The Hon. the Speaker: Honourable senators, I would like to call your attention
to the presence of some distinguished visitors in our gallery. They are the members of the
Italian Canadian Businessmen's Association, along with their president, Nino Colavecchio.
They are here at the invitation of Senator Ferretti Barth. We welcome them to the Senate.
Hon. JohnLynch-Staunton (Leaderofthe Opposition):
Honourable senators, this year marks the fifth anniversary of the North American Free
Trade Agreement between Canada and the United States and Mexico. By any measure, it has
been an unqualified success for Canada and for our NAFTA partners. This agreement has
helped us build a true NAFTA family where our peoples can collectively enjoy the benefits
of a unique political, economic and cultural partnership.
The numbers speak for themselves. Canada's exports to the United States and Mexico have
grown by 80 per cent and 65 per cent respectively since the NAFTA was implemented on
January 1, 1994. Indeed, trade and investment flows among all three NAFTA partners have
increased substantially as a result of the agreement. The Canadian economy continues to
expand, and more than 1 million new jobs have been created in Canada since NAFTA came into
Last year, the United States, Mexico and Canada launched a comprehensive review of the
NAFTA to examine achievements to date and to set priorities for the road ahead. This
review highlighted a number of important achievements. Tariff elimination is proceeding
ahead of schedule. Non-tariff barriers to trade are being removed. The standards regimes
of the NAFTA parties are being made more compatible in areas like telecommunications and
All of these improvements have made it easier than ever for Canadians to succeed and to
do business across North America. Yet there is still more work to be done. Important
discussions are underway to clarify the expropriation and compensation provisions of the
NAFTA's investment chapter to provide greater certainty as to the intent of the parties in
this area. The parties are also looking to achieve greater transparency in the NAFTA
institutions as a whole, including the investor state dispute-settlement procedures.
The more Canadians understand about the agreement, the more their already high level of
support for the NAFTA will be strengthened.
While the vast majority of trade between the NAFTA members flows unimpeded, the NAFTA's
rules have created a strong framework by which we can resolve disputes when they do arise.
That has provided stability and predictability to entrepreneurs in all three countries.
Clearly it has helped to multiply the number of business opportunities for Canadian firms
and has made North America one of the most dynamic and prosperous trade areas in the
The NAFTA provides preferential and secure access to the rich North American markets,
which is particularly reassuring at a time of global economic uncertainty and turmoil in
many other international markets. As we look ahead to the next five years, I am confident
the NAFTA will continue to serve as a powerful locomotive for increased trade, investment
and jobs for all Canadians.
I want to assure all honourable senators that this statement was not prepared for me by
former prime minister Brian Mulroney, although I suspect that he is aware of it, because I
found it in a booklet entitled, "The NAFTA after Five Years: A Partnership At
Work." That booklet was issued by the Department of Foreign Affairs and International
Trade. The statement, with only minor changes, is identified as a "Message from the
Minister," with his picture alongside and the signature of Sergio Marchi below.
Last week - May 27, to be exact - marked the sixth anniversary of the vote in the House
of Commons on the enabling legislation confirming the NAFTA. Minister Marchi, whose
support of the NAFTA today is unlimited in its enthusiasm, voted against the legislation.
Joining him in the vote against the NAFTA were the Prime Minister of Canada, the Deputy
Prime Minister, the Minister of Foreign Affairs, the Minister of Canadian Heritage, the
Minister of Finance, the Minister of Veterans Affairs, the Minister of Agriculture, the
Minister of Public Works, the Solicitor General, the Minister of Industry, the Minister of
International Cooperation, and our present High Commissioner to London.
Honourable senators, January 1, 2001, will mark the tenth anniversary of the goods and
services tax being in place. I look forward to putting on the record a statement in praise
of it, preferably by a Conservative Minister of Finance.
Hon. R. James Balfour: Honourable senators, Sunday, June 6, 1999, will mark the
fifty-fifth anniversary of the Allied landings in France in 1944, a date which will be
forever known as D-day.
Canada was a full partner in this great enterprise. Hundreds of thousands of Canadian
servicemen and women serving in the Royal Canadian Navy, the Royal Canadian Air Force,
with other Allied services, and in the Merchant Marine of Canada, all made their
individual contributions to defeating a brutal and determined Nazi war machine.
It should not be forgotten that these Canadians in uniform, volunteers all, were but
the cutting edge of a national effort that stretched back to every factory, farm and
fishery of our country. Foremost in the massive endeavour that was D-day was the Canadian
In 1944, the Canadian army overseas was over 270,000 men strong. Our country, then 12
million people, had fielded three infantry and two armoured divisions, two independent
army tank brigades, two corps headquarters, an army headquarters, and the full range of
supporting arms and services.
On D-day, the Canadian army had already been battling the Axis powers in Sicily and
Italy for over a year, where the Allies had just advanced to liberate Rome. On the beaches
of Normandy, in the pre-dawn of that June morning, the 3rd Canadian Infantry Division,
supported by the 2nd Canadian Armoured Brigade, was one of the eight Allied assault
divisions that landed from the sea and from the air.
On "MIKE" Beach, at Courseulles-sur-Mer, it was the men of the Regina Rifles,
the Royal Winnipeg Rifles, and the 1st Battalion, the Canadian Scottish Regiment,
supported by the tanks of First Hussars, whose collective military prowess overcame a
stubborn defence, at no small cost in casualties.
At Bernières-sur-Mer, the Queen's Own Rifles of Canada, the North Shore (New
Brunswick) Regiment and Le Régiment de la Chaudière, supported by the tanks of The Fort
Garry Horse, fought ashore on "NAN" Beach and overcame the enemy to establish an
Allied foothold in continental Europe.
Also fighting on the Normandy beaches that morning were the guns of the Royal Canadian
Artillery, sappers in field companies of the Royal Canadian Engineers, and members of all
the other corps who serve to give an all-arms battle formation its fighting strength.
Separate from the main Canadian assault, the 1st Canadian Parachute Battalion,
operating under the command of British 6th Airborne Division, was dropped to seize
crossings on the River Dives.
These Canadians served in a powerful, cohesive, identifiably Canadian force, whose
existence and achievements are the bedrock of the respect and stature that Canada and
Canadians enjoy throughout the world to this day. The valiant efforts of these men and
women on D-day, and throughout World War II, built on the sterling reputation of their
forefathers who formed The Canadian Corps in World War I. This is a reputation that is now
maintained by their sons and daughters, grandsons and granddaughters, who serve in the
Canadian Forces today.
Honourable senators, I rise today to formally note, on behalf of this chamber and all
Canadians, the determination, bravery and sacrifice of all those who fought for Canada in
the Allied invasion of Nazi-occupied France, 55 years ago this Sunday.
Hon. Rose-Marie Losier-Cool: Honourable senators, in my capacity as co-chair of
the Canadian Association of Parliamentarians on Population and Development, I should like
to point out that July 11, 1999 will be World Population Day.
This is an opportunity for all Canadians to learn more about population issues. I would
like to take this opportunity to encourage all parliamentarians to take part in
consciousness-raising activities around World Population Day.
The world's population is now up to 5.9 billion. It increases 1.33 per cent every year,
which means an additional 78 million people, 97 per cent of whom are born in the less
developed regions of the world.
On October 12, 1999, the world's population will reach the six billion mark. The
population is increasing proportionately every year. This leaves us facing the challenge
of dealing with such universal issues as food safety, ageing, reproductive health, and
human resource development.
As the world approaches the 6 billion mark, it is important to note that 9 out of the
10 fastest growing national populations are found in the developing world. We are also
faced with constant aging of the world's population. As the proportion of elderly citizens
grows around the world, particularly in its poorest regions, we will undoubtedly face
serious challenges in health care.
World Population Day affords us, as Parliamentarians, the opportunity to inform
Canadians of developing trends in world population with a view to a better understanding
of the future we share.
With respect to population and development, the Canadian Association of
Parliamentarians has been an active promoter of awareness of these matters. I encourage
all senators to participate in the activities surrounding World Population Day and to
continue to promote this awareness in their own communities.
Hon. Donald H. Oliver: Honourable senators, I wish to take this opportunity to
comment on a conundrum that we are encountering more and more in Canada - the competing
claims of environmental protection for pre-eminence over the equally valid demands for
development of our offshore resources.
Specifically, the George's Bank Review Panel is presently seized with the issue of
whether to extend the moratorium that prevents offshore oil and gas development off
George's Bank. George's Bank, as you all know, is one of the richest fishery resources in
the Atlantic, off Nova Scotia and New England.
The fear on the part of the fishing interests and environmentalists is that drilling
near this lucrative feeding and spawning ground may do irreparable damage to what remains
of our East Coast fishing industry. Competing against these claims are the desires of
petroleum-related industries that Nova Scotia - and Atlantic Canada in general - needs
another Sable Island project or its GDP, or the current increase in employment, will
either stagnate or drop from its current level.
