THE STANDING SENATE COMMITTEE ON LEGAL AND CONSTITUTIONAL AFFAIRS
EVIDENCE
OTTAWA, Wednesday, March 23, 2022
The Standing Senate Committee on Legal and Constitutional Affairs met with videoconference this day at 12:03 p.m. [ET] to discuss the motion regarding the taxation of the Canadian Pacific Railway in Saskatchewan.
Senator Mobina S. B. Jaffer (Chair) in the chair.
[English]
The Chair: Honourable senators, I am Mobina Jaffer, senator from British Columbia, and I have the pleasure of chairing this committee. Today we are conducting a hybrid meeting of the Standing Senate Committee on Legal and Constitutional Affairs.
[Translation]
If you are having technical difficulties, especially with interpretation, please let the chair or the clerk know, and we will try to resolve the problem.
[English]
I would like to take a moment to introduce the members of the committee: Senator Gold, Leader of the Government in the Senate; Senator Boisvenu, deputy chair of the committee; Senator Batters; Senator Boniface; Senator Campbell; Senator Clement; Senator Cotter; Senator Dalphond; Senator Dupuis; Senator Harder; Senator Pate; and Senator Wallin. We are also joined today by Senator Arnot. Senators, I would like to give you a heads-up that I’m not going to follow the normal calling of the list. I will call Senator Cotter, Senator Batters and Senator Wallin first.
Honourable senators, today we are studying government motion 14, which was referred to us on March 1. This motion, if adopted by the committee, would make a constitutional change regarding the taxation of CP Rail.
Today we are hearing from government officials. We welcome, from the Privy Council Office, Michael Vandergrift, Deputy Minister, Intergovernmental Affairs; and Louise Baird, Assistant Deputy Minister, Intergovernmental Affairs. From the Department of Justice Canada, we have Nancy Othmer, Assistant Deputy Minister, Public Law and Legislative Services; Warren J. Newman, Senior General Counsel, Public Law; and Daniel Bourgeois, Senior General Counsel, Tax Law.
Honourable senators, I want you to know that we did invite both Minister LeBlanc and Minister Lametti. We made many times available today. Unfortunately, they were not available, but we have very capable officials who will answer your questions and make the presentations, starting with the Privy Council.
Michael Vandergrift, Deputy Minister, Intergovernmental Affairs, Privy Council Office: Thank you, honourable senators, for the opportunity to be here and the kind invitation.
[Translation]
I would like to begin by recognizing that I am speaking to you from the traditional territory of the Algonquin people. I am happy to be appearing before you today as part of your study on the resolution proposal authorizing the Senate to make a constitutional amendment concerning Saskatchewan.
My comments today will essentially concern the federal-provincial aspects of that resolution. I will let my colleagues from the Department of Justice provide you with the legal and constitutional context and answer your questions about that.
[English]
Looking at the deliberations that have already taken place on this matter in the Senate Chamber, I believe you’re already quite familiar with the subject matter. I’ll therefore only provide a brief summary of the issue before I delve into some of the federal and provincial considerations and precedents that might be helpful to you in your study.
On November 29, 2021, the Legislative Assembly of Saskatchewan unanimously adopted a resolution to repeal section 24 of the Saskatchewan Act, which incorporates by reference clause 16 of an 1880 contract between the federal government and the CPR’s founders, exempting the CPR’s historic western main line from certain taxes forever. This provision, which is echoed in statutes relating to Alberta and Manitoba, was intended to recognize the CPR’s role in building the trans-Canadian rail network in the 19th century. Saskatchewan has expressed to us the view that this exemption has outlived its original purpose and that maintaining section 24 is unfair to its residents and businesses. I know you’re scheduled to hear from the Minister of Justice and Attorney General of Saskatchewan in your study as well, and I’m sure he can explain these views further.
Since the adoption of the resolution in the Legislative Assembly of Saskatchewan, the Government of Saskatchewan has been seeking the Government of Canada’s support in bringing this amendment to Parliament and Parliament’s support in passing the amendment. Saskatchewan’s request is that the houses of Parliament pass parallel resolutions, thereby authorizing the repeal of section 24 of the Saskatchewan Act in accordance with the section 43 amendment procedure in the Constitution Act, 1982.
Should another provincial legislative assembly adopt a resolution for a bilateral constitutional amendment of a similar nature, be it Alberta, Manitoba or any other province, the Government of Canada would study and consider the proposed amendment, as we did in this case. While this proposal for a bilateral constitutional amendment is a rare occurrence, it’s not unprecedented. The bilateral amendment procedure has in fact resulted in seven constitutional amendments since 1982, each of which amended provisions of the Constitution of Canada that applied to a single province.
[Translation]
So this would be the eight time a Canadian province is using the bilateral procedure to amend the Canadian Constitution in accordance with section 43. That provision was used to amend the constitutional obligations related to Quebec’s denominational schools in 1997 and Newfoundland and Labrador’s in 1998.
Although they were similar amendments related to those two provinces’ school networks, they were concluded separately through the bilateral procedure, as they concern two separate provisions on Quebec and on Newfoundland and Labrador.
The last bilateral constitutional amendment was made in 2001, so more than 20 years ago, when this mechanism was used to make nomenclature changes for the province of Newfoundland, which then became Newfoundland and Labrador.
[English]
This bilateral constitutional change in front of you today, that you’re studying, may be historic and the first of its kind in 20 years, but it is not, as you can see, unique and unprecedented.
The Government of Canada supported this constitutional amendment pursuant to the request of the Government of Saskatchewan and the Saskatchewan legislature to repeal section 24 of the Saskatchewan Act and sees no legal or constitutional obstacles to proceeding. The Government of Canada supports the rationale put forward for proceeding with this amendment, promoting tax and fiscal fairness and cooperative federal and provincial relations, but it would also reflect in law the ongoing practice whereby the CPR, despite the historical tax exemption, has been paying taxes to Saskatchewan. This is also part of working with provinces and territories in a collaborative way by supporting consideration of this requested constitutional change, which is a priority for the Government of Saskatchewan and its legislature. Ultimately, this is a decision for the houses of Parliament to make, with the motion already adopted unanimously in the other place and now before the Senate for consideration.
We’re more than willing to answer any questions to help you in your assessment of this motion. Thank you, Madam Chair and honourable senators, for this opportunity.
The Chair: Thank you very much, Mr. Vandergrift.
Nancy Othmer, Assistant Deputy Minister, Public Law and Legislative Services, Department of Justice Canada: Good afternoon, Madam Chair and honourable senators. I’m pleased to appear before you today in your study of the motion for a resolution granting the authorization of the Senate to make a constitutional amendment in relation to Saskatchewan.
I’d first like to take a moment to acknowledge that I’m speaking to you from my home, which is located on the unceded, unsurrendered territory of the Anishinaabe Algonquin First Nation whose presence here reaches back to time immemorial. The Algonquins are recognized as the customary keepers and defenders of the Ottawa River watershed and its tributaries. I honour their long history here.
Also permit me to begin by saying that the Government Representative in the Senate, Senator Gold, has ably communicated the government’s support for the carriage of the motion and the adoption of the necessary resolution by this house, and my remarks today may be considered as supplementing those earlier communications.
To recap, as you are aware, resolutions authorizing the proposed amendment of the Constitution of Canada have already been adopted by the Legislative Assembly of Saskatchewan and the House of Commons. The amendment, if also authorized by resolution of the Senate, will repeal section 24 of the Saskatchewan Act, a statute that was enacted by Parliament in 1905 and is considered part of the Constitution of Canada.
Honourable senators on this committee are aware that, 40 years ago, the Constitution was patriated by the enactment of the Canada Act 1982. Patriation meant that the United Kingdom’s Parliament would no longer legislate for Canada, including making amendments to its Constitution. The Canada Act 1982 completed Canada’s journey from colony to autonomous dominion to fully independent state, while preserving our institutions and traditions of parliamentary democracy and, of course, the rule of law.
[Translation]
The Constitution Act, 1982, which is set out in a schedule to the Canada Act 1982, institutionalizes the Canadian Charter of Rights and Freedoms, confirms the rights of Canada’s indigenous peoples and includes government commitments to promote equal opportunity for all Canadians.
Part V of that act sets out procedures for amending the constitution.
