argue in Chicoutimi, the Beauce or elsewhere, to go to dinner at night with the judge and the advocate for the other party and fraternize. Today, judges do not do that kind of thing anymore. I have friends who were in my law office and became judges, and whether or not they were part of my law office, you cannot have open social relations with them. It is clear that that is part of the judge's role, but that is not quantifiable. So you have imponderable elements there, of the sort that you cannot evaluate, just as it is difficult to assess what job security is worth for a government employee. You cannot evaluate that and it is the same thing for a judge who has to deal with the conditions you have mentioned. Senator Joyal: What are the other criteria used to evaluate remuneration which, according to the code, should be "fair and reasonable"? It is difficult to determine something to measure it by without developing a comparative base which would give the decision as objective a character as possible. Because that is where the opinion of the Supreme Court, in the reference of the Prince Edward Island case, is bringing us. You quote this in your report when Judge Lamer says, and I am quoting the judgment on this: Moreover, if, having examined the Commission's report, the executive or the legislative assembly, as the case may be, decides to reject one or several of the recommendations, they must be ready to justify their decision, as need be, before the Court of Justice. Any unjustified decision might lead to a declaration of non-constitutionality. That means that the government must also have objective criteria, in a way, to be able to balance out the recommendations you are making and the decision that the executive and Parliament are asked to make. The importance of defining the criteria was considered, by our committee, as being an essential element in making the law work. If we are to benefit from your work and the experience you have accumulated to produce this report, may we expect that during the next few years you will come up with criteria so that the final decision could be made with the least discretion possible? Mr. Drouin: I would mention that, under the law, we must submit to the criteria in clause 26. Those criteria, in themselves, cannot be as objective as you would like. For example, when financial security or judiciary independence are mentioned, they are very subjective criteria insofar as the evaluation is concerned. The criteria you have mentioned and that we have mentioned in our report are more in the nature of criteria that would provide a firm data base. In other words, all the data that we get must be organized, for example, the data from the Department of Revenue, to be able to examine them in detail and in depth. Why are our regional disparities so great? Should something be done concerning regional disparities? Unless we were to change the substance of the law, but I do not think that any change would be in conformity with the Supreme Court's judgment, the law predicates that we must always submit to criteria that are objective in and of themselves. So we have to arrive at the best decision or the best recommendation based on the data we consider the most reliable. [English] Senator Joyal: My colleagues have mentioned the uneasiness that we collectively have about being asked to vote on increases of salaries that are "reasonable" while there is such a major discrepancy with the legislative function and the executive function. My colleagues around the table have alluded to it. The importance of your work is that the more the methodology being developed by a body like the commission is refined, the better it will serve as a reference when we determine the compensation of legislators and executive members of the government. This step of developing an approach is important if Canada, as a country, wants to address the issue of how to compensate public officers of that level of responsibility for determining the affairs of the nation. What you do is an important step for the future of discussion on this. As much as we could not rely on a methodology and criteria in the past, what you will be doing is essential for the appreciation of the professional input that parliamentarians bring to the public debate. It is important that you develop the basis. I fully support the comparative analysis with the bar and the comparative analysis with DM-03s, but if I were to be a member of a compensation board, such as the current Lumley commission, and I had to make recommendations, where would I start to make sure that I appear just and balanced in a way, from one Parliament to the other, so we do not submit ourselves to the painful exercise of creating the impression that we stretch our hands into the public purse to try to give ourselves a cozy deal. This element is important inasmuch as you mentioned there are other people, more or less in the same position as judges, who have to decide by themselves to appoint or contribute to the decision of how much we will compensate and when the increase is needed. Mr. Drouin: I take great note of the comments made by the senator. Senator Moore: Mr. Drouin, I want to pursue the point about representatives of the judiciary. These are not your words, but you thought that perhaps an actuary would qualify as being a representative of a judiciary and his or her bill could be shared pursuant to proposed section 26.3. Subsection 26.3(3) refers to costs on a solicitor-and-client