I raise this issue today because of a letter I received from Mr. John McDonald,
president of Seimac Corporation, dated April 22, 1999. He wrote to me as the owner of an
export-oriented company struggling to stay in Nova Scotia in the face of business and
personal taxes that are far too high and cannot be sustained. He felt compelled to
comment, in his letter to me, on the George's Bank moratorium issue. He feels that by
letting the moratorium expire Nova Scotians will be able to control George's Bank and
develop it in the interests of all the citizens of Atlantic Canada.
Honourable senators, what struck me was that he wrote to say he was struggling to stay
in Nova Scotia in the face of business and personal taxes that are far too high, but at
the same time as maintaining these high taxes, we do precious little to allow industry, in
particular small business, to be competitive.
I have read the brief submitted to the George's Bank Review Panel by the Offshore
Technologies Association of Nova Scotia. The brief presents one possible solution to
dealing with the various competing interests off George's Bank. What it does deal with,
however, is the position of the Nova Scotia fishermen, who have a legitimate fear that the
lucrative fishery will be ruined if drilling and other petroleum-related operations take
place. On the other hand, it seems that, if the review panel were properly balanced with
those who understand the interests of the fishermen, this solution might allow Mr.
MacDonald and others to stay in Nova Scotia and get on with their business lives, thus
contributing to the economy of Atlantic Canada.
Hon. Jack Austin: Honourable senators, on Monday, May 31, Senator Di Nino made
some comments regarding human rights in China. He referred to the tenth anniversary of the
death of Chinese students and other citizens who had massed in Tiananmen Square to
demonstrate against corruption and for democratic change.
Apart from declaiming against the Chinese government, it is not clear what Senator Di
Nino would recommend as Canadian policy towards China 10 years later. What policies would
flow from Senator Di Nino's statement that, "In terms of importance, human rights
should rank far above trade statistics"?
Perhaps Senator Di Nino and other out-of-work Cold War warriors think it would be
desirable to renew policies of isolation and ostracization of China - policies followed
with no obvious advantage by the United States and others from 1949 on, when China then
sought a normal standing in the world community but was driven into isolation and thus to
ally itself with the Soviet Union. That brought on a bipolar world with Vietnam, and other
revolutions that took 30 years to pass through.
If you declare a nation to be your enemy and seek its punishment in isolation, then you
can be certain that it will be your enemy with all the consequences. Does Senator Di Nino
want to do a little war dance and take on one-fifth of humanity to prove his moral
superiority? Let us be clear: China has lots of domestic problems, and the development of
human rights and democracy are major issues for them and for us. But China has made great
progress in its economic and social modernization since it returned to the international
community 20 years ago. At no time in China's history have the lives of individual
citizens been more free than they are today; at no time have they had more personal
opportunity than they have today. It is not confrontation that should be the basis of
Canada's policy, but engagement at a level of mutual respect. We have our system and we
have our values, and we make them known to the Chinese. We do not compromise our values.
However, we seek the progress of the Chinese people in their individual lives. As
Honourable Raymond Chan has said, "Human dignity and human lives are the most
valuable things a nation has."
Visiting Ottawa today is a team of experts from the National Peoples Congress. I met
with them this morning. They are studying Canada's social policy system. China wants to
introduce health care, pension, unemployment and welfare support programs for its
citizens. Can we detect in that goal a regard for the individual? Should we support it?
Would they be here if we reminded them at every encounter of something we disagreed with
in their history? Do we do that with other nations?
The normalization of China's relations with the world is a key to the peace and
prosperity of the entire globe. Through policy exchanges, trade exchanges and people
exchanges, Canada is playing a useful role. China's accession to the WTO is the next major
step that Canada and the Prime Minister are doing their best to facilitate. What is really
required is that all sides summon the resources necessary to foster cooperation and
prevent conflict. At all times, we must use our will and our energy to surmount the
negative issues of the moment.
Senator Lynch-Staunton: Tell us about their spies!
Hon. J. Michael Forrestall: Honourable senators, in what Sir Winston Churchill
described as "the most difficult and complicated operation that has ever taken
place," on June 6, 1944, Canadians of the 3rd Canadian Infantry Division joined with
their comrades-in-arms and landed on Juno Beach at Normandy. The Canadians were joined by
four other infantry divisions that fateful day from the United States and the United
Kingdom. The 3rd Canadian Division was supported in this holy crusade by ships and crews
of the Royal Canadian Navy, the Merchant Navy, the aircraft and aircrew of the Royal
Canadian Air Force, the Canadian Parachute Battalion and the 2nd Armoured Brigade, while
the 2nd Canadian Infantry Division and the 4th Canadian Armoured Division waited in the
United Kingdom to reinforce their fellow Canadians. They landed on the coast of France
determined to stay, while the enemy soldiers of the Third Reich, waiting for them, hoped
to push them back into the sea in what was one of the most decisive battles in military
John Keegan, in his monumental work, Six Armies in Normandy, said, "They
took with them a blessed sense of release from the spectres from 22 months before on the
beaches 70 miles to their east" - a reference to the horrible lessons of Dieppe. That
was a lesson paid for in Canadian blood that sowed the seeds of victory in the D-day
Field Marshal Montgomery of El `Alamein fame said of the Canadians, "You would not
see such a body of men in any other army in the world." He was absolutely right, for
at the end of D-day, June 6, 1944, Canada had penetrated inland the farthest of any Allied
division. They were the best of the best and, to paraphrase Shakespeare, "no table
was better set."
They were seasick when they landed on the beaches or, more often than not, in hip- or
chest-deep waters off the shores of France. Scared, tired, sick, and under fire, they
moved inland decisively and aggressively to achieve their objectives. One Nova Scotian, a
Cape Breton highlander, Sergeant Chandler, summed it up best when he said, "I was so
sick that I did not care if the whole German army was on the beach. All I wanted to do was
to get my feet on dry land."
Heroism was commonplace. One of the most memorable stories for me was that of Gilbert
Boxall, a stretcher-bearer from Saskatchewan, who bravely crawled up and down the beach
dressing the wounds of gravely injured Canadian soldiers. On D-day plus three, while
moving to answer a cry for help, he was shot dead. When his body was examined, his friends
found five dressings and wounds on his body - wounds that he never spoke of during the
three days of intensive fighting.
Who could forget the story of our parachute battalion that jumped with the 6th British
Airborne to seize bridges ahead of the landings - and its padre, who was killed when his
chute failed to open? Who could forget the heroism of the CANLOAN officers with British
units? Out of 673 CANLOAN lieutenants and captains, 127 were killed during the war; 338
were wounded or taken prisoner; and 41 were awarded military crosses.
To those of you who may be interested, assuming that you can find a copy of it, I
recommend Colonel Roger MacLellan's book, Wave an Arm "Follow Me." It is
well worth reading.
The Normandy landings, honourable senators, started the drive that eventually liberated
Western Europe. When coupled with the Allied forces in Italy and Canada's prized and
somewhat adored 1st Canadian Infantry Division - those homegrown soldiers, the landings
brought disaster upon the German army of Hitler's Third Reich. Field Marshal Rommel, the
Desert Fox, said of D-day, "Believe me, the first 24 hours of the invasion will be
decisive...the fate of Germany depends on the outcome...for the Allies as well as Germany,
it will be the longest day."
In fact, it was on that "longest day" that victory was determined, and by
June 12 the Allies had established a bridgehead - a springboard of victory - that was 25
kilometres deep and 97 kilometres long. To those brave Canadian and Allied soldiers, some
55 years later, we say a very humble "Thank you."
Hon. Michael A. Meighen: Honourable senators, I wish to subscribe wholeheartedly
to what my colleagues Senators Balfour and Forrestall have said. I bow to their eloquence
and their knowledge of military history.
Having just returned myself from a trip to the Normandy beaches, I could not let today
pass without saying a word or two about that.
It was a trip, yes, but as I stood on the beaches at Bernières-sur-Mer and
Saint-Aubin-sur-Mer and Courseulles, it became sort of a personal pilgrimage. It became so
even more deeply when I went to the cemeteries at Cintheaux and Bény-sur-Mer and saw the
graves of some 5,000 Canadians who still rest in the soil of France, whose graves, I can
assure all honourable senators, are attended with the greatest interest, care and
affection by the inhabitants of those regions.