[English]
For those among us who are not constitutional experts — and I include myself in that group — there are five amending procedures. Two of them have been widely publicized: the general procedure and the unanimous consent procedure.
The general procedure, under section 38 of the Constitution Act, 1982 requires the authorization of both this house and the House of Commons and at least seven of the ten provincial legislative assemblies representing 50% of the provincial population. Only one constitutional amendment has been made under this 7/50 procedure, and that was in 1983, to strengthen the rights of Indigenous peoples under section 35 of the Constitution Act, 1982.
The unanimous consent procedure is set out in section 41, and it applies to a limited number of subjects. It requires the approval of two federal houses as well as all ten provincial assemblies. Both the Meech Lake and the Charlottetown Accord packages were constitutional proposals subjected to this stringent standard.
[Translation]
In addition to those multilateral procedures, there are two unilateral procedures with a limited scope.
Parliament can, under section 44 of the Constitution Act, 1982, amend the Constitution of Canada in relation to federal executive powers, in the Senate or in the House of Commons, subject to multilateral procedures that protect those institutions’ fundamental characteristics.
[English]
That is how Parliament amended, in 1985 and in 2011, section 51 of the Constitution Act, 1867, concerning representation in the house. It is also how Parliament, in enacting the Constitution Act, 1999, added a senator to represent the territory of Nunavut.
Each provincial legislature may, pursuant to section 45 of the Constitution Act, 1982, amend the constitution of the province as long as, in doing so, it does not infringe fundamental provisions, such as section 133 of the Constitution Act, 1867 and section 23 of the Manitoba Act, 1870, which protect language rights.
Now we come to the bilateral constitutional amendment procedure. It is this procedure that the Legislative Assembly of Saskatchewan has invoked, and it is set out in section 43 of the Constitution Act, 1982. An amendment to the Constitution of Canada in relation to a provision that applies to one or more but not all provinces may be made by a proclamation issued by the Governor General where authorized by resolutions of this house and the House of Commons and of the legislative assembly of each province to which the amendment applies.
That’s clearly the case here. The provision that would need to be amended, section 24 of the Saskatchewan Act, only applies to Saskatchewan, and the legislative assembly of the province to which the amendment applies, the Legislative Assembly of Saskatchewan, has authorized the amendment, that is, the repeal of section 24.
[Translation]
The French version of section 43 of the Constitution Act, 1982, talks about authorization from the legislative assembly of each province “concernée.” The term “concernée” means that authorization must be obtained from the legislative assembly of the province to which the amendment applies.
[English]
Canadians who remember the lengthy debates over the Meech Lake and Charlottetown Accords, which were subject to the unanimous consent procedure, might be surprised to learn that the bilateral constitutional amendment procedure has produced no fewer than seven constitutional amendments. I know this committee is not surprised. Four of them concerned Newfoundland and Labrador. One changed the name of the province to include “Labrador” in 2001 and three changed the denominational schools provisions of the terms of union in 1987, 1997 and 1998. One was made at the request of Quebec and also concerns denominational schools provisions to remove their application so as to favour the organization of school boards along linguistic lines. That occurred in 1997. One was made at the request of New Brunswick in 1993. It added 16.1 to the Canadian Charter of Rights and Freedoms and thus recognized constitutionally the equality of the English and French linguistic communities in that province. One was made at the behest of Prince Edward Island in 1993 to remove the requirement in the terms of union for Canada to maintain a ferry service, thereby facilitating the substitution and construction of the Confederation Bridge to the mainland.
The Chair: Ms. Othmer, may I ask you to conclude your remarks, please?
Ms. Othmer: Absolutely.
Those amendments all have the same things in common. Each of them amended provisions of the Constitution of Canada that applied to fewer than all provinces. Each amendment itself applied only to one province, and each amendment was initiated by the provincial legislative assembly before being considered by the federal houses. Finally, each amendment modernized certain aspects of the Constitution and demonstrated federal-provincial cooperation.
The Chair: Thank you very much.
Senators, we are very fortunate today in that we have the witnesses from the second panel as well. I’m going to introduce them to you now. We will hear from them, and then we will have a longer time to speak to all the witnesses.
It’s a pleasure to welcome the Minister of Justice and Attorney General from Saskatchewan, the Honourable Gordon Wyant. He is joined by his Chief of Staff, Michelle Lang. We are also happy to welcome Merrilee Rasmussen from Rasmussen & Co., Barristers and Solicitors, who will provide us insight on this matter, as well. Senators, I want to share with you that the attorney general accepted our invitation enthusiastically, and we are happy he’s here. I’ll ask you to present now, Mr. Wyant.
Gordon S. Wyant, Minister of Justice and Attorney General, Government of Saskatchewan: Thank you very much, Madam Chair and honourable senators, for this opportunity. It’s my great pleasure to be invited to speak to the committee today.
I’m speaking to you from the city of Regina in Treaty 4 territory and the traditional homeland of the Métis.
I appreciate the comments that have been made so far by the other witnesses.
On behalf of the people and the government of Saskatchewan, I respectfully ask that this committee recommend that section 24 of the Saskatchewan Act be repealed pursuant to the Senate’s constitutional amending power under section 43 of the Constitution Act.
This matter is of considerable importance to the people of Saskatchewan, as demonstrated by the unanimous vote in our legislative assembly. Section 24 is a relic of an earlier time. If enforced, it restricts the taxation powers of the people of Saskatchewan and gives a strong competitive advantage to one of Canada’s most successful and profitable businesses, Canadian Pacific Railway. This would mean that the people of Saskatchewan have less constitutional autonomy than Canadians in most other provinces.
In our view, section 24 is bad tax policy. It would mean that one business corporation is a free rider, entitled to take the benefits of all the services and infrastructure that Saskatchewan provides but is not required to contribute its fair share in taxes. Tax fairness means that every resident and business corporation pay their fair share — farmers who rely on the CPR to ship their grain and import feed, single parents, young couples starting out, new Canadians starting a life in this great country and retirees on fixed incomes, but not the CPR. It says that it doesn’t have to pay its fair share. In our opinion, that’s a slap in the face to the residents and the people of Saskatchewan who do pay their fair share.
The CPR’s position is also directly contrary to the federal government’s transportation policy. The Canada Transportation Act recognizes that competition is essential in the transport sector, yet the CPR asserts that it has a perpetual tax holiday, unlike other companies in the transport sector, like Canadian National, Air Canada and WestJet, which are required to pay taxes, particularly on fuel. If so, that is a significant competitive advantage.
There’s no prejudice to the CPR if the exemption is formally repealed. There is no change to the status quo. The CPR has paid all applicable Saskatchewan taxes since the province was established in 1905. As well, we submit that the CPR agreed to the abolition of the exemption in 1966, as was set out in our written submission.
However, there would be significant prejudice to the people of Saskatchewan if the exemption applies. The amount claimed by the CPR is at least $341 million. If the CPR gets that free ride, then the people of Saskatchewan have to make up that amount. With our population of just over 1 million people, that would be an average tax increase of $340 for each resident of this province.
If section 24 is still in force, Saskatchewan would have less constitutional authority than most other provinces and a major business corporation would be tax-exempt. Saskatchewan’s taxation powers should not depend on the date our province joined Confederation. In our opinion, it’s time to repeal section 24.
I do want to take the opportunity to extend my thanks to the officials at the Saskatchewan Ministry of Justice for their excellent advice, guidance and support of the people of this province.
Thank you for reading our written submission and for listening to my submissions today. I certainly welcome any questions that the committee may have. Thank you very much, Madam Chair.
The Chair: Thank you very much, Mr. Wyant.
Merrilee Rasmussen, Lawyer, Rasmussen & Co., Barristers and Solicitors: I want to thank the committee for the invitation to come before you today to speak to you and provide you with a little bit of my background in relation to this issue and why it is that I have received your invitation.
I am a lawyer in private practice in both Saskatchewan and Nunavut. I began my legal career drafting legislation and, for almost 15 years, served as legislative counsel and law clerk to the Saskatchewan legislature. I was also a member of Saskatchewan’s constitutional unit in 1992 and was engaged in the Charlottetown negotiations, which were referred to earlier. As well, I was involved in the preparation of the legal text of the Charlottetown agreement and other drafting issues in a federal context. In my private practice, I’ve also worked for many provincial and territorial government entities in Saskatchewan and Nunavut and for many Indigenous governments in Saskatchewan.
