The Members convened were:

The Honourable Senators

AndreychukAtaullahjanBakerBattersBellemareBeyakBlackBoisvenuBonifaceBoveyCampbellCarignanCoolsCordyCormierDagenaisDawsonDayDeanDowneDoyleDuffyDupuisDyckEatonEggletonEnvergaForestFraserFrumFureyGagnéGreeneGriffinHarderHartlingHousakosHubleyJafferJoyalKennyLangMacDonaldMaltaisManningMarshallMartinMarwahMassicotteMcCoyMcInnisMcIntyreMercerMerchantMeredithMitchellMooreMunsonNancy RuthNeufeldNgoOgilvieOhOmidvarPatePattersonPetitclercPlettPoirierPratteRaineRinguetteRuncimanSeidmanSinclairSmithStewart OlsenTannasTardifWellsWetstonWhite

The Members in attendance to business were:

The Honourable Senators

AndreychukAtaullahjanBakerBattersBellemareBeyakBlackBoisvenuBonifaceBoveyCampbellCarignanCoolsCordyCormierDagenaisDawsonDayDeanDowneDoyleDuffyDupuisDyckEatonEggletonEnvergaForestFraserFrumFureyGagnéGreeneGriffinHarderHartlingHousakosHubleyJafferJoyalKennyLangMacDonaldMaltaisManningMarshallMartinMarwahMassicotteMcCoyMcInnisMcIntyreMercerMerchantMeredithMitchellMooreMunsonNancy RuthNeufeldNgoOgilvieOhOmidvarPatePattersonPetitclercPlettPoirierPratteRaineRinguetteRuncimanSeidmanSinclairSmithStewart OlsenTannasTardifWellsWetstonWhite

The first list records senators present in the Senate Chamber during the course of the sitting.

An asterisk in the second list indicates a senator who, while not present during the sitting, was in attendance to business, as defined in subsections 8(2) and (3) of the Senators Attendance Policy.

PRAYERS

Senators’ Statements

Some Honourable Senators made statements.

ROUTINE PROCEEDINGS

Tabling of Documents

The Honourable the Speaker tabled the following:

The 2016 Fall Reports of the Auditor General of Canada to the House of Commons, pursuant to the Auditor General Act, R.S.C. 1985, c. A-17, sbs. 7(3).—Sessional Paper No. 1/42-811.

Orders of the Day

Government Business

Bills – Third Reading

Third reading of Bill C-13, An Act to amend the Food and Drugs Act, the Hazardous Products Act, the Radiation Emitting Devices Act, the Canadian Environmental Protection Act, 1999, the Pest Control Products Act and the Canada Consumer Product Safety Act and to make related amendments to another Act.

The Honourable Senator Black moved, seconded by the Honourable Senator Fraser, that the bill be read for a third time.

After debate,

The Honourable Senator Martin moved, seconded by the Honourable Senator Raine, that further debate on the motion be adjourned until the next sitting.

The question being put on the motion, it was adopted.

Bills – Reports of Committees

Order No. 1 was called and postponed until the next sitting.

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The order was called for resuming debate on the motion of the Honourable Senator Smith, seconded by the Honourable Senator Beyak, for the adoption of the eighth report of the Standing Senate Committee on National Finance (Bill C-2, An Act to amend the Income Tax Act, with an amendment), presented in the Senate on November 23, 2016.

SPEAKER'S RULING

Honourable senators,

I am ready to rule on the point of order relating to the eighth report of the Standing Senate Committee on National Finance. Colleagues will recall that, when the adoption of the report was moved last Thursday, Senator Harder rose on a point of order. He challenged the receivability of the amendment in the report on the basis that it would increase taxes on some individuals over what is included in Bill C-2. He argued that it does not respect the basic constitutional principle that tax measures, as well as appropriations, must originate in the Commons. This increased tax burden would not, Senator Harder asserted, respect the recognized principle that the Senate can only amend tax bills so as to reduce taxes, not increase them. Senator Bellemare later supported Senator Harder’s position, emphasizing that any analysis of the effects of the amendment needs to be done in relation to Bill C-2, not to the existing Income Tax Act.