Today perhaps, knowing that most Canadians, for a variety of reasons, are unable to pay
a personal visit to what was certainly one of the turning-points of World War II, the
Battle of Normandy, I want to salute the work of one organization and one individual who
are doing their part to ensure that the heroism of the men and women we salute today does
not slide from memory. I am referring to the Canadian Battle of Normandy Foundation, in
which I know that our colleague the Speaker plays a very prominent role, and which has
done an outstanding job in ensuring that the role of Canada in the Battle of Normandy is
preserved for all time, principally through the memorial in Caen where, not to put too
fine a point on it, the role of Canada is somewhat understated. I know that this situation
is being rectified. Indeed, thanks to the efforts of the Canadian Battle of Normandy
Foundation, there is now a Canadian garden in the memorial that is a most outstanding bit
of recognition and testimony to the heroism of 55 years ago.
Finally, I want to signal the contribution of Professor Terry Copp, Professor of
History at Wilfrid Laurier University in Waterloo. Professor Copp is the author of a
number of books and articles on the role of Canadians in the liberation of Europe. For
anyone intending to visit Normandy, I cannot recommend highly enough his guide to the
battlefields of Normandy, which provides incredibly informative and interesting
information for the traveller. Certainly Professor Copp and the Battle of Normandy
Foundation, in taking students to that part of the world every year, deserve our greatest
support. I guess support can be expressed in a variety of ways - not only money, although
that is always welcomed by any foundation, but by following their work and supporting them
in their endeavours, so that those who did so much, who made the ultimate sacrifice for
us, will remain ever present in our memories and the memories of Canadians for generations
Sixth Report of the Standing Joint Committee
Hon. Céline Hervieux-Payette: Honourable senators, I have the honour to table
the sixth report of the Standing Joint Committee for the Scrutiny of Regulations on
instruments administered by the Department of Indian Affairs and Northern Development.
Hon. Terry Stratton, Chairman of the Standing Senate Committee on National
Finance, presented the following report:
Thursday, June 3, 1999
The Standing Senate Committee on National Finance has the honour to present its
Your committee, to which was referred Bill C-71, An Act to implement certain provisions
of the budget tabled in Parliament on February 16, 1999, has, in obedience to the Order of
Reference of Wednesday, May 12, 1999, examined the said bill and now reports the same
The Hon. the Speaker: Honourable senators, when shall this bill be read the
On motion of Senator Carstairs, bill placed on the Orders of the Day for third reading
at the next sitting of the Senate.
Notice of Motion to Authorize Committee to
Meet During Sittings of the Senate
Hon. Wilfred P. Moore: Honourable senators, on behalf of Honourable Senator
Milne, I give notice that, on Tuesday next, June 8, 1999, she will move:
That the Standing Senate Committee on Legal and Constitutional Affairs have power to
sit at 3:30 p.m. on Wednesday, June 9, 1999, and at 3:30 p.m. on Wednesday, June 16, 1999,
even though the Senate may then be sitting, and that rule 95(4) be suspended in relation
Abusive and Illegal Tax Collection Tactics-
Notice of Inquiry
Hon. Donald H. Oliver: Honourable senators, I give notice that, on Tuesday next,
June 8, 1999, I will draw the attention of the Senate to methods by which taxpayers in
Canada may be better protected from abusive and illegal collection tactics utilized by
Revenue Canada, its agents and employees, by reviewing the results of a similar study of
Appropriation of Federal Government Pension
Fund by Treasury Board
Hon. Ethel Cochrane: Honourable senators, I have the honour to present a
petition signed by 27 citizens of Canada, residents of Newfoundland and Labrador, who
petition the following:
We, the undersigned citizens of Canada, draw the attention of the Senate to the
THAT on February 10, 1999, Treasury Board President Marcel Massé announced that the
government would unilaterally appropriate the pension funds belonging to 670,000 current
and future retirees from federal departments, Crown corporations, agencies, the military
and the RCMP.
THAT this action is morally flawed because:
The pension funds are the deferred income of the employees;
Public Sector workers have accepted below market pay in return for decent pensions;
The morale of public service workers is, again, assaulted and undermined;
Therefore, on behalf of all Canadians who believe in fairness and social justice, we
call upon the Senate to:
Halt the plans of Treasury Board to unilaterally appropriate the surpluses in the
public service, military and RCMP pension plans;
Direct Treasury Board to end all actions which undermine the confidence and the morale
of public service, armed forces and RCMP personnel.
Proposal to Reduce Reserves-Possible
Elimination of the 84th Independent Field Battery- Government Position
Hon. Gerald J. Comeau: Honourable senators, my question is for the Leader of the
Government in the Senate. He will know that the province of Nova Scotia has taken its fair
share of Liberal government cuts, to fisheries, to Cornwallis, to the ferry service, and
the list goes on.
I have now learned that the 84th Independent Field Battery, based in Yarmouth, a
reserve artillery unit, may be eliminated by the proposed military cuts. Will the minister
assure the people of Southwest Nova Scotia that the 84th Independent Field Battery will
not be eliminated?
Hon. B. Alasdair Graham (Leader of the Government): Honourable senators, I am
not aware of any such move. I certainly shall bring my honourable friend's representations
to the attention of the Minister of National Defence
At the same time, I do not agree with the premise of the honourable senator's question
with respect to cuts made to Nova Scotia. Certainly sacrifices were made by all Canadians
early in the mandate. However, the result is a balanced budget that helps all areas of the
country, including Senator Comeau's home province of Nova Scotia.
Senator Comeau: Honourable senators, I bring this matter to the minister's
attention as there has been some talk of it. On the subject of the premise of my question,
I know the minister indicated last week that we might wish to discuss this matter in the
future. I would be glad to return to the subject, cut for cut, track for track, and thrash
it out at that point.
Senator Graham: I would be very happy to participate in such an engagement.
Conflict in Yugoslavia-Deployment of Ground
Troops- Number to be Assigned-Government Position
Hon. J. Michael Forrestall: My question is for the Leader of the Government in
the Senate. General Lewis Mackenzie indicated before the Standing Senate Committee on
Foreign Affairs the other day that, at a minimum, to maintain our national identity, we
should be sending a heavy battle group or brigade, which is directly in keeping with the
1994 white paper on national defence.
NATO has asked the Government of Canada for more troops and the Department of National
Defence has given the government its options. What are these options? How many troops and
from what units are we prepared to send them if they are to be required?
Hon. B. Alasdair Graham (Leader of the Government): Honourable senators, I do
not believe Senator Forrestall indicated a destination for the troops. I presume he means
A further request has been made by NATO, as he would understand. At present we have in
that area some 285 members of the Armed Forces attached to the CF-18s. We have 200 naval
personnel aboard the Athabaska. We have agreed to deploy 800 more troops to that
area. A request for more members of the Armed Forces is now under consideration by the
Government of Canada.
Search and Rescue Helicopter Offset Benefit
Program-Possible Contracts for Aviation Industry in Nova Scotia-Government Position
Hon. J. Michael Forrestall: I hope that consideration is being given to sending
a battle group or even to a somewhat lightened brigade.
Honourable senators, Atlantic Canada was promised$43.1 million in regional and
industrial benefits for the Canada search and rescue helicopter program, with over half of
the aviation industry in the region expecting $20 million to $25 million or some 4 per
cent of the revenue. To date, Nova Scotia has two proposed contracts and has received just
two offsetting contracts, one for $2.5 million and one for $440,000. Not one red cent has
gone to the aviation industry in Nova Scotia. We will be lucky to receive 2 per cent of
What is the minister doing to ensure that the terms of that offset benefit program and
the assurance given to Nova Scotia, in particular, will be followed through?
Hon. B. Alasdair Graham (Leader of the Government): Honourable senators, I am in
constant contact with the Minister of National Defence and the Minister of Industry and
other colleagues. However, I am not aware of the origin of the $43.1-million commitment to
which my honourable friend refers.
I wish to assure the honourable senator that ministers and other officials are actively
engaged in considering what benefits may accrue not only to Atlantic Canada but to other
parts of the country as a result of new procurements which I hope will be announced in the
Awarding of Contract for Replacement of Sea
King Helicopters-Request For Information
Hon. J. Michael Forrestall: I am about to ask the minister for his most recent
explanation of how long is "soon."
As I said the other day, I welcome very much the indication that the maritime
helicopter project has now been opened, although somewhat in secrecy, and I cannot for the
life of me understand why. Why, for example, has there been no announcement to this
effect? Why is it that we have not sent out a request for submissions from the interested
firms so that we might get on with this work?
Hon. B. Alasdair Graham (Leader of the Government): Honourable senators, such
procurement has not been officially approved by the government. It has certainly been
under consideration by defence officials and the Minister of National Defence.
With respect to secrecy, I am not aware of anything that is being done in a cloak and
dagger manner, if that is the proper way to characterize the situation to which my
honourable friend alludes. However, I wish to assure Senator Forrestall that while this is
very much a priority with the Minister of National Defence, there are currently other
events in the world that are preoccupying the minister.
Senator Forrestall: You have to be kidding. There is nothing more important.