Specifically, my involvement with the proposal to repeal section 24 of the Saskatchewan Act began in the early 1990s when I was working as a constitutional adviser in Saskatchewan’s Intergovernmental Affairs department. At that time, Dr. Howard Leeson was the deputy minister, and he raised the issue of section 24 with me. We prepared at that time a proposed resolution, but it was not taken up by the government of the day. I would speculate the reason for that is because, as Minister Wyant has pointed out, there was no practical concern with the issue of CPR taxation because the CPR had paid taxes since Saskatchewan became a province in 1905.
Dr. Leeson was also a deputy minister in the early 1980s, and he was intimately involved with the constitutional negotiations that led to the patriation of Canada’s Constitution in 1982. As we’ve heard, that process of patriation included the amending formula that has been described by the witness from the Ministry of Justice so well. Of course, as this amendment affects only one province, that being the province of Saskatchewan, the change only requires the approval of the Saskatchewan legislature and the House of Commons and the Senate in Parliament. The adoption of that particular amending formula facilitated the removal of section 24, which was an issue of great interest to Dr. Leeson back in the early 1980s because it represents an inequality among the provinces with respect to jurisdiction and tax. Why shouldn’t the Saskatchewan government have available to it the same jurisdiction as the eastern provinces to tax and raise revenue for the benefit of its residents?
The drafting of the specific amendment to repeal section 24 is not complicated. Our efforts were thus focused on the preparation of the recitals to the resolution. In our development of those “whereas” clauses preceding the resolution to repeal, we wanted to provide the context for the amendment being proposed. In that sense, we focused on the inequality of taxation jurisdiction among the provinces.
The recitals in the resolution before you today, however, speak to more than just the inequality that we were focused on. They also set out briefly the historical facts that led to the inclusion of section 24 in the Saskatchewan Act and point out the unfairness of providing the tax exemption to a large corporation, thus increasing the burden of taxation on other businesses and individuals in the province.
The resolution before you also states that the amendment is to be retroactive to August 29, 1966. We did not consider retroactivity because we initially prepared the resolution about 30 years ago when this was not an issue. Dr. Leeson also advises the issue of retroactivity was never discussed in the negotiations leading up to what became the Constitution Act, 1982. I understand from the Federal Court’s decision with respect to litigation involving the CPR and the Government of Canada that the date to which this amendment is stated to be retroactive is the date on which the province argued that the CPR agreed to give up the exemption to taxation that section 24 refers to.
As is stated in the recitals to the resolution before you today, the CPR has in fact paid those taxes or amounts equal to the taxes that would have been required to the Province of Saskatchewan since the province’s creation in 1905. Thus, while the change that is before you today changes the constitutional authority of the province to tax, it doesn’t change the practical reality.
Retroactive legislation is commonly enacted by Parliament and all legislatures in Canada, but he Saskatchewan Act, as we know, is not just a piece of legislation. It is a constitutional document. However, the retroactivity included here simply confirms in law what has always been the case in fact.
Saskatchewan should have the ability to make its own decisions about taxation policy within the province, and that is what the removal of section 24 will accomplish. As the minister has pointed out, this resolution was passed unanimously in the Saskatchewan legislature, and unanimous resolutions in any legislature are not a common occurrence.
The Chair: Ms. Rasmussen, may I please ask you to wind up.
Ms. Rasmussen: Yes, I just have one last comment to make, Madam Chair.
The Chair: Certainly.
Ms. Rasmussen: The approval of the Senate to this resolution is the last step to provide for the issuance of a proclamation to amend Saskatchewan’s constitution and put the province on an equal jurisdictional footing with other provinces in the federation.
I thank you for your indulgence in hearing from me today.
The Chair: Thank you very much for making time for us. Thank you.
Senators, we will now go on to questions. May I ask if you have questions for the department, ask them first? Mr. Vandergrift and Ms. Othmer, do you have to leave earlier than 2:00?
Mr. Vandergrift: Madam Chair, I’m fine to stay through the 2:00 period so the committee can operate as it wishes.
The Chair: Thank you. Since we have mixed the panels, senators, you will have up to seven minutes to ask your questions.
Senator Cotter: Thank you to all of the witnesses who have attended.
It feels a little bit like an old home Saskatchewan week, if I may say. Four or five of the Saskatchewan senators are in attendance at the hearings, and I wanted to extend my welcome and appreciation to Minister Wyant, Ms. Lang and Ms. Rasmussen, who I know from other movies.
I have two questions, at least in this round, if I may, Madam Chair. The first is for Mr. Vandergrift. It relates not directly to Saskatchewan but more broadly. I think you would agree with these three propositions: First, this is an unusual constitutional provision, in fact, a nation-building one, initially in 1880 and then introduced into the Saskatchewan Act in 1905; second, that it was unilaterally put in place by the Government of Canada; and third, that the Government of Canada in either or both of the federal houses could initiate the amendment in other jurisdictions, that is, Manitoba and Alberta as well as Saskatchewan.
My question really is a question of whether or not the executive of the Government of Canada is open to and inclined to — as another nation-building exercise — moving forward with resolutions not just in what has happened with respect to Saskatchewan but also Alberta and Manitoba to put this historical anomaly and degree of unfairness to the three Prairie provinces behind us.
Mr. Vandergrift: Thank you, honourable senator.
You’re right to point out that this provision does exist in founding statutes of Alberta and Manitoba as well. We have reached out informally to colleagues in those provinces to start discussions in this regard.
Our preference would be that amendments of this nature do originate in the legislature of the province to which the constitutional provision applies. I believe Nancy Othmer from the Department of Justice indicated that has been the case with all the previous bilateral amendments using this formula. We do believe the best way to approach this would be to have the legislative assemblies in these provinces indicate the wish to, in fact, proceed, and then the Government of Canada would certainly give it the full review and attention, as it has in this case, as would I imagine both houses of Parliament would as well. Our view would be, in using this bilateral formula, that the best way forward would be, in fact, for the legislature to which it applies to make that first indication that it is important to remove from the constitution since it applies exclusively to them.
Madam Chair, if you are okay with this, I would invite the colleagues from the Department of Justice to add any further context on this.
Warren J. Newman, Senior General Counsel, Public Law, Department of Justice Canada: I will add a comment from the Department of Justice. Thank you, deputy, for the “ouverture,” so to speak.
It is true that every bilateral amendment to the Constitution under section 43 that has been made since 1982 pursuant to this procedure has been done first by a resolution of the province concerned by the amendment. However, that is not to pre-empt the possibility of discussions in advance to coordinate the introduction of amendments and to coordinate on the wording of the amendments so that obviously the government and the two houses are not necessarily put before a fait accompli. Since this is a bilateral and not a unilateral procedure, ideally we need discussions beforehand to ensure that we’re all ad idem with the type of amendment that will go forward. Happily, all of the amendments to date, including the proposal being studied before this committee, have conformed to our understanding of what the Constitution requires. Thank you.
Senator Cotter: If I could continue, Madam Chair, with my second question, which is a question for Minister Wyant, but first, I would say thank you, Mr. Newman — nice to see you again — for your endorsement of the quality of drafting by the Saskatchewan folks here.
My question, Mr. Wyant, is in relation to the proposed resolution. It is contemplated as being retroactive to 1966. Can you say why 1966 is the date chosen for its retroactivity? I think it is fair to say there is no dispute about the ability of governments to put in place retroactive constitutional amendments, and that has happened before, but why 1966?
Mr. Wyant: Thank you very much, Senator Cotter, for the question.
Indeed, there have been a number of retroactive constitutional amendments made, as you have noted. The date we picked in 1966 corresponds to the date of a letter between the then-Minister of Transport and the president of the CPR, where it was indicated that there were a number of regulatory changes made in respect to transportation policy in the country, and in exchange, the CPR indicated that they would be prepared to give up the exemption. I think this letter was part of our submission. That was the basis upon which that date was chosen.
Senator Cotter: Thank you.
Senator Batters: It is great to be here today. I’m wearing my Saskatchewan green just for the occasion.