basis. From my understanding as a lawyer, that is strictly between lawyers. It never included expert witnesses, whether they be actuaries, public relations people, doctors or anybody else. The solicitor-and-client basis is fine for the legal representative, but I do not understand how others are covered here. Mr. Drouin: I was prompted to give you that answer by my actuary. Senator Moore: I thought as much. Mr. Drouin: To be clear, the recommendation we made was toward legal representation only. Senator Moore: That is where I think we should be. Mr. Drouin: The text of the legislation talks about representation. Senator Moore: It is not tight. It should be legal representative or legal counsel. Senator Banks: Do you agree with what Senator Moore said? Mr. Drouin: Yes. Senator Banks: Do you agree that the act ought to be more specific? Mr. Drouin: I would not like to make a statement on that. I am just interpreting that representatives, if not clearly mentioned as legal counsel or legal whatever, gives opening to the statement that I made that actuaries can play a major role in being representatives. If the legislator did not want to cover that, it should be clarified. Senator Banks: It could be a career counsellor or an investment counsellor. Following up on what Senator Nolin asked, it used to be the case - I do not know if it still is - that some justices of provincial courts and, if I recall correctly, some chief justices of provincial courts are also justices of Territorial courts. Do you know of an instance in which that is still true and, if it is, what would obtain with respect to the salaries? Would they be piled on top of one another or commensurate? The Chairman: I am not sure if that is still true. I believe it was the Chief Justice of Alberta who was doing the Northwest Territories. Mr. Guay: The Chief Justice of Alberta is also the Chief Justice of the Northwest Territories and Nunavit, and the Chief Justice of B.C. is the Chief Justice of Yukon. They do not receive any more salary. It is the same salary. Senator Cools: Is it not true that they receive additional representational cost? Mr. Guay: They receive additional representation for that function only. Senator Cools: They get one salary but two representational allowances. Senator Banks: As they should. Mr. Guay: I just want to mention that the Chief Justice of B.C. is the Chief Justice of Yukon and the Chief Justice of the Court of Appeal for Yukon, but on behalf of the Supreme Court, it is the senior judge at the Supreme Court. Senator Cools: I have a newspaper clipping from the Toronto Star dated May 13, 1998. This article draws its conclusions from census data. According to that information, the highest paid people in the country are judges, with lawyers placing at seventh place. The point I make is that there is a significant gap between judges' salaries and the average salaries or incomes of lawyers. I am not questioning your conclusions and I am not questioning how you arrive at those conclusions in this regard, however, I am agreeing with Senator Joyal that the methodology is still somewhat arbitrary. We hear about lawyers making hundreds of thousands of dollars, but, according to the data I read, I do not find that. There are a few lawyers who make such sums of money, but there are not that many of them. We do a terrible disservice to lawyers when we speak about them as though they were all making hundreds of thousands of dollars. That is not the truth. The average lawyer working at the Department of Justice - or our own legal counsel in the Senate - earns far below anything we have mentioned here. Standards are required that are palatable to all of us. Public opinion questions why these conclusions are drawn. I would invite the honourable gentlemen to give this more thought. Standards are required that are objective and rational. I do not quarrel with the philosophical premise of attaining standards. I am not satisfied that choosing the particular percentile of the highest paid lawyers in the country is an appropriate standard from which to evaluate the quantum for the remuneration of Her Majesty's judges. I feel strongly about Parliament's role in this. I also believe that people who serve the public should be properly remunerated. I do not believe that they should live in poverty or that their contribution should be based on virtue. It is a foolish community that believes virtue should be its own reward. I would encourage the gentlemen at the table to move toward truly scientific criterion. There is much criticism and concern in the public mind. Mr. Drouin: I take note of that. Senator Cools: The intention of all of us is essentially to have a system that works and to have standards that are true and pure. The Chairman: I wish to thank the witnesses for being with us this afternoon. Our next witnesses are from the Office of the Superintendent of the Financial Institutions, Mr. Ménard, Mr. McCleave and Mr. Cornelis. Welcome, gentlemen. Please proceed. [Translation] Mr. Jean-Claude Ménard, Chief Actuary, Office of the Chief Actuary: Before beginning, I would like to say that we are very happy to have been invited to address your committee. Messrs. Lou Cornelis and Steve McCleave, also from the Office of the Chief Actuary, who are with me today are experienced actuaries who have provided actuarial advice during the whole process followed by the Commission and during the preparation of Bill C-12. The Office of the Chief Actuary is