Possibility of Back-to-Work Legislation for
Air Traffic Controllers-Government Position
Hon. Donald H. Oliver: My question is for the Leader of the Government in the
Senate. Would the leader comment on the growing speculation that Parliament will shortly
see draft back-to-work legislation for the air traffic controllers in the event they act
on their threat and walk out?
The honourable leader will be aware that government officials have told the National
Post that plans are underway to draft back-to-work legislation in order to keep
Parliament in session past next week's expected recess in the event that a strike or
Will the honourable leader tell us the current state of negotiations and when this
chamber may expect such a bill?
Hon. B. Alasdair Graham (Leader of the Government): Honourable senators, I can
only say that negotiations are continuing. We are hoping that a positive solution will be
reached so that back-to-work legislation will not be necessary.
Hon. Douglas Roche: Honourable senators, my question is to the Leader of the
Government in the Senate. It appears that a group of MPs will hold a rally on Parliament
Hill on June 8, 1999, for the purpose of building public support to abolish the Senate.
What is the position of the Government of Canada on this rally?
Is the government prepared to tell the people of Canada about the work of the Senate?
For instance, in the past eight months alone, 21 Senate committees held a total of 414
meetings, for 778 hours, heard 1,194 witnesses, and issued 79 reports.
Hon. B. Alasdair Graham (Leader of the Government): Honourable senators, Senator
Roche has quite eloquently responded to his own question. I believe it is incumbent upon
all honourable senators to get that message, a similar message or even an enhanced message
out to the public.
There is a great deal of misunderstanding in Canada regarding both the work and the
role of the Senate. Again, it is incumbent upon all of us to participate in getting the
message to the public.
Effect of High Taxes on Attracting New
Businesses-Possibility of Reductions-Government Position
Hon. Terry Stratton: Honourable senators, my question is addressed to the Leader
of the Government in the Senate. Last month we received yet another warning about taxes.
Along with the CEO of Nortel, Canadian Pacific Chairman, Mr. David O'Brien, has said that
CP may have to move some of its head office operations to the U.S. because it simply
cannot attract and keep the talent that it needs, given Canadian tax levels. This follows
April's statement by John Roth, Chief Executive Officer of Nortel, that his company may
have to move to the U.S. because our tax laws are driving employees that his company needs
to leave for the United States.
Why is the Minister of Finance unwilling to concede that our tax laws are contributing
to a major brain drain that is just not leading to an exodus of talent, but which could
also force companies that rely upon that talent to leave as well? Why is the Minister of
Industry alone in recognizing that we have a problem?
Hon. B. Alasdair Graham (Leader of the Government): Honourable senators, the
Minister of Industry is not alone in recognizing that we have a problem. Everyone in the
country recognizes that we have a problem.
I think we should examine Mr. O'Brien's comments very carefully and heed what he says.
He says that workers will go where salaries are higher, taxes are lower and opportunities
are greater. If our industries cannot compete on a salary or opportunity basis, no amount
of tax cuts will make one shred of difference.
I would reiterate that in a speech to the Finance Committee hearings on productivity,
the President of the Business Council on National Issues or BCNI called our health care
system a competitive advantage. He is acknowledging that by securing the future of
Canada's health care system, our government is helping employees decide where to work. He
suggests they should base their decisions, at least in part, on the strength of the
medical system in Canada, the quality of life in Canada, and other such attributes of
which we are so proud.
Senator Stratton: The question still boils down to taxes. These two chairmen
talk about taxes, full stop.
According to a new Industry Canada study, Canada has a productivity gap with the United
States that ranges from 4 per cent in mining to 30 per cent in manufacturing. The Minister
of Industry has been very vocal and is calling for tax cuts to help make Canada a more
competitive place to do business. He realizes that we will not be able to attract foreign
capital without tax relief. He realizes that our current tax regime is driving Canadians
out of the country. He realizes that high taxes do not encourage investment in new
machinery and equipment. When will the Minister of Finance come to the same conclusion and
introduce major tax cuts that will both spur investment and end the brain drain?
Senator Graham: Honourable senators, a total of $16.5 billion in tax cuts over
the next 36 months was announced in the last budget. I believe that is a good start for a
long-term tax reduction strategy.
I think we all agree that there is a need to cut taxes in Canada, but we will not do it
at the expense of our health and our education systems. It was clear before the
introduction of the last budget that the first priority for Canadians was an improved and
a better-funded health care system.
Could there have been larger tax cuts if we had not invested $11.5 billion in the
health care system? Absolutely, but we would have been ignoring the clear wishes and needs
of Canadian citizens.
Use Of Surplus in Employment Insurance
Hon. Terry Stratton: Honourable senators, while the honourable leader is
bragging about $16 billion worth of tax cuts, the government is taxing Canadians $5
billion a year more than is needed in EI premiums to balance the books. Over three years,
that is $15 billion. That is what is paying for the tax cuts.
Hon. B. Alasdair Graham (Leader of the Government): Honourable senators, in the
last two budgets, the Government of Canada began to implement broad-based, personal tax
relief and committed to further reducing taxes for Canadians as resources permit.
Canadians are looking for personal income tax cuts before other tax cuts, but we are on
the right track. That is why we are able to balance the budget and create 1,600,000 new
jobs in this country.
Senator Stratton: Remember, honourable senators, that the current government did
not create the surplus. The people of Canada created that surplus. Anytime my honourable
colleagues stands up and talks like that, I will take him on. The people of Canada made
the sacrifices, and the people of Canada paid the price.
Senator Graham: I could not agree with my honourable friend more. The people of
Canada created the surplus under a Liberal government, and through the responsible fiscal
management which was brought to this country by this government.
Foreign Publisher Advertising Services
Agreement-Request for Copy
Hon. Noël A. Kinsella (Deputy Leader of the Opposition) : Honourable senators,
could the Leader of the Government in the Senate advise this house whether he has seen a
draft of the agreement that is supposed to exist between Canada and the United States with
reference to the split-run magazine matter?
Hon. B. Alasdair Graham (Leader of the Government): No, honourable senators, I
Senator Kinsella: Does the minister expect to see a draft copy of the agreement,
or does the minister expect to wait to see a copy of the agreement when it is signed? If
it is the latter, when does the minister expect that the agreement will be signed? If it
is eventually signed, will the minister undertake to see that it is tabled in this house?
Senator Graham: Honourable senators, I understand that the signing is just a
matter of days. As a matter of fact, perhaps it is being signed as we speak.
Senator Lynch-Staunton: Who cares?
Senator Graham: I do not claim to have any first-hand knowledge of that, but I
would be very happy to table the document as soon as it becomes available.
Resuming debate on the motion of the Honourable Senator Callbeck, seconded by the
Honourable Senator Cook, for the third reading of Bill C-72, to amend the Income Tax Act,
to implement measures that are consequential on changes to the Canada-U.S. Tax Convention
(1980) and to amend the Income Tax Conventions Interpretation Act, the Old Age Security
Act, the War Veterans Allowance Act and certain Acts related to the Income Tax Act.
Hon. Terry Stratton: Honourable senators, in the 15 seconds it will likely take
me to read this sentence, a further $2,500 will be added to the accumulated surplus in the
Employment Insurance Fund. While the bill before us makes some minor income tax cuts each
and every day, the EI surplus grows by $14 million, as businesses and their employees pay
far more in premiums than they need to. Put another way, each and every day the EI surplus
grows by the equivalent of the cost of meeting the annual payroll of a business with 350
employees. What we now have with EI is a tax disguised as a premium, and what we have with
this bill is a shell game.
Honourable senators, the minor tax relief in this bill is more than offset by
unnecessarily high EI premiums. This year, EI revenues will total $20 billion, while
expenditures will only equal $15 billion, for a total surplus on the year of $5 billion.
Add this to all the surpluses from past years, and the employment insurance account will
have an accumulated surplus of just under $26 billion by the end of this fiscal year. At
that rate, it is a very safe bet that by the end of the next fiscal year, the surplus will
be well over $30 billion. This is almost certain to happen unless the government does what
it has so far refused to do - bring premiums down to the level actually needed to run the
This bill should have a clause making it illegal to overcharge Canadians for employment
insurance. By the end of next year, the overcharging since 1993 will be equal to the cost
of two years' worth of benefits.
The government may boast all it wants about this bill being one of several that will
make law tax cuts from its last two budgets that it claims will total some $16 billion
over three years. The problem is that it also plans to overcharge Canadians over the same
period by roughly the same amount for Employment Insurance. This government is
overcharging Canadians for a program that now pays benefits to only one out of three
jobless Canadians. Would honourable senators voluntarily buy collision insurance from a
company that only covered one crash in three? I do not think so. You would take your
Employment insurance premiums are supposed to pay for employment insurance benefits -
but not under this government. They are now a major source of revenue for the government.