It’s wonderful to see the Minister of Justice. I’m sure that’s the office that I spent a considerable amount of time in when I was chief of staff to his predecessor, Mr. Don Morgan. It’s great to see you here today.
It’s also great to hear the reference to Professor Leeson. He was my third-year political science professor way back at the University of Regina many years ago. We did a mock Meech Lake Accord. It’s nice to hear his name today.
Mr. Wyant, I would like to start with you. I appreciate that your written submission pointed to how this constitutional amendment is entirely consistent with the role of the Senate, which plays such a key role in protecting Canada’s regions. I always view it as one of the most critical parts of my role, to represent the concerns of the people of Saskatchewan. As such, trying to help Saskatchewan receive tax fairness here — particularly, with $350 million — is an important task in that respect. Minister, would you please tell us more about how this amendment is critical to our region of Saskatchewan being treated fairly as a full partner in Confederation?
Mr. Wyant: Thank you very much, Senator Batters, for the question.
As I have mentioned before, we think that the provision in the Saskatchewan Act is a relic of an earlier time. There is a modern transportation policy in place in this country. We believe that the Province of Saskatchewan should have the full and formal ability to tax the CPR as it does with respect to any other company that’s operating in the province. Certainly, the CPR takes advantage of infrastructure in Saskatchewan. Its employees take advantage of programs that are available, like health care, education and social services, and so we believe that as an equal partner in Confederation, the Province of Saskatchewan should be entitled to those tax revenues and not be penalized simply because of the date we became a province in the country. Given the historic significance of the railway to the entire West and given the fact that the railway and its employees do take advantage of a number of policies and programs in the province of Saskatchewan, we believe that they should pay their fair share.
As an exporting province, the railway is important to the Province of Saskatchewan, but in order to ensure that Saskatchewan is treated as an equal partner, we think the tax policies of the province should conform to and be equal to the taxing policies of the other provinces with respect to the railway. We believe that is the case for Alberta and for Manitoba. I would point out that we did reach out to the province of Manitoba and the province of Alberta to let them know what we were doing moving forward. We leave it to those provinces to decide how they will move forward with their respective challenges in this area.
We do believe, given the fact that the exemption was provided and the fact that the Province of Saskatchewan did not have any input into the drafting of the Saskatchewan Act when it was put forward in 1905, that this is an opportunity to correct what we consider to be a historical wrong and ultimately to treat Saskatchewan as an equal partner this country.
Senator Batters: Thank you.
I want to move on to the federal officials to say the Government of Saskatchewan is not party to the CPR contract that we’re dealing with here. As such, amending this particular part of the Constitution pertaining only to Saskatchewan is the only way Saskatchewan has to eliminate that major restriction on its taxation powers. To the federal officials, does the Government of Canada agree with the position of the Government of Saskatchewan that a private law contract cannot be used to block a province’s power to initiate a constitutional amendment to achieve equality with the original provinces of Confederation and British Columbia?
Mr. Newman: I will speak at a level of more generality. The Constitution is the supreme law of the land, and the Part V amending procedures are an expression of the sovereignty of the people of Canada, as the Supreme Court said, acting through their representatives, both federal and provincial. There is an exhaustive — or at least comprehensive — set of amending procedures, and certainly, this particular resolution comes, in our analysis, within section 43 and within the Part V procedures as Ms. Othmer explained already.
In terms of whether a contract can bind constitutional actors into the future, it certainly has not been our position. In a previous constitutional amendment in relation to Newfoundland, there was litigation. I argued the position of the Attorney General of Canada in that case — that was before the courts of Newfoundland — where it was contended that there had been agreement on the terms of the union in Newfoundland and that that agreement was perpetual and could not be overcome. It was argued that the terms of the union relating to the denominational school provisions in the province were in the nature of a contract in that particular case.
The Newfoundland courts and, particularly, the Court of Appeal put that argument completely to the side and essentially said the Constitution is the supreme law. Every contract, of course, has to be interpreted in accordance with the law as it is amended from time to time and, in this particular case, in accordance with the supreme law. Certainly, the constitutional amendment was upheld despite the allegation that there was a contractual undertaking that could not be amended in this way. That case, by the way, is called Hogan v. Nfld. (A.G.), (2000) 189 Nfld. & P.E.I.R. 183 (NFCA), and the decision was rendered in 2000 by the Newfoundland Court of Appeal. Leave to appeal to the Supreme Court of Canada was denied.
Senator Batters: Thank you.
I have a quick question —
The Chair: Senator Batters, may I put you on second round?
Senator Batters: Yes. Definitely.
Senator Wallin: I’m sure that many people who are joining us remotely today are wondering why we are all here. There is no question about the retroactivity and the constitutional right to proceed to have this recognized retroactively. From everything I have heard today, I think there is agreement that this is a discriminatory act and that the people of Saskatchewan are restricted in their ability to tax a profitable company, not to mention that we wouldn’t want to suggest a commercial advantage for one company over another.
To the federal officials, is there anything here that poses any kind of restriction from your point of view?
To Minister Wyant, is the threat coming from the CPR of wanting to collect retroactively or pay back for taxes a real and present danger in this circumstance?
Mr. Wyant: Senator Wallin, perhaps I will go first and answer your question.
As you may know, the CPR and the Government of Saskatchewan are currently in litigation over the matter. The challenges that have been presented by that certainly came into sharp focus when that litigation was commenced. There is ongoing litigation; I will not comment directly on it. Certainly, that’s been the pressure that’s been put on the Province of Saskatchewan with respect to working to get this matter resolved, or at least from a constitutional perspective, to have the exemption eliminated. How that gets dealt with in the course of the litigation is something that the courts are going to have to determine. But certainly this was important to us, given the litigation that was ongoing and the threat to the province of Saskatchewan with respect to the repayment of the money that’s been paid.
I think a number of speakers have made the point that there is no real prejudice to the CPR. They have been paying taxes since 1905, so we don’t see the prejudice to the CPR, but having said that, there is some considerable pressure on the Province of Saskatchewan with respect to the matter in the event that the CPR were successful in the litigation.
Senator Wallin: Thank you for that important context. Is there anyone on the federal side who wishes to comment?
Ms. Othmer: Senator Wallin, I can confirm that it is the position of the Government of Canada and, more particularly, the position of the Minister of Justice and Attorney General of Canada, Minister Lametti, that, having considered our advice, the proposed constitutional amendment comes squarely within the bilateral amending formula and raises no legal difficulties or concerns in this regard. It’s the same procedure that we’ve used to adopt seven previous bilateral amendments, and we’re supportive of it.
Senator Wallin: And there is no concern from the federal justice department that this decision, if approved by the Senate, would somehow be perceived as interference in the judicial process between the CPR?
Ms. Othmer: None whatsoever.
Senator Arnot: Good afternoon, everyone, and thank you to Minister Wyant for attending here today — I appreciate that — and certainly Ms. Lang and Ms. Rasmussen.
Minister Wyant, in the debates of the House of Commons, Jack Pickersgill, then minister of transportation, said in September of 1966 that what the CPR was doing, which was agreeing to give up the perpetual exemption, was right, reasonable and in the public interest, and he went on to say later in those same debates that it was a fine example of good Canadian corporate citizenship. Do you feel that the Canadian public will see what the CPR is doing today in court is a fine example of bad corporate Canadian citizenship in our modern context?
Mr. Wyant: Senator Arnot, thanks very much for the question. It’s difficult for me to answer that question specifically.
I might say that certainly the people of Saskatchewan would consider the current situation to be quite difficult for the province — as I mentioned before, upwards of $341 million liability. As I said earlier, the commitment to give up the exemption wasn’t without consideration. I mean, there were some changes that were made to the regulatory regime of the day that prompted the promise to give up the exemption.
Certainly from the province’s perspective, the opportunity to amend the constitution to hopefully eliminate the demand on the taxpayers of Saskatchewan would be viewed as a very good thing, and I think that the unanimous consent of our legislature is an example of that. I won’t comment on good faith or bad faith of the Canadian Pacific Railway. Certainly, they are a very important partner to the province of Saskatchewan when it comes to transporting goods out of this province. As you know, being from the province, we’re an export economy, so the relationship that we have with our transportation partners, including the CPR, is very important. But I know that from Saskatchewan’s perspective, the elimination of the exemption would be seen as very popular with the people of this province.