part of the Office of the Superintendent of Financial Institutions, which supervises and regulates all Canadian banks and all trust and loan companies, insurance companies co-operative credit associations and fraternal benefit societies as well as all the pension plans set up or registered under federal law. Within the Specialist Support Sector of OSFI, the Office of the Chief Actuary provides actuarial services to the government for a variety of programs sponsored by the government. The two largest programs, namely the Canada Pension Plan and Old Age Security, provide retirement and other benefits to most Canadians. The other programs are the pension and insurance plans for members of the Public Service, the Canadian Armed Forces, the RCMP, federally appointed judges and federal parliamentarians. Besides preparing statutory actuarial reports on the financial status of the plans, the Office of the Chief Actuary provides the departments involved with actuarial advice concerning the design, funding and administration of those plans. In accordance with the Public Pensions Reporting Act, the Office of the Chief Actuary has been doing triennial actuarial valuations of the judicial pension plan since 1985. To do so, we have examined closely the demographic data on judges, more particularly the two key elements which are the rate of retirement and the rate of mortality. The retirement rate assumption stemming from the analysis of historical data of the plan varies depending on age and years of service while the hypotheses of the mortality rate varies according to age and sex. The most recent statutory valuation report concerning the judicial pension plan was prepared by the Office of the Chief Actuary on 31 March, 1998. It reveals that the average normal retirement age is 73.0, for judges. Based on the assumed mortality rates in that report, the remaining life expectancy at that age is 13.8 years for male judges and 17 years for females judges. At the request of both the Department of Justice and the Judicial Compensation and Benefits Commission, the Office of the Chief Actuary was deeply involved in the design and costing of the various pension and insurance proposals for judges. At the request of the commission, my office also provided the actuarial information required by the commission's constitutional expert. [English] The Bill C-12 pension plan amendments were costed largely on the basis of the actuarial assumptions from the 1998 statutory report, supplemented by assumptions for new contingencies such as retiring early with a prorated pension. These costings were done in the same format as a statutory pension valuation, meaning that the changes to the accrued liability and normal cost were estimated. The accrued liability is the liability for benefits earned in respect of service rendered prior to a given valuation date. The accrued liability for the judicial pension plan would rise by $6 million if the Bill C-12 amendments were made, which is small relative to the total accrued liability of more than $1 billion. This $6 million is a one-shot increase. The normal cost is the cost of benefits earned in respect of service rendered during the year beginning on a given valuation date. Assuming a 6 per cent annual interest rate and judicial salaries in accordance with Bill C-12, the government's normal cost of the judicial pension plan is $61 million per annum at this time. The Bill C-12 pension amendments would raise this cost by $3.5 million per annum. Most of this increase in the government portion of the normal cost is attributable to the selective reduction of pension contributions by judges. Bill C-12 stipulates that judges who are eligible for a full pension shall contribute at 1 per cent of salary instead of the 7 per cent payable before becoming eligible. The other Bill C-12 pension changes, namely the prorated early retirement pension and the enhanced survivor benefit option, would add little to the government portion of the plan costs. The Office of the Chief Actuary was involved in designing the enhanced survivor benefit option so that it would be as cost neutral as possible. This was achieved first by imposing a one-year waiting period before the enhanced 60 per cent or 75 per cent survivor benefit takes effect and, second, by making the option available only at the time of retirement for incumbent judges. These safeguards are important because the enhanced survivor benefit is likely to be popular. The Office of the Chief Actuary also provided the estimated cash costs to the government over the next five years for the Bill C-12 pension amendments, using the same actuarial assumptions as for the actuarial costs. These costs average somewhat more than $2 million per annum. Cash costs are important because the judicial pension plan is financed on what is effectively a pay-as-you-go basis. In addition to the work on the pension plan, the Office of the Chief Actuary also provided the costing for the various proposed insurance coverage. The basic life insurance is the most costly of these, with the premium paid by the government in the first full year of operation being over $4 million. The post-retirement life insurance will cost the government very little in the first year because the insured population will be small, being restricted to those who retire after the implementation date. However, the insured population will grow rapidly and so the annual cost is projected to exceed $1 million within five years. These costings were done on the basis of the same mortality assumptions as the pension costings. I wish to thank you for the opportunity to appear before this committee. My colleagues and I would be pleased to answer any question that you might have. Senator Cools: I have a question in respect of pensions. Proposed new section 44.2 essentially replaces the current section 44.2. Were you involved at all in the clauses in the bill of this proposed new section? You look puzzled. I will read the proposed new subsection. 