If the government were a business, this program would be called a profit centre.
Honourable senators, there is no question that taxes are too high, and I include sales
taxes, property taxes, income taxes, probate fees, custom duties and payroll taxes. If one
were to add up all the charges levelled by all three levels of government one would see
that they account for almost one-half of what we earn. Payroll taxes are one of the worst
ways to raise money, as they bear little or no resemblance to the ability of either the
employee or the employer to pay.
Before he became addicted to EI premiums, the Finance Minister thought payroll taxes
were a problem. In his first budget back in February 1994, the minister told us that
"payroll taxes are a barrier to jobs."
Honourable senators, this was a familiar refrain in the government's first year or so
in office. Later that year, we were told in the orange book, or Building a More
Innovative Economy as it was officially known, that "payroll taxes raise the
relative cost of labour, creating a disincentive for firms to create jobs." Later in
1994, we were told in the purple book, known officially as A New Framework for Economic
Policy, that a payroll tax "raises unemployment relative to the situation in
which there is no tax or a lower tax." Finally, just before he brought down his 1997
budget, Paul Martin told a CBC town-hall meeting that "there is no doubt that when
payroll taxes rise, that can have an effect on jobs."
Let us take a look at the payroll taxes that Canadians have paid since this government
was elected. In 1993, a working Canadian faced combined Canada Pension Plan and EI
premiums of $5.50 for every $100 of salary. This year, payroll taxes will take out $6.05
for every $100 worth of earnings. The government keeps telling us that EI premiums have
fallen from $3 per $100 of earnings in 1993 to $2.55 this year. They ignore the fact that
premiums could drop to $2 and still cover the cost of the program. They do not like to
remind us that Canada Pension Plan premiums have jumped substantially under this
government. In 1993, employees paid CPP premiums of $2.50 per $100 of earnings. This year
they will pay $3.50. Add it up, honourable senators, and you will find under the Liberals
that combined CPP and EI premiums have jumped from $5.50 to $6.05 per $100.
If the government sticks to the EI premiums assumed in the budget for planning
purposes, then next year the combined premiums will be $6.45.
There has not been one year in the six since this government took office where working
Canadians have seen their payroll taxes decrease. The best year they faced of the last six
was 1998 when EI premiums were reduced by exactly the amount needed to offset rising CPP
premiums - no gain for the taxpayer and only one year in six when there was no additional
These premiums come out of the pockets of working Canadians. The EI actuary tells us
that at least 55 cents of that money is not needed. Premiums could be cut back to $2 and
the program could still be run in the black. This government is taking more than $200 per
year out of the pocket of someone earning an average wage.
Then, honourable senators, there are the payroll taxes paid by employers. For
employers, combined CPP and EI premiums have climbed from $6.70 to $7.07 per $100 of
earnings. Business taxes can only be paid in one of three ways.
First, they can be reflected in lower profits. In the case of the small business
operator, this results in less money for his or her family at the end of the year. In the
case of larger businesses, this is reflected in lower earnings, which means less money to
reinvest and lower returns to shareholders. The days are long gone when only the
wealthiest Canadians were shareholders. Today, equity markets affect more ordinary
Canadians than ever, thanks to the growth of retirement savings and pension plans.
Business taxes are increasingly becoming taxes on retirement savings.
Second, business taxes, including payroll taxes like EI and the CPP, can be reflected
as higher prices, if the business can pass them on.
Third, payroll taxes can translate into lower wages and fewer jobs, if the business is
in a position to dictate wages, or if hard decisions must be made about payroll costs.
Honourable senators, the government's refusal to lower premiums is, frankly, a bit
surprising, given the way it allows polls to drive its agenda. On February 20, the National
Post reported the results of a Compas poll on Employment Insurance. It said that as
many as 71 per cent of Canadians believe the federal government should only collect as
much money as it needs to run the program.
The Kitchener-Waterloo Record noted in an editorial last December 3 that:
Finance Minister Paul Martin may understand politics but he has real trouble
understanding words such as employment, insurance and premiums.
No other conclusion could be reached after Martin refused this week to lower Employment
Insurance Premiums to a level that would be actuarially sound, neither too high nor too
low to get us through the next recession.
Honourable senators, after a few paragraphs outlining break-even premium rates, the
What Martin is really saying is that the premiums are not premiums at all, they are
just another tax. This concept of unemployment insurance premiums would have surprised
federal officials when Ottawa formally took over constitutional responsibility for
Unemployment Insurance in 1940. They thought they were going to run an insurance plan.
The Toronto Sun noted in an editorial on the same day that:
If Martin isn't listening to taxpayers, isn't listening to business and isn't listening
to his own actuary, what possible basis does he have for taking so much of our money?
None, except politics. Martin says he hopes to keep cutting EI premiums "every
year." In other words, right up to the next election.
Right. He'll have nickel-and-dimed us all to death by then.
I will leave the final word on this subject to a publication that has long been known
for its unwavering support of the Liberal Party. My apologies in advance to the
interpreters, who I hope can do justice to what follows.
Last December 3, The Toronto Star stated in an editorial:
The Chrétien government made a mistake when it changed the name of Unemployment
Rather than calling it Employment Insurance, Ottawa should have named it the Liberal
About Face Fund, or LAFF.
Even though Finance Minister Paul Martin is collecting $7 billion a year more in
premiums than is needed to pay for jobless benefits, he had decided to reduce
contributions next year by only one-seventh of that amount.
Better than nothing, he'll say with a LAFF.
Honourable senators, a few paragraphs later, the editorial concludes by stating:
With so much funny paper, Martin's budget will doubtless be a barrel of LAFFs.
Lastly, honourable senators, there is nothing funny about this government's failure to
bring both meaningful, broad-based tax relief and employment insurance premiums down to
the level actually needed to run the program.
This bill is simply not good enough.
Hon. Noël A. Kinsella (Deputy Leader of the Opposition): Honourable senators, I
should like to make a few observations on Bill C-72. The focus of my remarks relates to
students who are either in our universities or who have left with an indebtedness that
would frighten any member of this chamber, I am sure.
Although budget documents in the past have contained measures such as the Millennium
Scholarship Fund, they have not effectively responded to the concerns of students who have
completed university, community college or other programs and are left with enormous debt.
We must face up to that indebtedness. Students whom I have personally had the privilege of
teaching have been indebted in the range of $30,000 to $40,000.
Often, students who meet on campus during the course of their studies fall in love,
marry, and want to begin a family. Suddenly, they are faced with $60,000 of indebtedness.
If we had started our careers with a $60,000 debt, how quickly would we have entered the
housing market? This is a national problem, created by methods for financing education
that have evolved over the years.
A number of the measures in the budget address problems of accessibility. There remains
grave concern in the university and college community across Canada. We must assess the
core funding of these institutions in terms of our national educational objectives. We
must also examine the indebtedness that the current system imposes on young people trying
to prepare themselves for the 21st century.
The programs that have been announced to reduce loan principal, for example, do not do
much to help Canadian students who, having completed their programs of study, are
harnessed with horrendous debt. The only group being helped by the indebtedness of this
community of Canadians is the financial institutions.
We must find creative solutions to this problem. Perhaps the government should consider
rolling together first entry into the housing market and student indebtedness. For
example, if a first entry into the housing market requires a $100,000 mortgage and that
student has indebtedness of $30,000, perhaps the answer is a $130,000 mortgage, insured
the way the Canada Mortgage and Housing Corporation insures mortgages, so that the student
would be able to pay off student debt and mortgage with one monthly payment. That is but
one idea that might attract the interest of the government. We need creative solutions to
deal with the problem of indebtedness.
Honourable senators, a great number of students across Canada are expecting to obtain a
post-secondary education. That expectation is held not only by individual students but
also by Canadian society as a whole, as we enter the 21st century. There is a common good
to be achieved if our students become the best technologists and academics in our global
In order for our students to be able to study and achieve excellence, we must provide
them with the necessary financial resources. In Canada, responsibility for funding
post-secondary education has traditionally been shared among parents, students and, to a
significant extent, provincial and federal governments.
Since 1980, tuition fees in Canada have increased by 115 per cent, whereas
inflation-adjusted family income has increased by only 1 per cent. Increases in tuition
fees have been mammoth. The social consequences of that tremendous burden will be felt in
the housing market. As we all know, the economy is very active when there is a thriving
Government loans are one way in which governments invest in the future of students.