Senator Arnot: Minister, when you look at the correspondence between Ian Sinclair and Jack Pickersgill, is it not quite clear that there is no ambiguity whatsoever and that there was clearly an agreement in the mind of Sinclair to forgo the exemption in perpetuity in order to get the ability to set freight rates in Western Canada, or in Canada, actually?
Also, quite clearly, both the CPR and the Government of Canada got what each of them wanted because Pickersgill really wanted to end the exemption. He described it as being not desirable. I would use the word “unconscionable” in the seventh decade of the 20th century, and to now be dealing with it in the third decade of the 21st century is quite an anomaly.
Is it quite clear to you that there is no ambiguity whatsoever? Both sides got what they wanted. The only failing was the Government of Canada did not take the opportunity to change the Constitution post-1966 on that issue.
Mr. Wyant: Thank you, again, Senator Arnot, for that question. It is clear from our perspective that there is an agreement and that it is unequivocal that there was a commitment by the railway to give up the exemption in exchange for the regulatory change. That’s clear to us. That is certainly our position. I can’t comment on why the federal government at the time didn’t proceed with the constitutional amendment, but certainly the patriation of the Constitution in 1982 has given the province of Saskatchewan and others the opportunity to make these bilateral constitutional amendments, and that’s why we’re bringing it forward today. Clearly, it has been our position that that letter is unequivocal with respect to the agreement that was made.
Senator Arnot: Thank you, chair. I don’t have any other questions.
The Chair: Thank you, Senator Arnot, and we’ll now go to Senator Boisvenu.
[Translation]
Senator Boisvenu, thank you so much for your generosity. Senator Boisvenu is the committee’s deputy chair.
Senator Boisvenu: Thank you very much, Madam Chair. It is most natural for my colleagues from Saskatchewan to have the privilege to ask the first questions, as they are the most concerned.
I want to begin by thanking the witnesses who are appearing before us this morning. My question is for Minister Wyant. You said earlier that failing to adopt this motion would directly impact your province’s population. You talked about an amount of about $360 per resident. I am sure that residents of Alberta and Manitoba who are listening to us are telling themselves the impact will be the same for them.
Can you explain to us, in practical terms, why there are few consequences for Canadian Pacific, while the impact is more significant for your province’s residents?
[English]
Mr. Wyant: Thank you very much for the question, senator.
As I mentioned before, the CPR has been paying these taxes since 2005, so the impact on the railway is negligible. In terms of the province of Saskatchewan, we have 1.1 million people in this province, and $341 million at a minimum would be a significant burden on our economy. We would need to find a way to ensure that was satisfied. It would certainly be a burden on the Province of Saskatchewan if the CPR were successful in their litigation. That’s always been our position, and we’ll continue to defend the interests of the people of Saskatchewan through that litigation for a number of the reasons that we have set out in our written brief and has been spoken to here today, including the correspondence. But it would certainly be a significant prejudice to the people of Saskatchewan.
As I mentioned, I did reach out to the provinces of Manitoba and Alberta. I understand — and not being privy to the litigation or any of the pleadings — that the amounts in those provinces are significantly less than the burden the Province of Saskatchewan would feel. As you know, the Province of Alberta doesn’t have a provincial sales tax, which is a significant amount of the claim that’s been brought against the Province of Saskatchewan. As I say, while I’m not privy to the amounts, we understand that they’re significantly less than the amount that’s been claimed by the CPR. However, it would be a significant burden on the people of Saskatchewan and on our budget if we were found liable for payment of the amount.
[Translation]
Senator Boisvenu: Thank you for your answer.
So you are telling us that CP is currently in court. Is that court case at the heart of the motion?
[English]
Mr. Wyant: We like to try to divide this up a little bit. There’s the constitutional provision, which really prejudices the Province of Saskatchewan with respect to its taxing, on the one hand, and the litigation on the other. I won’t comment as to whether or not this amendment formally resolves the issue. There are complex issues of the Constitution, contractual law, statutory law and equity that may still be issues that need to be dealt with by the court. I won’t comment on that. But the fact that this has been brought forward at this particular time, as I mentioned before, really came as a result of the litigation bringing into sharp focus the burden that the Province of Saskatchewan would face with respect to the issue. That’s why it’s been brought forward. But we certainly consider this to be, really, two separate things: the Constitution on the one hand, being a relic of history and being unfair to the Province of Saskatchewan, and the litigation on the other side.
[Translation]
Senator Boisvenu: I have one last question. If I understand correctly, from Quebec’s angle, as we may be a bit far from this file, the motion would benefit your province in helping find a quick solution to the conflict that may arise between you and Canadian Pacific?
[English]
Mr. Wyant: Yes. At the end of it, it certainly resolves the issue of the constitutional provision, but as I mentioned before, there may be other contractual provisions, statutory and equitable considerations that the court will have to take into account after — and hopefully when — the Constitution is amended. Therefore, I won’t say unequivocally that the litigation is resolved by the amendment of the Constitution. We just think that it’s time that there be a reckoning with respect to the Constitution.
I might also say, senator, that the relationship between the Province of Saskatchewan and its transportation partners is very important. Notwithstanding the litigation and notwithstanding the constitutional amendment, it continues to be the position of the Province of Saskatchewan that we will continue to have conversations with our transportation partners when it comes to projects and programs that enhance the export capacity of our province. Notwithstanding the fact that the Constitution may change and the litigation be resolved potentially as a result of that, that does not in any way impair this province’s desire to continue to have conversations with transportation partners with respect to programs and projects that will help enhance the transportation challenges that the province faces. Certainly as an export economy, we need to continue to have these relationships.
Senator Dalphond: My questions will be for the Justice Department, to those in charge of the file before the Federal Court of Appeal. Further to the Federal Court judgment of September 29, 2021, the Canadian Pacific Railway has filed an appeal but, I understand, not the federal government. I have four questions.
First: Does this mean that the federal government intends to defend the judgment rendered in the Federal Court? In that judgment, the judge concluded that, in 1966, the agreement between the federal government and the CPR was to remove and to rescind the tax exemptions in connection only with local and municipal taxes and that clause 16 was still in effect and does provide an exemption, not for income tax, excise tax or tax on fuel but only in connection with capital stock tax.
Second: Are you of the view that if the constitutional amendment is adopted, the contract will be amended, or will remain as it is between the federal Crown and Canadian Pacific?
Third: If the contract is not amended, do you intend to compensate Canadian Pacific for the tax on capital paid to Saskatchewan, which is an amount of $4 million, according to the brief from Saskatchewan, as did the Canada Revenue Agency in connection with the federal capital tax, which was repaid by the federal Crown?
Fourth: Is it your view that Saskatchewan is bound to provide more exemptions than what the contract provides in between the federal Crown and the CPR? In other words, if the Federal Court judgment is going to stand, does it mean that we’re talking here about only tax on capital stock, so we’re talking about $4 million and not $341 million?
Thank you.
Daniel Bourgeois, Senior General Counsel, Tax Law, Department of Justice Canada: I believe I should be responding to this. I can certainly answer the first two questions.
First of all, you’ve accurately explained the judgment of the Federal Court. The Crown was completely successful in that matter in that the court found that the Kingstreet remedy — the constitutional remedy — that was being claimed was not available because the instruments were not of a constitutional status.
You did accurately explain how the court delineated the scope of the exemption in finding that of the three taxes that had been in issue — income tax, fuel tax and large corporations tax — the large corporations tax would have been in scope.
Also, you’ve correctly explained the findings of the Federal Court with regard to the negotiations during the 1966 period. The Crown had asserted the argument that, as a result of all the exchange of correspondence and contextual evidence, the court should find that there was an intention of both parties that the CPR would abandon the tax exemption in its entirety. The Federal Court did not accept that argument and found that the evidence was only sufficient to demonstrate that there was an intention to abandon the exemption as it related to municipal taxes.
I’ll add that the argument made by the Crown was that although the documentation that was in evidence focused on municipal taxes, whether it was from President Sinclair or there was a focus on municipal taxes, those were the only taxes that were not being paid by the CPR at the time.
That’s the state of the decision. Obviously, given that we are successful, we could not appeal the decision. The appeal was brought by the Canadian Pacific Railway.