44.2(1) Subject to the regulations, a judge to whom an annuity has been granted may elect to reduce his or her annuity so that an annuity may be paid to a person who, at the time of the election, is the spouse or common-law partner of the judge but to whom an annuity under section 44 may not be granted. Can you shed any light on that proposed new section? This is a novel innovation in this bill. This proposed new section essentially addresses income splitting, does it not? Mr. Lou Cornelis, Principal Actuary, Valuation Unit B, Office of the Superintendent of Financial Institutions: Proposed subsection 44.2(l) replaces current subsection 44.2(l), which refers to the optional survivor benefit. The subsection has to be altered slightly because current subsection 44.2(l) does not allow for a judge to elect the optional survivor benefit while the judge is in the deferment period of the deferred annuity referred to in proposed new subsection 43.1(l). The effect of the change is that it gives a judge who has been granted a deferred annuity the right to elect the optional survivor benefit while the judge is in the deferment period; that is, before the judge reaches 60 years of age, at which time the annuity is payable. This right to elect during the deferment period does occur in other public service pension plans. Senator Cools: This provision is not about survivor spouses. This speaks to when the judge is still alive. The survivor sections come into force upon a judge's demise. This proposed new section is not about that. Maybe I misunderstand. I would be happy to be wrong. The judge is expected to be alive, on the face of it. I am prepared to be enlightened. Mr. Steve McCleave, Senior Actuarial Assistant, Valuation Unit B, Office of the Superintendent of Financial Institutions: It is at the option of the judge to make the election. Senator Cools: I understand that. Mr. McCleave: The judge makes that decision if the partner was not the judge's partner at the time of his or her retirement. Senator Cools: This partnership occurs while the judge is still sitting, correct? Mr. McCleave: No, if the partnership occurs while the judge is still sitting, the partner would be entitled to an annuity under section 44(2). If the partnership commences after the judge has retired, that is, stopped sitting, the partner would not be entitled to a survivor pension under 44(2). Senator Cools: What this says is that the spousal provision triggers if the judge dies in office and that it is a different situation if he is a retired judge. Is that what you are saying? Mr. McCleave: It has to do with the date of marriage. If the judge married or cohabited with the person after leaving the bench or after retirement and the judge were to die, then that person would not be entitled to a survivor benefit under the act as it stands now. Senator Cools: Could you tell me the considerations that are being met with this clause? It is very strange. It is replacing a section that was only placed into the law last year. That is a very interesting thing. Bill C-37 was amended in the Senate. Those amendments have been canned and this proposed new section speaks to the annuity. Our witnesses' specialities include pensions and annuities. Mr. McCleave: The substitution from one to another is not done by us. Senator Cools: In other words, the old section that is being replacing was only passed a year ago. Senator Nolin: What is new in this proposal? Senator Cools: What is new in proposed new section 44.2(1)? The Chairman: Our researcher has a copy of the bill in which the new parts have been underlined. This may help us. I will read these out. In proposed new subsection 44.2 (1), "Subject to the regulations, a judge to whom," "to whom" is new and then the words "has been granted" are new. In the second last line of that clause, "to whom," again, is new and, in the last line of this clause, "may not be granted" is new. In proposed new subsection 42.2(2) in the second line, the word "granted" is new. Senator Cools: There is a whole set of new clauses. After 44.2(3) there are then two whole new clauses. The Chairman: Proposed subsections 44.2(3.1) and 44.2(4) are new. Senator Cools: Proposed subsection 44.2(4) is new, but the bill was only amended a year ago. The Chairman: That is, some, but not all of the wording in subsection 42.2(4). Mr. McCleave: On the first part, clause 44.2(1), currently there is no deferred annuity where the judge will have to wait until 60 to receive it. Instead of being in receipt it will be granted, but they will have to wait a few years, until they are 60, to get it. Senator Nolin: Now I am puzzled. The Chairman: Perhaps you better say that again in words for non-actuarial people. Mr. McCleave: The words were changed to incorporate, in the situation of a judge who has opted for an early retirement, the deferred annuity. In this case, the judge would not be in receipt of the annuity right away, but would have been granted the right