In reply, Senator Smith, the chair of the committee, argued that consideration of the report should be allowed to proceed. He indicated that, with the amendment, no one’s tax rate would rise when compared to existing rates. He did, however, clarify that with the amendment some individuals would pay more than they would if Bill C-2 were to pass without it. As examples, Senator Smith stated that, with the amendment, individuals making $93,000 per year would see their rate rise from 18 per cent  to 18.2 per cent; while those making $95,000 per year would see their rate go from approximately 18.1 per cent to 18.8 per cent.

Senator Smith did not, however, limit his intervention to the merits of the amendment. He also questioned whether the Speaker should rule on this point of order, since, in his view, it is a constitutional or legal question, not a procedural one. Senator Cools raised a similar concern, claiming that the Speaker should not call into question the report of a committee. Senator Fraser noted that the Speaker’s role is to rule on points of order using procedural analysis, unrelated to the content or merits of a particular issue.

Honourable senators, let me start by clarifying the role of the Speaker. As stated in rule 2-1(1)(b) the Speaker “rule[s] on points of order, the prima facie merits of questions of privilege and requests for emergency debates”. A point of order is defined in Appendix I of the Rules as “[a] complaint or question raised by a Senator who believes that the rules, practices or procedures of the Senate have been incorrectly applied or overlooked during proceedings”. A senator has raised a point of order, so it is my duty, as Speaker, to make a ruling. In doing so, I must take into account our Rules, practices, and procedures. No consideration is given to whether the matter at issue is desirable or not, only whether it respects our Rules and follows proper procedures and practices. I should also like to clarify that no one has in any way questioned the propriety of the bill as received from the other place, only of the amendment contained in the committee’s report.

As senators know, the Constitution Act, 1867 provides that any bills to appropriate public monies or to impose taxes must originate in the Commons. This is a basic principle of Canadian parliamentary democracy. In addition, measures to increase taxes are the sole initiative of the Crown in the other place, as they must be preceded by the adoption of a ways and means motion.

The authority of the Senate with respect to the application of this principle has led to occasional disagreements between the two houses. As an example, mention was made, during discussion on the point of order, of two earlier bills that had been initiated in the Senate but were found to be out of order in the Commons because they were considered to involve a tax. Those bills had, however, been determined by the Senate to deal with levies, not taxes. This is why the Senate had concluded that it was in order to adopt them. However, the other place reached a different conclusion, as is its right. But, let us be clear, the Senate did not initiate what it considered to be tax legislation.

To return to the disagreement on appropriation bills and tax measures, the Commons claims that aids and supplies are its exclusive right to grant and cannot be changed in any way by the Senate. The Senate has never accepted this interpretation.

In 1918, a special committee of the Senate was formed to consider “the question of determining what are the rights of the Senate in matters of financial legislation, and whether under the provisions of The British North America Act, 1867, it is permissible, and to what extent, or forbidden, for the Senate to amend a Bill embodying financial clauses (Money Bill)”. The committee’s report, commonly referred to as the “Ross report”, was presented on May 15, 1918. It was subsequently adopted, together with an attached memorandum, by the Senate on May 22.

The conclusions and principles set out in the report dealing with money bills received from the House of Commons express and govern our practices, to the extent these matters are not specifically addressed in our Rules. Therefore, with respect to Bill C-2, I can assure senators that we are indeed dealing with a procedural matter, and not a legal or constitutional one. As an aside, I should note that this report did not actually examine the authority of the Senate in respect of bills originating in this place that seek to reduce a tax. This remains an unresolved issue.