With respect to the Crown’s position on those findings having to do with the scope of the agreement, if you will, in 1966, the Crown will be filing its factum in June. It will have an opportunity to make comments on those findings. Unfortunately, I’m not in a position to tell you what that ultimate argument will be.
I believe that answers your first question. I might ask you to help me with the second aspect of your question.
Senator Dalphond: Are you of the view that the constitutional amendment, if adopted, will amend the contract, or will the contract stay as it is?
Mr. Bourgeois: This constitutional amendment procedure, which seeks to repeal section 24 of the Saskatchewan Act, will have no impact on the federal litigation or on the contractual obligation that is there, so no, this process will have no impact on the arguments raised in the Federal Court litigation.
Perhaps my colleagues will be best placed to answer your third and fourth point. I don’t know if they are able to proceed or if they would benefit from your help in perhaps asserting what it is again.
The Chair: Senator, may I put you on second round, please.
Senator Clement: I’m one of these people who believe in paying taxes, and I said that even when I was in elected office. I really mean that. Taxes are a good thing. A lot of this makes sense to me and to a lot of colleagues. I’m trying to get at the downside here, sort of the way Senator Wallin was going. Tell us what could go wrong here. Will the passing of this amending motion have an impact on our reputation in terms of respecting corporate agreements? Can any of you comment on what the downside might be here in terms of our reputation in conducting business?
Mr. Vandergrift: Maybe, Madam Chair, I could jump in to respond to the honourable senator’s question. We’ve looked at this, and we really don’t see an impediment from a legal or a constitutional perspective. As the Minister of Justice and Attorney General of Saskatchewan spoke about, this is an agreement from a long time ago, from a different era. There have been interceding events, including the events in 1966, and a letter exchange that was referred to earlier in the testimony. From these perspectives and from looking at the case, we don’t see any impediments to proceeding, given this history and given the circumstances of this situation.
[Translation]
Senator Clement: Thank you.
Senator Dupuis: Minister of Saskatchewan, welcome to this committee of the Senate of Canada. It is extremely important for you to be here. I want to emphasize that I appreciate you agreeing to appear, since you know, as I do, that the legislative intent is fundamental.
I have two questions for you. The second one is for you and for the Department of Justice officials.
What is your interpretation of section 43? It concerns a bilateral—so federal-provincial—constitutional amending formula. In the wording of section 43, how do you interpret the provisions that apply to certain provinces only?
If we look at how section 43 is worded, we can assume that it applies to a single province. We can also assume that it applies to a number of provinces, to more than one province, but not to all the provinces. In this case, we are dealing with a contract the federal government signed with CP, which was intended to meet a British Columbia requirement and concerned three provinces.
Am I understanding correctly that, in your interpretation, section 43 applies only to Saskatchewan, and that is why you are now introducing a constitutional resolution?
My other question is for the Department of Justice officials. Why does the Department of Justice consider all this to apply separately to each of the provinces, and not to three provinces out of 10 — in this case Manitoba as of 1881, and Saskatchewan and Alberta as of 1905?
[English]
Mr. Wyant: Senator, I’ll try to answer that question by prefacing it to say that prior to 1982, the provinces didn’t have the benefits in section 43, and I think a number of the witnesses have spoken to the fact that that can be used in circumstances where amendment is requested that affects one or more provinces but not all the provinces. We’re thankful that we have that provision in the Constitution that allows us to move forward.
I’m not sure this answers your question adequately, but it’s our view that the exemption provision that’s currently in the Saskatchewan Act, which has been noted as a constitutional document in the constitution of our province, has outlived itself. It’s a relic of the past and really shouldn’t be applicable to those provinces simply based on the date that they joined Confederation. We have this unique kind of situation where, on the main line, taxes are paid to the Manitoba border, but they’re exempt as the railway is travelling through Manitoba until you get to the territory that is originally the province of Manitoba in and around the Red River, and then exempt all the way to the B.C. border. As I say, I’m not sure this really answers your question, but certainly the bilateral constitutional amendment allows Saskatchewan to bring the resolution on the floor of our assembly and then send it to the federal government, to the House of Commons and then the Senate for their consideration. I think I mentioned this earlier that the Province of Saskatchewan, or the Territory of the Northwest Territories at the time in 1905 when Saskatchewan became a province, didn’t have significant or any input with respect to the drafting of the Saskatchewan Act. That’s why we consider this to be a relic of a different time, a different situation over 140 years ago when that contract was signed.
I’m not sure, senator, that that answers your question. Perhaps someone from the federal government may have a different answer for you.
[Translation]
Senator Dupuis: Minister, this is along the lines of the second question I wanted to put to you. If I understand correctly, the Government of Saskatchewan took the initiative to introduce this constitutional resolution because, since 1982, you have had that possibility, but especially because the federal government, at no point before 1982 or after 1982, has done what it could have done. Since 1982, the federal government could have also proposed a constitutional resolution that would have covered the three provinces. So, if I understand correctly, you are speaking out today because the federal government has failed to do so thus far?
[English]
Mr. Wyant: That’s correct, senator. We’re not really sure why the federal government didn’t proceed with an amendment prior to 1982 based on the conversations that were had in 1966. I can’t comment on that, but I can comment on the fact that since the patriation of the Constitution, it’s given us the ability to take the steps that we have taken on the floor of our assembly.
[Translation]
Senator Dupuis: Thank you, Minister.
Could the Department of Justice give us information from the Government of Canada’s point of view? Why not consider this to be an amendment concerning the three provinces and, therefore, have the consent of the three provinces or present a resolution formula concerning the three provinces?
Mr. Newman: You are right to say that there are similar provisions that concern Alberta and Manitoba, which could allow us to see the big picture. I actually think that our Deputy Minister of Intergovernmental Affairs said it may have been desirable to work together on relevant amendments.
However, legally speaking, it is crystal clear to us that section 24 of the Saskatchewan Act is in itself a provision that applies to certain provinces only, even to a single province: Saskatchewan.
Let’s go with the hypothesis that the province of Saskatchewan wants to proceed in this way, but that Manitoba does not. Would Saskatchewan then be prevented from amending the Saskatchewan Act because another province bound by a similar provision does not think it timely to amend the Constitution?
To answer more directly—
[English]
The Chair: We will now go to Senator Pate.
[Translation]
Senator Dupuis: I would like the witness to complete his answer eventually. Thank you.
[English]
The Chair: We will have the witness finish now because it’s a continuous sentence.
[Translation]
Mr. Newman: For us, a provision, like I said, is section 24. It is true that the key to section 43 is a provision or provisions that apply to certain provinces only. To close the vault, if you will, a resolution of the legislative assembly of the province to which the amendment applies is needed. That is how the Quebec Court of Appeal interpreted the term “concernée” in Potter v. Quebec (Attorney General) in 2001, where it was claimed that, to amend section 93 of the Constitution Act, 1867, Ontario’s agreement or that of six provinces would be required. Section 93 applies to all those provinces, and not only to Quebec. The Court of Appeal, just like the Superior Court, concluded that the constitutional amendment would apply only to the province of Quebec, and that Ontario was not affected by that amendment. Thank you.
[English]
The Chair: Thank you, Mr. Newman.
Senator Pate: Thank you to the witnesses for being here and for your testimony.
My question is for both the Government of Saskatchewan and the Department of Justice of Canada. During the second reading debate, Senator Cotter and Senator Arnot both pointed out some issues around the seizing of unceded Indigenous First Nations lands by the CPR that were provided by the federal government at the time. We know that at that time, as many as approximately 5,000 First Nations people were turfed off their land in the Cypress Hills area of Saskatchewan alone. Much of that was done through the use of things like withdrawal of rations and penalizing of Indigenous people.
My question for both of you: In light of the role of reconciliation for the federal government and in light of treaties and federal commitments to the UN Declaration on the Rights of Indigenous Peoples, not to mention the constitutional protections that already exist for First Nations and the principles that the Canadian government has put in place for its discussions and its relationship with Indigenous people, what do you see for both governments are the implications of this when it comes to reconciliation for both the Province of Saskatchewan and the federal government?
The Chair: Senator Pate, who are you asking the question of?
Senator Pate: The Minister and the Department of Justice.