Student loans provide indispensable financial assistance to 80 per cent of Canadian
university students. These loans are not risk-free. The level of student indebtedness is
increasingly cause for concern and may be creating serious problems for borrowers and
Average indebtedness among students obtaining a first degree in 1982 was $5,260. In
1998, this figure had risen to over $25,000. The 1998 winter edition of Statistics
Canada's "Canadian Social Trends" included the 1995 national graduate survey of
43,000 students in professional, university and college training programs. That survey
indicated that, among 1995 graduates from college or first-degree programs,
inflation-adjusted government student loan indebtedness was between 130 per cent and 140
per cent higher than for the class of 1982. This is a very serious problem, and one that
is affecting the fabric of Canadian society economically, socially and culturally.
The Statistics Canada data also indicates that, two years after graduation, 1995
graduates from college and first degree programs had repaid a smaller proportion of their
loans than had the class of 1990. For example, by 1997, the 1995 graduates had repaid only
19 per cent of their loans, while the 1990 graduates had repaid 35 per cent. That
indicates that the more recent graduates, with the bigger indebtedness, are finding it
tougher to repay.
Similarly, 1995 graduates from first degree programs have repaid only 17 per cent of
their loans, in comparison with27 per cent for the class of 1990. These figures mean that
the 1995 graduates will certainly need more time than did classes of previous years to
repay their loans.
Honourable senators, I submit once again that the government must come up with some
very creative and innovative programs for these Canadians, who wish to have the best
education they can achieve and are being encouraged, if not pushed, by society, which
wants them to be the best and the brightest. Through no fault of their own, and because of
the system for the financing of post-secondary education, we have harnessed them, chained
them, fettered them to a financial burden that no one in this chamber would wish to have
hanging around their neck. Creativity throughout all branches of government, and
federal-provincial meetings that address this issue of indebtedness must be the order of
Honourable senators, I have established that growing student indebtedness in Canada is
worrisome, if not a national crisis. If nothing is done to remedy the situation over the
next few years, the prospect of heavy indebtedness could discourage more and more students
from entering post-secondary education programs, or force them to drop out before they
complete their studies. It could also influence a graduate's plans to buy a house, which
is the example I gave a few moments ago, or furniture or, in a society which demands that
we be mobile, the expense of an automobile. If you have a $30,000 debt, how quick are you
likely to go out and buy a car? How quick are you likely to go out and buy furniture? The
system has led to a fettering of these generations of young Canadians who provide the
demand that fires the economy in terms of the supply.
The situation, honourable senators, is potentially subject to aggravation by the fact
that students may see their prospects of finding a job soon after graduation an impediment
in itself. That is to say, in my province, there has been a great deal of job creation.
The job creation, particularly in the small centres, has been in minimum wage types of
jobs. The Canadians I am speaking of, those who have invested in technological or other
academic areas and are harnessed with an indebtedness of $30,000 to $40,000, cannot take a
job at minimum wage and expect to pay off their student loan.
Consequently, a number of graduates, particularly in the high-tech fields and a number
of academic fields, have responded in what way? They have left Canada. That does not make
sense. If we are investing in students' education, both federally and provincially,
through the infrastructure of our institutions, plus through investment in the various
support programs, plus through loan programs, Canadians and Canadian society are losing
the benefit of those investments. In most cases, it is the United States and its economy
that is benefitting. That does not make much sense. That speaks to the issue of our
burdensome tax system and our system of financing higher education.
In my opinion, the tax measures of this government will do nothing to relieve student
indebtedness in Canada, at least nothing that I have seen presented to us. There has been
very little creativity, and that is the challenge. This sobering fact is unworthy of us as
a country, where access to education is accepted by each and every one of us as a
universal value, and it is a value which must be fulfilled. It is a programmatic right.
Hon. P. Derek Lewis (Acting Speaker): Senator Kinsella, I am sorry to have to
advise you that your time has expired, unless you wish to ask for leave to continue.
Senator Kinsella: No, I will stop.
On motion of Senator Kinsella, for Senator Meighen, debate adjourned.
Resuming debate on the motion of the Honourable Senator Kirby, seconded by the
Honourable Senator Cook, for the second reading of Bill C-78, to establish the Public
Sector Pension Investment Board, to amend the Public Service Superannuation Act, the
Canadian Forces Superannuation Act, the Royal Canadian Mounted Police Superannuation Act,
the Defence Services Pension Continuation Act, the Royal Canadian Mounted Police Pension
Continuation Act, the Members of Parliament Retiring Allowances Act and the Canada Post
Corporation Act and to make a consequential amendment to another Act.
Hon. Terry Stratton: Honourable senators, Bill C-78 essentially does three
things; all without the consent of the members of the pension plans of the public service,
the RCMP and the military.
First, it allows the federal government to take as its own the entire $30-billion
surplus that has been accumulated in these three pension plans. This was the primary focus
of the debate on this bill in the other place.
Second, it changes the way those pension plans operate, mainly by allowing the funds to
be invested in the market-place by the investment board which will be created through this
Honourable senators, the accountability regime set out for that board is surprisingly
weak. One would have expected something better from the Treasury Board, of all
The Public Sector Pension Investment Board is modelled on the CPP Investment Board. It
would appear that the government has ignored the recommendations for changes to that board
made by the Senate Banking Committee.
Third, it makes a number of changes to the plans themselves, in areas such as funding
My remarks this afternoon will primarily concern the way the government has treated the
public service. I believe that Senator Tkachuk will speak later to issues of
accountability and pension plan governance.
Honourable senators, the first and most controversial issue surrounding Bill C-78 is
the government's decision to take back the $30-billion surplus that these three plans have
The government tells us that it has a legal right to claim the entire amount on behalf
of the taxpayers of Canada. We are told that this is appropriate, since the government is
responsible for any deficits in the plan and, indeed, has met such deficits in the past.
However, those with an interest in this surplus, the retirees and the unions speaking on
behalf of the employees, tell us that, if the government already had a legal right to the
surplus, it would not need legislation to claim it.
Honourable senators, they challenge the government's assertion that it has ever met
such a deficit, on the basis that the government simply wiped out the accounting deficit
that arose in the mid-1980s by using an offsetting interest-income surplus. No direct
extra contributions were ever made, we are told.
It must be remembered that in 1982 the Liberal government of the day rolled back
inflation-related increases in public service pensions as part of a public relations
exercise known as the "Six and Five" program.
What assurances do we have that the government, having stripped the surplus, will not
reduce benefits or further increase premiums, should the plan run a deficit? Indeed, it
could create a surplus any time it wants by reducing benefits.
Unlike private sector employers, the government can change the rules of the pension
plan any time it wants to do so simply by passing a bill.
Indeed, honourable senators, in speaking to the second reading of the bill, which
imposed the "Six and Five" program on the public service pensions, Senator
Olson, then Leader of the Government, told us at page 5279 of Hansard of January 26, 1983,
Changes can be made to the relevant legislation to reflect varying economic conditions.
Economic conditions are always varying. Interest rates are up, and then they are down.
Inflation is up, and then it is down. The stock market is up, and then it is down. It is
the same with the bond market.
Honourable senators, if the government were subject to the same pension laws as the
private sector, it would have no legal basis on which to claim the full surplus. In fact,
it would need the permission of two-thirds of plan members to do anything with that
surplus. It was only last year that we made the law for private sector plans that fall
under federal legislation, when we passed Bill S-3.
The government keeps telling us that nowhere in the public sector is there a case where
employees share in the surpluses but not in plan deficits. Private sector employers are
responsible for meeting plan deficits, but they cannot touch the surpluses unless they
come to some kind of sharing agreement with the employees. However, this government does
not subject itself to the same laws that apply to the private sector. There is a double
We are being warned that this could prompt other employers to seek changes to the
Pension Benefits Standards Act that would allow them to take the surplus out of their own
defined benefit plans, without the need to seek consent of their employees. I am not sure
how the government will be able to look them in the eye and say "No" after
changing the rules for itself.
The retirees and the unions tell us that the only reason that there is a $30-billion
surplus is that the premiums over the last few years were set too high. Too much has been
contributed to the fund. One reason that they were set too high is that wages did not rise
as fast as expected. For example, as a result of a six-year wage freeze, the pensions of
new retirees are lower than the actuaries thought they would be.
The retirees and the unions would prefer that the surplus be used to improve benefits
or to forestall the anticipated premium increases that will occur over the next several
years. Combined with those of the Canada and the Quebec Pension Plans, these premiums,
currently 7.5 per cent of salary, could hit 11 per cent by the year 2010.
I am not sure how attractive the public service will be to young Canadians given the
combination of an 11 per cent pension charge and wages that have fallen well below those
of the private sector. Nor will this help the government meet the challenge of retaining
its existing employees, many of whom are already taking their skills to better-paid jobs
We are told, in the words of a petition to Parliament currently being circulated by the
Public Service Alliance, that:
This action is morally flawed because:
The pension funds are the deferred income of employees;
Public sector workers have accepted below market pay in return for decent pensions; and
The morale of public sector workers is, again, assaulted and undermined.