The first conclusion in the Ross report, and one that still applies, is that the Senate does have the power to amend appropriation or taxation bills, but only by reducing amounts proposed therein. The report reads:

That the Senate of Canada has and always had since it was created, the power to amend Bills originating in the Commons appropriating any part of the revenue or imposing a tax by reducing the amounts therein, but has not the right to increase the same without the consent of the Crown.

The report also states that “The Senate … cannot directly or indirectly originate one cent of expenditure of public funds or impose a cent of taxation on the people.”

This fundamental conclusion has guided the Senate since, and on a number of occasions we have amended taxation bills.

This conclusion also makes clear that when amending such bills our power is limited. We can only propose changes that would reduce amounts contained in the bill. Whether an amendment is, overall, revenue neutral is not relevant — the question is whether it would increase taxes or not, and the Senate cannot increase the amounts.

When dealing with Senate amendments, reference must be made to the amounts in the bill before us, not to the existing law. This is clear from the use in the Ross report of the word “therein”, which identifies the bill passed by the Commons. If the Senate deletes a clause or defeats a bill, we revert to the current law. This fact does not, however, mean that we can use the status quo to determine the amendments we can propose. Our reference point for textual amendments is the bill passed by the House of Commons, which is, in the case of tax increases, based on a ways and means motion introduced by the Crown and adopted by the House of Commons.

During consideration of the point of order, it became clear that the amendment proposed in the report would increase tax rates for some individuals. This increase would come about through a change initiated in the Senate, and is therefore contrary to established practice. It violates a basic principle governing parliamentary business in general, and the Senate’s specific understanding of how it deals with tax bills.

The amendment in the report is not receivable, since it amends the bill by increasing taxes.

To be clear, this finding does not affect the conclusion of the Ross report that the Senate can amend money bills from the Commons by reducing the amounts they contain. 

Let me hasten to note that this situation, in which amendments in a report are not receivable, is not without precedent. On December 8, 2009, a point of order was raised about amendments in a report being beyond the scope of the bill in question. The next day the Speaker ruled that this was indeed the case. The content of the report was therefore evacuated, resulting in the report being without amendment and the Speaker asking “When shall this bill be read a third time?”.

This is a sound precedent that can be followed in the current case. Since the report only contains an amendment now determined to be out of order, the content of the eighth report of the National Finance Committee is evacuated. In consequence, the report proposes no amendments to Bill C-2 and, under rule 12-23(2), stands adopted. As in 2009, the next question that must be put to the Senate is therefore the procedural one of “When shall this bill be read a third time?”. To be clear, this is for third reading of the bill without amendment.

The Honourable Senator Day moved, seconded by the Honourable Senator Hubley, that the bill be placed on the Orders of the Day for third reading at the next sitting.

The question being put on the motion, it was adopted.

Bills – Second Reading

Resuming debate on the motion of the Honourable Senator Greene, seconded by the Honourable Senator Runciman, for the second reading of Bill S-4, An Act to implement a Convention and an Arrangement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and to amend an Act in respect of a similar Agreement.

After debate,

The Honourable Senator Martin moved, for the Honourable Senator Tannas, seconded by the Honourable Senator Carignan, P.C., that further debate on the motion be adjourned until the next sitting.

The question being put on the motion, it was adopted.

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Orders No. 2 to 5 were called and postponed until the next sitting.

Motions

Order No. 1 was called and postponed until the next sitting.

Inquiries

Order No. 1 was called and postponed until the next sitting.

Other Business

Senate Public Bills – Second Reading

Orders No. 1 to 5 were called and postponed until the next sitting.

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Resuming debate on the motion of the Honourable Senator Mitchell, seconded by the Honourable Senator Omidvar, for the second reading of Bill S-229, An Act respecting underground infrastructure safety.

After debate,

The Honourable Senator Martin moved, for the Honourable Senator Neufeld, seconded by the Honourable Senator MacDonald, that further debate on the motion be adjourned until the next sitting.