to receive it once he or she turned 60. Senator Cools: It is a curious thing, Madam Chairman, the Judges Act was premised on obligations accruing from the fact that the judge had served, but here we are talking about an obligation that is accruing outside of the judicial service of the judge. I am just curious about this. The Chairman: It allows a judge in receipt of an annuity to reduce the amount he or she receives in order to provide for a surviving spouse who would not otherwise qualify for an annuity under section 44. Senator Nolin: I am reading the change in French. It has everything to do with words. In French, in what was the law last year, the expression "le juge pensionné," was brand new last year. If I change the word "pensionné" meaning "that is receiving a pension" to a "à qui une pension a été accordée," that means it will be granted. Someone can be entitled to a pension but not be pensioned. [Translation] Is that a good explanation? Mr. Ménard: That is an excellent explanation. The main reason is that there had to be a provision because the judges are now eligible for a different annuity. They do not get an annuity, but if they die during that period, it ensures that the survivor is covered. Senator Nolin: As long as death does not occur in the year chosen. That explains new paragraph 3.1? Mr. Ménard: Yes. [English] The Chairman: Despite anything in this proposed section, if a judge dies within one year after making the election it is deemed not to have been made. Senator Nolin: Exactly. Senator Cools: The question that I also have is this: How do the two sections interact with each other? First, you put a provision there and switch it around. It seems we should look at that at some point because the provisions in respect of the annuities should stand. I am always very skeptical where there is one provision and then, a few clauses later, there is another provision saying "but those not entitled." It is inadequate or insufficient drafting. That is not your problem. We have that problem all the time. Mr. Cornelis: There is an actuarial aspect to this. The judges' pension plan is unique in that judges are quite a bit older than all other employed people, if you will. At their ages, if they select this optional survivor benefit, they are more likely to have health impairments. Therefore, to protect the plan, to make this optional survivor benefit as cost neutral as possible, we have said that if in the first year a person who made the election dies the election is not valid. In that way we eliminate people who - The Chairman: Then it is deemed not to have been made. It was invalid. Mr. Cornelis: I am sorry. In other words, it is just to make sure that this optional survivor benefit is as cost neutral as possible. The philosophy is the plan should not pay for people who make this election knowing that they are not in good health. Senator Cools: You say judges retire at an older age, but the thrust of the legislation over the last many years has been to allow judges to retire at quite youthful ages on full pensions. I do not understand what you mean about the old age of retirement. Judges are retiring at a much younger age today than before. Mr. Cornelis: Judges still do retire at a rather advanced age. The age was 73 in 1997 for those who were on pension then. There is perhaps a trend towards having judges retire earlier, but even if they retire at 70 or 71, that age is still older than the average person who is on a pension plan. All I am saying is that at age 70, for example, many more people have health impairments than at age 55 or 60 and that is the issue here. Senator Moore: Mr. Ménard, on page 4 of your submission you wrote: Most of this increase in the government portion of the normal cost is attributable to the selective reduction of pension contributions by judges. Bill C-12 stipulates that judges who are eligible for a full pension shall contribute at 1 per cent of salary instead of 7 per cent payable before becoming eligible. When do they become eligible, when they are 60 years of age? Mr. Ménard: They are eligible for full retirement when their age and years of service equals a figure of 80, with a minimum of 15 years of service. This amendment brings the plan in line with the other plans for public service members. If a person is already entitled to the full retirement benefit, it makes sense to reduce his or her contribution. Senator Moore: If somebody is appointed to the bench at 50, does he or she have to work until 80 years old? Mr. Cornelis: These people would have to work until they are 65. Senator Moore: They must work a minimum of 15 years to age 65, at which time their contribution would drop from 7 per cent to 1 per cent. Is that correct? Mr. Ménard: Exactly. Senator Moore: Why is that? Could they take their pension then? Could they take a full pension then? Mr. Ménard: They could if they wanted. Senator Moore: What is the pension contribution of members of the House of Commons, percentage-wise to their pension plan? The Chairman: We have been told it is 5 per cent. Senator Moore: I take it there must be a legal requirement for them to put something in, so it is at 1 per cent. If they are entitled to a pension why are they contributing? The Chairman: I am told there is statutory indexing. Senator Moore: There is a legal requirement to put something in. Mr. Cornelis: This is a similar provision to the PSSA where, after 35 years of service, contribution drops to 1 per cent. The