Honourable senators, the $30-billion surplus question has been the most controversial
issue, but it is not the only issue. Indeed, there are a number of other substantive
issues, such as joint management of the plan and how the board will be governed. Many of
these issues stem from the process leading up to this bill.
The government is proceeding with major changes to its pension plans without the
agreement of its employees. Discussions with the public service unions on changes to the
plan failed to lead to an agreement, with talks breaking down over the pension surplus
The war of words we now see reflects a very bad labour relations climate. For example, TheOttawa Citizen of April 26 tells us:
Treasury Board President Marcel Massé accuses "the unions of deliberately
scuttling a deal negotiated last January, for a new jointly managed pension plan because
they, `didn't want to take the heat' from their members for giving up the surplus in the
Honourable senators, the same article has Steve Hindle, president of the Professional
Institute of the Public Service of Canada, responding:
We didn't walk from that table to avoid the heat. This is about an equitable
distribution of the surplus and giving up $30 billion to the government was not a deal for
Honourable senators, pension lawyer Fiona Campbell said in the May 3 Ottawa Citizen
This bill is unprecedented. I'm not aware of pension legislation of this magnitude in
both what it's trying to do and in how quickly it's being done with no input from the
Honourable senators, even if you accept the government's arguments that the unions
scuttled a deal, you must remember that this bill applies to more than just the public
service. It also applies to the RCMP and to the military.
In testimony before the Government Operations and Natural Resources Committee in the
other place on May 4, Mr. Kevin MacDougall from the RCMP Divisional Staff Relations said
at a pension advisory meeting in November:
We were told that nothing would happen to the RCMP plan unless a full consultation was
Honourable senators, after stopping briefly to answer a question, Mr. MacDougall
continued. He said:
We were told on January 21 that the legislation was drafted and we would be given
absolutely no opportunity to input. As a result of that, we had various meetings with
senior management and they also informed, in fact confirmed in writing yesterday, that
they, as senior management of the RCMP, had been given no opportunity to input. In fact,
there has been no "meaningful consultation with senior management as well."
Now how does that look to the members of the RCMP? Our members are from coast to coast,
we work hard out there, pensions are very, very important to police officers yet the
government is signalling changes, it's about to make changes, dramatic changes to our act,
and they haven't even consulted with, not only the representatives of the members, but
they haven't provided any meaningful consultation with senior management.
Mr. MacDougall then went on, on behalf of his members, to ask that the parts of the
bill dealing with the RCMP be put aside so that they could have time to provide some
In committee, I would like government witnesses to respond to Mr. MacDougall's
testimony. I would like to hear a satisfactory explanation as to why the government made a
promise to consult the RCMP in November, and then broke it in January.
I would like a satisfactory explanation as to why the government failed to include
representatives of the RCMP and the military in its discussions, and why they are being
punished for the breakdown in talks with the public service unions.
Honourable senators, for couples who are not legally married, Bill C-78 introduces a
new definition of "spouse" based on conjugal relationship, in place of the
opposite-sex, common-law concept we now have. The courts have said that the survivor
benefits now provided to common-law heterosexual couples must also be extended to same-sex
I want to be careful in raising this subject, as I do not want to detract from my main
message of fairness, process and accountability by inviting a headline that reads,
"Senator rants against same-sex benefits." This is not a rant against anything.
What I want to do is draw the Senate's attention to the fact that arguments have been
advanced that, as presently worded, Bill C-78 could end up creating yet another round of
work for the legal community. These further problems concern not the bill's intent but the
For example, the Federal Superannuates National Association, in testimony before the
other place, noted a problem, in that the final decision on whether there is a conjugal
relationship rests with the minister - I wonder how honourable senators would like that
decided for them by a minister - with no right for the survivor to present his or her case
and with no process of appeal spelled out in law. In committee, we may want to examine
this, and to see whether there are ways in which to manage the application process that do
not deny fair process.
It is not hard to see some lawyer arguing, somewhere in the country, that, since the
conjugal-relations rule does not apply to formally married couples, it ought not to apply
to common-law married couples.
I am also told that the bill as drafted may present problems for common-law couples who
at some point cease to have conjugal relations for reasons of health or who cease to
cohabit because they have been placed in separate nursing homes. Concerns have also been
raised about how the bill treats pensioners who remarry.
These matters were raised in committee in the other place a month ago, yet the
government's initial response was to shrug its shoulders and to say that it is the best we
can do. I would hope that in the intervening month - a short time now - the government has
taken a second look at these concerns and will either be able to provide factual
assurances that there are no problems or to offer amendments to deal with them. Otherwise,
I very much fear that this bill will turn into a job-creation program for Department of
Justice lawyers and other lawyers across the country.
In closing, honourable senators, I want to say that I am more than a little concerned
about the state of labour-management relations in the public service. This bill will not
help. It will just extend the present problems and create further and greater ones.
This marks the third time this spring that the government has asked the Senate to
ignore the very strongly voiced concerns of its employees. The two other cases were the
Revenue Canada Agency Bill and the imposed settlement set out in the blue-collar
back-to-work bill. I hope this is the last time.
Hon. David Tkachuk: Honourable senators, Senator Stratton has already outlined
the issues concerning the government decision to dip into the pension plans of its
employees. Senator Stratton and I are sharing the obligations on this bill. It is such a
bad bill that he ran out of negative adjectives to use. Knowing my propensity for negative
adjectives with regard to the Liberal government, he asked me to assist him and take the
other half of the bill. I can assure him that, after reading the bill, I am pleased to be
able to do so, because this bill has bad concepts, bad principles, and it writes bad law.
Senator Kinsella: There is nothing good in it?
Senator Tkachuk: That is right. I could not find anything good in this bill. It
is such bad law that the courts will be making the law for us, rather than, as it should
be, the other way around.
Today I will address the issues of governance and accountability that arise from Bill
Honourable senators, the original plan was for a pension investment board that would
report to a joint management board. If the investment board created by this bill were
jointly managed by the employer and the employees, then issues such as who should audit
the plan would be less relevant because both sides would bear the costs of bad decisions.
The unions and the retirees want to be represented on the board. They fear that their
participation in the advisory committees that will select the nominating committees that
will put forward names to the minister will be meaningless.
We have heard this before concerning the CPP plan.
James Baglow of the Public Service Alliance noted the following in an April 16 press
Is this government afraid that if there is a joint union management board they will
have to give consideration to the people to whom the money belongs-the retirees and the
The deficit has already been fought on the backs of these workers and former workers.
They have endured frozen wages for more than six years, massive job cuts through direct
layoffs or privatization and continuous delays in the implementation of pay equity.
Now they are watching their employer, the federal government, bring in legislation that
would deny them any say in their future.
Honourable senators, the government's answer is that the bargaining agents walked away
from the agreement that would have given them representation. The unions were not willing
to give up the surplus in exchange for representation on the board, so, as far as the
government is concerned, they can forget about both the surplus and the joint board. They
can have neither.
What kind of an attitude is that on the part of the government? Is it any wonder that
labour-management relations in the federal public service are in such a mess? Is it any
wonder that morale is so low?
What of the RCMP and the military? Why are they to become casualties of the
government's war on the public service?
Honourable senators, the bill as drafted does not even allow the option of a joint
management agreement in the future. Bill C-78 even forbids anyone either now receiving a
pension or entitled to a future pension from sitting on the board of directors.
In committee, I would like the President of the Treasury Board to explain why the
government did not even have the door open to an eventual agreement.
What rules should apply to a board that is not jointly managed? What should be the
qualifications of its directors? What is an appropriate level of transparency? Have we not
heard all these questions before?
Honourable senators, let me cite an example of why we should be asking ourselves these
kinds of questions. Bill C-78 sets up a complicated process for nominating directors,
where advisory committees select a nominating committee, which, in turn, puts forward
names to the minister, who, in turn, takes his or her own choice of names from that list
to cabinet. Presumably, this is to make it harder to appoint someone from, say, the
Hull-Aylmer Liberal Association or the Assiniboia-Gravelbourg Liberal Association to the
board of directors. I do not think so. The only guideline, according to clause 10 of the
bill, is that the nominating committee have regard to:
...the desirability of having on the board of directors a sufficient number of
directors with proven financial ability or relevant work experience such that the Board
will be able to effectively achieve its objectives.
Honourable senators, we all qualify.
Bill C-2, the legislation setting up the Canada Pension Plan Investment Board, had a
similar clause, and this gave rise to concern that it opened the door to the appointment
of a board that lacked the necessary skills to carry out their duties. Can someone
opposite tell us what constitutes a "sufficient number," and can someone
opposite define "proven financial ability"? As currently worded, the end result
of this bill could be a board where no one knows the first thing about pension fund
management or about such basic matters as what an actuary is or what an auditor is.