Mr. Wyant: I’m not really prepared to speak to the elements of your question today, but I can tell you that from the Government of Saskatchewan’s perspective and UNDRIP, we have said publicly that we support the principles of UNDRIP. I’ve made those comments personally as the Attorney General of the province and to our ongoing commitment to reconciliation. Regrettably, I don’t have in front of me a number of the things that we have done and continue to do with respect to reconciliation, not just within the Ministry of Justice but within the Government of Saskatchewan generally. Our commitment has been clear with respect to the issue of reconciliation and ensuring that we meet our obligations not just under treaty but our obligations with respect to the principles of reconciliation. I know that’s probably not a very thorough answer for you, but I can express on behalf of the Government of Saskatchewan our commitment with respect to the UNDRIP principles and the issues with respect to reconciliation.
I can’t speak directly to the issue that you’ve raised with respect to individuals who were moved off the land as a result of the construction of the railway. Regrettably, I can’t speak to that today, just to comment on the government’s commitment to reconciliation and the principles of UNDRIP.
The Chair: Senator Pate, who would you like to continue answering this question?
Senator Pate: Whoever from the Department of Justice feels they can. Clearly, there have been some discussions about reparations and compensation for past wrongs, so I’m curious as to whether this has been part of the discussion at all.
Ms. Othmer: Senator Pate, thanks for the question. It’s a really important one.
My colleagues in the department are furiously working on an implementation and action plan in consultation with Indigenous folks as a result of the declaration. Part and parcel of that work will be looking at some of the historical anomalies. I haven’t had direct conversations regarding this constitutional amendment, but if the Senate were to pass this resolution, I’m sure it would be folded into the work that we would have to do to go forward with respect to our obligations. I think we have two years to get that done. I think from that perspective, everything is open for being part of this action plan that we’re trying to develop with our partners.
Senator Campbell: I don’t have a question but rather a comment. I don’t know that there’s anything more Canadian than having to take 50 years to make this decision. It is the right one, clearly. It is a historical anomaly and just goes to the Canadian patience. Thank you very much.
Senator Harder: I have three quick questions for the minister.
Minister, thank you for appearing here. You spoke of the unanimous resolution in the Saskatchewan legislature. Could you share with us how many speeches and witnesses were heard before the Saskatchewan legislature voted?
Mr. Wyant: Yes, I’m happy to answer that question. I brought the resolution forward on behalf of the Government of Saskatchewan. I spoke to the matter and so did one member of the opposition, Mr. Wotherspoon, who spoke on behalf of the opposition. No witnesses were brought forward to speak to the matter, although the comments that are on the record in Hansard with respect to both mine and Mr. Wotherspoon’s comments were consistent with the adoption and the support of the resolution. So in answer to your question, there were no witnesses, and two individuals spoke to the resolution.
Senator Harder: Thank you very much. We do know that in the House of Commons they shared the in-depth consideration of the province. This is the first witness-held session on this matter.
Minister, you spoke several times about why you couldn’t explain why the Government of Canada hadn’t acted in this matter during the constitutional negotiations. My question is, why didn’t your government act earlier? Mr. Wall, I believe, was elected in 1982. What has prompted the Government of Saskatchewan, since Mr. Wall and Mr. Moe have been premier, to act now?
Mr. Wyant: I will see if I can answer that.
The Saskatchewan Party government was elected in 2007. I can’t speak to any conversations prior to that. However, I do know, as Ms. Rasmussen commented, that there had been some conversations within the Ministry of Justice prior to the time that we formed the government in Saskatchewan.
As for why we’re doing it now, certainly — and I made a comment about this — the litigation has brought into sharp focus the liability of the province, so we wanted to take whatever steps we could consider necessary in order to blunt the challenges that would confront the Province of Saskatchewan if we were to be found liable for the repayment of those taxes. I know that this has come up in conversation before, but up until the time that the litigation was commenced, there was really no challenge to the Province of Saskatchewan. The CPR had been paying its taxes. We had been using those taxes to benefit the people of this province, both with respect to infrastructure and programming, and so while there had been some conversations, it certainly didn’t have the same focus as once the litigation had been commenced.
Senator Harder: Thank you very much.
My last question is prompted by the response to Senator Dalphond’s question by Mr. Bourgeois who spoke to what outstanding contractual liability there might be and suggests that the contractual liability will be much less than the $341 million liability that you have suggested. How do you respond to the Department of Justice answer to the question of Senator Dalphond suggesting that the contract will not be affected by this amendment to the Constitution and the liability is around 10% of that which you suggest?
Mr. Wyant: Thanks again, senator. We know what the claim has been against the Province of Saskatchewan, so that is the defence which we’re bringing.
There are a number of things, and I made the comment on this earlier. This is a very complex situation, not just dealing with the Constitution but also the contractual obligations. The Province of Saskatchewan is not party to that contract, but there are statutory and presumably equitable challenges that are and will continue to be raised through the litigation.
The approach that the province has taken, which I think is a responsible one, is to assume that the ultimate liability will be the larger number because that was the one that would certainly have the most dramatic effect on the province. Ultimately, the amount of damages, if the CPR is successful, will be determined by the court, and we’ll certainly make the arguments that we need to make to minimize the exposure of the province.
As I said before, the constitutional amendment really stands separate and apart from the litigation. We’re not convinced that the constitutional amendment will resolve the litigation. I’m not convinced of that. Ultimately, that will be for the court to decide based on the representations made by respective counsel.
Senator Harder: Thank you.
Senator Quinn: Thank you, chair and colleagues, for allowing me to be here today.
The questions I had have largely been responded to, but I have two short questions, the first being that I just want to come back to the question that Senator Wallin and a few others have asked with respect to the influence of the adoption of the resolution by the Senate and the impact it may or may not have on a court case. I would like to know — it is a “yes” or “no” really — will the adoption of the resolution interfere in any way? Will it stop the court proceedings, or will it affect the court proceedings in any way? I’m asking that to Justice officials and the province as well.
Mr. Bourgeois: I can speak very quickly to the influence of the repeal of section 24 of the Saskatchewan Act on the federal litigation. It will not affect or influence the proceedings before the Federal Court, which deal exclusively with a claim to recover past federal taxes and not Saskatchewan taxes. Thank you.
Senator Quinn: I have a follow-up, but the Attorney General may wish to comment, if he is able to.
Mr. Wyant: Thank you very much, senator, for the question.
As I mentioned before, we’re not convinced of the extent that the constitutional amendment will have. I cannot comment on what effect it will have on the litigation. Certainly, it is the position of the Province of Saskatchewan that we will continue to defend the interests of the province in the litigation.
As I mentioned, there is kind of a confluence of issues that arise here, not just contractual law but statutory and equitable considerations that need to be considered by the courts. Certainly, we’ll be making representations to the court with respect to the amendment if we are successful in convincing the Senate to move this forward, but to say that it will simply just end the litigation, that is not something that I cannot comment on.
What I will comment on, though, and I have said this before, is that the relationship that the Province of Saskatchewan has with the transportation companies that service our economy will continue. We’ll continue to have conversations with those companies, including the CPR, with respect to determining what projects might be of benefit to the Province of Saskatchewan and what kinds of commitments the Province of Saskatchewan would make to those projects to help enhance the export capacity of the province. Those conversations have been going on throughout the course of the litigation, and they will continue, notwithstanding the results of the court decision, ultimately.
Senator Quinn: Thank you.
I’m not a lawyer, so I’m just looking for some clarity. Earlier, a colleague said something in the discussion about the primacy of the Constitution. If we make an amendment to a constitution that becomes paramount, how can that not have some influence on the core proceeding?
Mr. Wyant: It would be our position, senator, that it would have some effect on the litigation, but we’re not sure what effect it is going to have. Certainly, it is important for the Province of Saskatchewan. I commented earlier on the separation between the Constitution and the obligations that the province may or may not have to the CPR. We just think that the constitutional amendment is important to ensure that Saskatchewan is treated as an equal partner in Confederation with respect to the taxing authority of the CPR. Ultimately, it will be up to the court to determine what the province’s liability will be, whether the Constitution is amended or not.
Senator Quinn: Thank you.
For my last question, I just wanted to go back to Senator Clement and some of the commentary she made. Having heard that it could have some influence, what role is it for Parliament — and the Senate is part of Parliament — to put at risk a judicial process because of a decision that we may take today or in the coming weeks? That seems to put us in an awkward position.