stated reason is that the 1 per cent takes care of indexation. Historically, that has been considered the indexation component of the cost. Senator Moore: It mirrors the public service pension in that regard. Is that correct? Mr. Ménard: Exactly. The 5 per cent to which you refer is the percentage of accrual rate for members at the House of Commons and 3 per cent for senators. The contribution rate is 9 per cent. If you have six years of service, for example, multiplied by 5 per cent, you will get 30 per cent as a replacement rate for your earnings. The Chairman: Given the pittance that senators are paid, I had better live a long time. [Translation] Senator Joyal: I would like to submit the following case and ask how you interpret the act. A judge chooses to contribute to establishing a fund for the survivor. He is married or common law. He pays in, retires and his spouse, common law or legal, dies. Automatically, that person ceases to be eligible for benefits from the plan. That judge eventually remarries and dies and leaves a second surviving spouse. Is he or is she eligible for the pension? Mr. Ménard: I would just like to make sure that I found this correctly. You are talking about a case where a judge has a pension, two partners or two deceased spouses. Senator Joyal: No, not at all. Do you want me to repeat what I said? Mr. Ménard: Yes, please do. Senator Joyal: Judges pay into funds when they are required to either make contributions or to set up a reserve fund for the surviving spouse. The judge retires. He therefore stops contributing to the survivor fund. His spouse dies after the judge has retired. A year later, the judge remarries and later passes away. Would the second surviving spouse have access to surviving spouse benefits even though we are no longer talking about the same person? [English] Mr. Cornelis: If the judge retires and the spouse at the time of retirement dies, no survivor pension is payable after that if the judge marries a second time, unless this optional survivor benefit is chosen by the judge. When the judge's first spouse dies and if the judge finds another spouse, that spouse is not normally covered. However, the judge has the opportunity to provide a survivor pension for that spouse by taking a reduced pension. This is what is called the optional survivor benefit election. However, it is cost neutral to the plan. The judge pays for it. Senator Moore: Does the opportunity to elect always exist, or does it lapse within a period of time after the first spouse passes away?Will that always be available to the judge? Mr. Cornelis: I believe the election must be made within one year of marrying the second time. You can remarry after 10 years, but the clock starts ticking once you remarry. Senator Joyal: I am trying to understand the principle. If a judge in his judicial capacity chooses to contribute to the pension system, the contribution exists in the fund. It seems odd that a second spouse would have fewer rights than the first spouse by virtue of the fact that person was not the spouse at the time the judge was on the bench. What is the logical argument for this? Can you enlighten us on this? Mr. Cornelis: It is simply to give the judge the opportunity to provide for the second spouse after he or she dies. The Chairman: Is there a concern that a judge might marry a 25-year-old? Mr. Cornelis: That is part of the concern, I believe. Mr. McCleave: The question was what happened to that reserve fund. In the original design of the plan, when you try to figure out how much each member must put into it to keep the total percentage contributions down, the original idea was that once the spouse dies, there would be no pension entitlement. If they did not take that out, you would have to have a higher rate of contribution. I am not sure if you call that a policy decision. Mr. Cornelis: I believe the concern was always death-bed marriages or, in other words, if you happen to marry at an advanced age solely for the purpose of deriving a survivor pension therefrom. Years ago that was the rationale for not recognizing marriages that occurred after retirement. The Chairman: Is this usual in other pension plans? Mr. Cornelis: It is usual in other pension plans sponsored by the government, yes. Senator Nolin: Since when? Mr. Cornelis: It has always been that way. It is only in the last five years that this optional survivor benefit has been introduced. There was a demand for it because people can legitimately want to provide for an after-retirement spouse. Senator Moore: In the example you discussed, Mr. McCleave, if a judge has made the contributions, then retires and the spouse passes away, the judge might remarry a year or two later, but the judge has still made all those contributions. I do not understand what varies. Does it depend on the age of the second spouse? What if the second spouse was the same age as the deceased spouse? The judge has made contributions on that actuarial basis. Why would there not be a full entitlement? Forget about the death-bed situation, forget about marrying someone 50 or 60 years the judge's junior. Could you explain the thinking behind that? Mr. Cornelis: Contributions that are made by a member of a defined benefit pension plan are not earmarked for the member specifically. You contribute into the pension fund on a group basis. The rules of the pension plan are if you marry after retirement that spouse does not qualify. It is perhaps not equitable. I am not saying