The question being put on the motion, it was adopted.

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Orders No. 7 to 10 were called and postponed until the next sitting.

Commons Public Bills – Second Reading

Orders No. 1 and 2 were called and postponed until the next sitting.

Reports of Committees – Other

Orders No. 1 to 13 were called and postponed until the next sitting.

Motions

Orders No. 92, 60, 43, 31, 51, 7, 73, 72, 69, 89 and 79 were called and postponed until the next sitting.

Inquiries

Orders No. 11, 2, 1, 13, 15 and 8 were called and postponed until the next sitting.

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Resuming debate on the inquiry of the Honourable Senator Seidman, calling the attention of the Senate to its role in the protection of regional and minority representation.

After debate,

The Honourable Senator Martin moved, for the Honourable Senator Ataullahjan, seconded by the Honourable Senator Raine, that further debate on the inquiry be adjourned until the next sitting.

The question being put on the motion, it was adopted.

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Ordered : That Order No. 1, under GOVERNMENT BUSINESS, Bills - Second Reading, be again called.

Resuming debate on the motion of the Honourable Senator Greene, seconded by the Honourable Senator Runciman, for the second reading of Bill S-4, An Act to implement a Convention and an Arrangement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and to amend an Act in respect of a similar Agreement.

After debate,

The question being put on the motion, it was adopted.

The bill was then read the second time.

The Honourable Senator Greene moved, seconded by the Honourable Senator MacDonald, that the bill be referred to the Standing Senate Committee on Banking, Trade and Commerce.

The question being put on the motion, it was adopted.

With leave of the Senate,

The Honourable Senator Day moved, seconded by the Honourable Senator Eggleton, P.C.:

That, for the purposes of its consideration of Bill S-4, An Act to implement a Convention and an Arrangement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and to amend an Act in respect of a similar Agreement, the Standing Senate Committee on Banking, Trade and Commerce have the power to meet, even though the Senate may then be sitting, and that rule 12-18(1) be suspended in relation thereto.

The question being put on the motion, it was adopted.

INQUIRIES

The Honourable Senator Hubley called the attention of the Senate to the current state of literacy and literacy programs on Prince Edward Island, including the need for federal support of the PEI Literacy Alliance.

After debate,

The Honourable Senator Griffin moved, seconded by the Honourable Senator Dupuis, that further debate on the inquiry be adjourned until the next sitting.

The question being put on the motion, it was adopted.

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Ordered, That the sitting be suspended to reassemble at the call of the chair, with a three-minute bell.

(Accordingly, at 3:23 p.m., the sitting was suspended.)

At 3:31 p.m., the sitting resumed.

Question Period

Pursuant to the order adopted on November 24, 2016, the Senate proceeded to Question Period.

Pursuant to the order adopted on December 10, 2015, the Honourable  Mélanie Joly, P.C., M.P., Minister of Canadian Heritage, entered the Senate and took part in Question Period.

ADJOURNMENT

The Honourable Senator Bellemare moved, seconded by the Honourable Senator Harder, P.C.:

That the Senate do now adjourn.

The question being put on the motion, it was adopted.

(Accordingly, at 4:14 p.m., the Senate was continued until tomorrow at 2 p.m.)

DOCUMENTS DEPOSITED WITH THE CLERK OF THE SENATE PURSUANT TO RULE 14-1(7)

Report on Commercial Vehicle Safety in Canada for the year 2011, pursuant to the Motor Vehicle Transport Act,R.S.C. 1985,c. 29 (3rd Supp.),sbs. 25(1).—Sessional Paper No. 1/42-810.

Changes in Membership of Committees Pursuant to Rule 12-5

Standing Senate Committee on Fisheries and Oceans

The Honourable Senator Plett replaced the Honourable Senator Stewart Olsen (November 29, 2016).

The Honourable Senator Frum replaced the Honourable Senator Eaton (November 29, 2016).