The Chair: Does anyone from Justice want to answer that?
Mr. Newman: Again, I will just speak more generally in relation to this particular piece of litigation.
Statutes, through the principle of parliamentary sovereignty, will often put an end to litigious disputes perforce of the fact that Parliament or a provincial legislature has decided to clarify the law in the area, and that is sometimes the end of it.
In this particular instance, we’re talking about an amendment to the Constitution of Canada. You heard earlier from fellow witnesses about the amendments in Newfoundland in relation to the denominational schools. There were three of those amendments. One of those amendments was made in 1997, and it was, again, a variation on the term — term 17 — relating to denominational schools, and litigation arose under that amendment. The province turned around in 1998 and put forward another amendment to abolish the guarantees altogether, and that constitutional amendment went through both the House of Assembly of the province and the federal legislative houses. There was subsequent litigation on the basis of that, which I have alluded to, as well. The court upheld the validity of the amendment, so it is not, in principle, an interference in the judicial process to proceed with legislative or constitutional amendments.
You have your role, and the courts have theirs, but the courts will take the law as they find it. Sometimes legislation is retrospective or retroactive in its application, too, and that is not an offence to the rule of law, except if you were to create a criminal offence retroactively, and then you have a Charter guarantee against that.
The Supreme Court has been quite clear that parliamentary sovereignty remains a principle of our constitutional framework, and thus if legislation is amended or, here, the Constitution is amended, it will produce legal effects.
Senator Gold: I don’t have any questions but I wanted to express my thanks to the minister and the officials who are here. It is really helpful to the committee.
Senator Batters: First of all, I wanted to make a brief comment dealing with what Senator Quinn was just talking about. It’s the Senate’s role — it’s Parliament’s role — to deal with the Constitution. We’re sitting here in the Standing Senate Committee Legal and Constitutional Affairs right now —
The Chair: Senator Batters, you have two minutes.
Senator Batters: Okay.
— to consider it and, in rare occasions, to amend it. That is our role as the legislative branch.
Minister Wyant, I just want to make this issue crystal clear. What happens if this constitutional amendment — motion — gets further delayed or, in the worst-case scenario, does not pass the Senate?
Mr. Wyant: As I mentioned before, we’re certainly going to continue to defend the interests of the Province of Saskatchewan with respect to the claim that’s been brought by the CPR. To the extent that the constitutional amendment may or may not have some effect on the litigation, we’ll let our justice officials and the lawyers that represent the parties work that out in court. Ultimately, there will be a judicial decision on that.
We do think, though, senator, that the amendment is important, not just from a practical perspective but really from a principled perspective. I have made this comment a number of times today: We believe that Saskatchewan should be treated as an equal partner in Confederation when it comes to their taxing authority, just as we think that Manitoba and Alberta, ultimately, should be treated. We would expect them to seek the same relief at some point. We’re all equal partners.
You will recall that a number of things have happened over the years that have given Saskatchewan a more equal voice. We had the natural resource transfer agreement back in the 1930s, which gave Saskatchewan control over its natural resources. That was fair. We think that giving the taxing authority back to the province is fair. It is unfair that the exemption exists. Things have changed — and I think, as has been noted by a number of witnesses, things have changed significantly — in the 141 years since that contract was signed. We made specific reference to a number of things.
In terms of where we go from here, I have given instructions to the Ministry of Justice to continue to pursue the defence of the litigation that has been brought from the railway, whether or not the resolution passes. That is really the dichotomy with respect to the issues today, with the Constitution on one side and the litigation on the other.
The Chair: Senator Dalphond, you have two minutes.
Senator Dalphond: For the Justice officials, I have two remaining questions that were not answered. I will ask them to send me a written answer to be filed with the committee.
My questions now will be for the Attorney General of Saskatchewan. I agree with the principle you are starting from, which is that for tax purposes, all provinces should be equal. That will maybe justify amending the Constitution if Saskatchewan seeks to remove section 24. But does that principle call for retroactivity? Why is it necessary to be equal to make it retroactive when there is pending litigation?
Mr. Wyant: Thank you for the question, senator.
I think the retroactivity piece — and I have spoken to that — is based on the agreement that we believe was in place between the CPR and the federal government back in 1966. I won’t comment on other examples of retroactivity with respect to the Constitution, except that it has been noted that there has been a few, but we believe that it should be retroactive—
Senator Dalphond: Sorry to interrupt, but I only have two minutes. Your assumption is that there is an agreement that covers that. The Federal Court ruled against you.
Mr. Wyant: We take a different view of that. We believe that, based on the letter, there has been an agreement.
The other thing that we’ll base our arguments on as we continue with the litigation is the fact that the CPR has been paying the tax since 1905, which is simply an indication, from our perspective, that they believe they had a responsibility to support the programs and the infrastructure that the Province of Saskatchewan provides to all Saskatchewan residents, including the employees of the Canadian Pacific Railway Company. So that will continue to be the position we will take as we move this litigation forward.
Senator Dalphond: Thank you.
[Translation]
Senator Boisvenu: I thank our guests once again. I am especially thankful to the minister for joining us this morning.
Mr. Bourgeois, I have a relatively simple question. Can you tell us what the difference would be, in terms of CP’s obligations, among municipal, provincial and federal taxes once this motion has been adopted?
Mr. Bourgeois: I want to understand your question properly. Can you please repeat it?
Senator Boisvenu: Will this motion affect CP’s obligations? Will it affect municipal, provincial and federal taxes, or will only the province of Saskatchewan be impacted?
Mr. Bourgeois: It will affect only Saskatchewan’s ability to legislate to impose to Canadian Pacific what would otherwise be in compliance with section 16. It will not affect federal taxes.
Senator Boisvenu: Or municipal.
Mr. Bourgeois: As for municipal taxes, if you refer to the ruling, you will see that what the court said is that, in 1966, an agreement was signed whereby Canadian Pacific voluntarily started to pay municipal taxes—those are actually subsidies rather than municipal taxes. So this issue was dealt with, and I think everyone agrees that it was resolved in 1966.
This constitutional amendment will help ensure that what Canadian Pacific will pay to Saskatchewan from now on will truly be municipal taxes, and not a subsidy in lieu of taxes.
Senator Boisvenu: Thank you very much.
[English]
The Chair: Ms. Rasmussen, you have not had an opportunity to answer any questions, and I would like to give you a few minutes. I am sorry for putting you on the spot, but if there is anything that you would like to add to this discussion, I would appreciate your comments.
Ms. Rasmussen: I thank you very much, Madam Chair. I don’t think that I could usefully add anything to what has already been said. Minister Wyant has answered very comprehensively all of the questions that have been brought forward.
As I indicated in my opening comments, my involvement in this came about because of the realization, many years ago, prior to any litigation and while the CPR was voluntarily paying taxes, about an issue that perhaps was seen at the time as being somewhat academic. Perhaps it wasn’t as academic as might have been thought at that time. It might have been preferable if this resolution were brought forward in 1982, shortly after the possibility existed, but, as the minister has said, there are certain events that bring a focus to the issue and focus attention on what needs to be done.
The main point here is that Saskatchewan should be able to have its own taxation policy, based on considerations that are important to the people of Saskatchewan. No one individual or corporation ought to be exempt from paying any tax to the province.
Thank you, Madam Chair and senators.
The Chair: Thank you for being here and contributing to our discussion. We appreciate your time very much.
Senators, before we end, I want to thank the interpreters who have done an amazing job in letting us continue with this meeting today. Once again, they really helped us out, so I thank the interpreters.
Minister, I want to thank you. It was very touching that you were very enthusiastic in our invitation. You were almost the first person who accepted, and that means a lot to this committee.
Mr. Wyant: Thank you.
The Chair: To the officials from Privy Council, Mr. Vandergrift and Ms. Othmer and all of the officials, thank you for being here.
As you can see, there is a lot of interest in the Senate, and the fact that we’ve held a committee meeting should indicate to you that we are very interested in this issue. We will continue with our discussions this afternoon. I am forced to stop now because we do not have leave from the Senate to sit any further.
Thank you, senators. We will see you later this afternoon.
(The committee adjourned.)