it is, necessarily. To the extent that people legitimately marry after retirement, it is simply a cost factor for the plan. If we wanted to recognize after-retirement-acquired spouses, we would have to raise the contribution rates. Senator Moore: The cost is in the payout. Is that right? Mr. Cornelis: That is correct. Senator Moore: The judge has made the contributions. Why should the payout be less? You say that is simply because those are the rules of the plan. Mr. Cornelis: If you have always been a single person, you pay exactly the same contributions into the pension plan. When you die, there will be no survivor pension paid. Those are the rules of the plan. Basically, a survivor pension is an add-on, a freebie. Senator Moore: The benefit only accrues to a spouse or significant other with whom you may be cohabiting and that is all. Mr. Cornelis: That is at the time of retirement. The Chairman: It is based on averages and how long survivors live. Senator Moore: I realize that. However, in the example of the second spouse being of the same average age as the first spouse who passed away, why would the payout not be the same? Why would it be so substantially reduced? That is my question. Senator Joyal: Again, I do not want to complicate the case, but if a judge who elects to contribute to this system, retires, divorces and remarries, if I understand your statement, the second wife would not be allowed to draw any pension. Is that correct? Mr. Cornelis: If he remarries after retirement, yes. Senator Joyal: We are discussing this matter with representatives of the Office of the Superintendent of Financial Institutions, but there is a question of policy which is very important. There is something in that logic that defies what I would call the natural status of a person who has the freedom to remarry because those who have contributed to a plan have more or less bought the right to live with somebody, in the context of a common law situation. In either a legal or a common-law situation, once you have bought that ticket, you have contributed to the funds and you maintain the rights for whoever is your spouse. Mr. Cornelis: How would you give equity to a single person, then? A single person pays the same contributions. Senator Joyal: It is a choice. Mr. Cornelis: You could say that a single person could designate a sibling, which is one way of looking at it. Senator Joyal: That is another issue. A sibling is not a connubial relationship. The court has been clear on that issue. As long as that remains the law, we must recognize that. Again, a judge who contributes to a pension fund for his or her spouse has the right to maintain living with a spouse. I do not see why a difference of identify at a certain point in time, for whatever reasons, would change the legal obligation of that person to the spouse. Senator Moore: It has not changed his contribution. Senator Joyal: That is why I feel that there is something there that does not put people on an equal footing. The Chairman: Senator Joyal, you are right. It does not, but this bill will not correct that. Senator Joyal: It is important that we use the expertise and knowledge of our witnesses to help us understand those issues. The Chairman: Senators, if there are no further questions, I thank the members of the panel for coming before us to enlighten us beyond the scope of the bill. It is been very interesting. Senators, it has been requested that we move in camera, and we will do so as soon as the room has been cleared. Senator Joyal: Before we go in camera, you mentioned we received a brief from the Canadian Bar Association. I read the brief and there is something I would like to underline. I do not want to open a debate, but I do want to state my position. It is on page 3 of the brief.I will relate it in English, but I have the French version in front of me. It says that the purpose is not to say that the committee should avoid careful consideration of the bill, but rather that consideration should focus on the rationality of the proposals themselves and not on issues extraneous to compensation. [Translation] The French text says: It goes without saying that your comittee should avoid an overly-detailed assessment of the Bill itself and should really focus on the appropriateness of the proposals and not on issues which do not relate to compensation. [English] I want to take exception to the way the French version is stated. I am sorry, but in our capacity as legislators we must examine bills and have sober second thought. The brief mentioned that we should not have a partisan approach to the issue. If there is a committee that does not have partisan issues, it is this committee. I am surprised that a brief from the Canadian Bar Association advises legislators of sober second thought not to do "un examen trop minutieux du projet de loi." I have the impression I have been sworn in as a senator to do an examination and to propose amendments and changes. I do not want to open a debate, but I want to put that on the record because at some point in time maybe the bar will read our comments and it will have occasion to appear before us perhaps on other issues. It is important to put that on record. The Chairman: You are right, Senator Joyal. Perhaps the next time the Canadian Bar Association sends a brief, it will not be the identical one they sent to the House of Commons, which this one is. We have certainly not abided by their suggestion. The committee continued in camera.