Indeed, given that the guidelines are expressed only in terms of "desirability,"
the board could also end up having no members with proven financial ability. When
investment managers start to talk about risk management, derivatives, valuations and IPOs,
my guess is that, for most of them, their eyes will glaze over.
In its study of the Canada Pension Plan Investment Board last year, after listening to
experts in the field of pension and board governance, the Senate Banking Committee
Directors of the Canada Pension Plan Investment Board, collectively, have a broad range
of experience and expertise. While the benefits of appointing directors with proven
financial ability are clear, the Committee believes that a majority of directors should
have expertise in pension fund management and other relevant skills.
Honourable senators, the government would have done well to keep that recommendation in
mind when it drafted this bill.
We may also want to have a close look at the investment regime for this bill. Within
two decades, this fund will become one of the largest in the country, with investments in
excess of $100 billion. To put this in perspective, excluding blocks that never trade, the
capitalization of the TSE is $650 billion. The board's investment decisions will have a
major impact on individual share prices.
We were extremely concerned about that when the government set up the CPP board. Now we
will have two boards, both based here in Ottawa. That is in another part of the bill. The
headquarters must be in Ottawa. They will have a tremendous impact on the financial
markets in this country.
We are told that allowing pension funds to be invested in the market-place will
increase the investment income of these funds and thus reduce the premiums needed to pay
for public sector pensions. It is amazing how they are interested in the premiums of the
workers and how much they have to pay towards the sectors, while at the same time they are
taking $30 billion that they could use to reduce premiums and putting it into the
Consolidated Revenue Fund.
In clause 50, the government even retains the power through Order in Council to
determine what percentage of their investments are to be placed in Government of Canada
bonds. We will have a board at arm's length except when we tell it where to invest. It
also has the power to set a time period during which it may only invest in broad market
The President of the Treasury Board will need to tell us why it is appropriate to force
the fund to invest one nickel in federal government bonds, given that employees, who have
no say in the fund's management, pay for lower returns to the tune of 40 cents on the
dollar. Provincial bonds usually have greater returns.
Has any thought been given to how long it would be appropriate for this arm's-length
board to invest in broad market indices, or for that matter whether it would be an
appropriate longer-term strategy?
The bill requires that the board establish an investment committee, and it gives no
direction as to whether investment ought to be passively or actively invested.
We are told that the board is to maximize returns without undue risk. Can someone
opposite tell us what constitutes "undue risk"?
Clause 50 also gives the cabinet extensive regulatory powers in the area of
derivatives. Derivatives are fairly complicated. If the cabinet is responsible for this
bill, I would hate to think that they will be giving advice on derivatives. Should that
not be the subject of parliamentary scrutiny?
The legislation gives the board power to establish investment policies and standards
that a person of ordinary prudence would exercise in dealing with the property of others.
Should the standard for a professional board managing a portfolio of more than $100
billion not be a bit stronger than "ordinary"?
The RCMP has tremendous investment concerns in this bill. Kevin MacDougall from the
RCMP Divisional Staff brought to the attention of the Government Operations and Natural
Resource Committee in the other place, on May 4, the following concerns. He said:
We were called in as the national police force to investigate the Bre-X alleged fraud
and we wonder how we could possibly do that if we had millions of dollars in Bre-X itself.
It would be alleged, certainly, by some of the people, the owners of Bre-X, and the
directors, that we were in a conflict and couldn't investigate it.
Mr. MacDougall went on to cite another example, that of when the RCMP were called upon
to allow replacement workers to cross a picket line at a Maple Leaf plant.
If they knew that we had investments in Maple Leaf foods, then certainly these workers
would have a right to be upset thinking that we were either too aggressive or whatever, so
we think that that could potentially pose a problem for us and requires more scrutiny.
Another issue that the committee ought to look at is the lack of a clear link between
premiums and the actuary's report. The creation of a $25-billion surplus in the EI fund
shows us what can happen when governments get overly prudent and ignore what their
actuaries tell them.
Premiums will rise to the point where they represent 40 per cent of plan costs, yet the
bill does not specify that this40 per cent ratio is to be based on a premium recommended
by the actuary. Instead, the bill says that it is the minister's call, after reading the
actuary's report, as to how much needs to be contributed to the plan.
On more than one occasion, this government has used accounting tricks to juggle its
deficits between years, some of them proper in the eyes of the Auditor General and some of
them not. At the same time, we have seen the government ignore the EI actuary's report on
the level of premiums needed to keep the program in the black, with the result that
inflated premiums have lead to a $25-billion EI surplus. The minister, in the first day of
a new mandate, claiming to be prudent, could decide that the pension plan needs $1 billion
more per year than the actuary says it does. Three years later he could have a $3-billion
surplus available to spend.
For that matter, it must be remembered that this plan will have the same actuary as the
Canada Pension Plan. Serious allegations remain outstanding, as honourable senators will
remember, to the effect that the government attempted to interfere in the most recent
actuarial review of the CPP so as to the keep the premiums below 10 per cent. The same
kind of optimistic economic assumptions that would lead the chief actuary to conclude that
CPP premiums need not rise could also lead him to conclude that the Public Service Pension
Plan had a bigger surplus than previously thought.
Honourable senators, there has been a debate in the past as to whether or not the
Auditor General ought to be the auditor for a fund such as this. He ought to be, but the
government has decided that he will not be. That is what happens when we take a government
agency and we say, "Oh, it is at arm's length." What we mean by that is
"away from the control of Parliament."
We must remember how we select the board of directors. We select them by a little
committee here, a little committee there, all chosen by ministers. The minister himself
decides who is on the board of directors, usually friends of the party. "Hello,
Mabel; Hello, Terry." Things can get done that way, but Parliament has no access to
Mabel and Terry.
Senator Kinsella: Why are you naming people from our side?
Senator Tkachuk: I am hoping that after the next election we will be naming some
from our side.
The problem here is that we are trying to use private sector public board principles to
government agencies, and you cannot do that. We have a situation where the board will
appoint its own auditor, much like we have with the CPP.
How can a board appoint its own auditor when that auditor is auditing the board and the
management of the pension plan? In a public company, the shareholders appoint the auditor.
The board cannot fire the auditor, only the shareholders can fire the auditor. That is not
so here and not under the CPP plan.
The minister representing the Crown could appoint the auditor. At least the minister is
representing the shareholders. We urged such recommendations in regard to the CPP board,
in order that the minister would then be responsible to Parliament.
However, in this case, these people are responsible to no one, because no one elects
them. The retirees using the pension plan have no representation on the board of
directors. Therefore, the users of the money have no responsibility whatsoever.
The shareholders seem to have no responsibility. The only people who have
responsibility are the board of directors, who the minister names, and they name auditors
to check on themselves. If they do not like what he says, they can fire him.
The Hon. the Acting Speaker: Honourable senator, I regret to inform you that
your time has expired. Are you requesting leave to continue?
Senator Tkachuk: I would request leave to continue, honourable senators.
The Hon. the Acting Speaker: Honourable senators, is it agreed that Senator
Tkachuk be granted leave to continue?
Hon. Senators: Agreed.
Senator Tkachuk: Thank you, honourable senators.
Honourable senators, it is too easy to have the board of directors remove their own
auditor. It is also irresponsible. As parliamentarians, we should not let that happen.
This bill is cloaked in secrecy. There is no access to information. They hire their own
board, they hire their own auditor. There is no responsibility to anyone. The organization
does not even have responsibility to Parliament.
There is no way to examine administrative fees. The government used to pick up the cost
At present, the pension plan has $130 billion in it. The government is planning to take
back $30 billion, which leaves $100 billion for actuarial purposes. The government is just
taking the surplus. That is a great deal of cash. The government will bill that amount
back. However, it will be billed back with no clear legal requirement that such charges
are reasonable; nor is it specified what can or cannot be charged to the fund. For
example, if the minister's office hires consultants to prepare notes for Question Period
regarding the pension fund, he or she could bill that back to the fund.
There is no control on the administrative fees charged. There is no control of the
auditor. If I were representing the public service union, or if I were a retiree, I would
be very concerned about this bill.
Given the haste with which the government is pushing this bill, the amount of funds to
be invested, and that the bill has been presented without the consent of those affected,
surely the least we can do is to demand that the bill be re-examined in three years' time.
The consultative mechanisms outlined in this bill may not go far enough to ensure that
that will happen. I know that will not happen.
While the board must meet once a year with the three advisory committees to discuss the
annual report, there is no requirement that other subjects be discussed. While the
advisory committee may make recommendations on various aspects of the plan, the government
is under no obligation to respond to these recommendations.
Honourable senators, I have outlined several matters that should be reviewed by the
committee. These are important matters. As can be seen with the CPP board, the parks
agency and the national revenue agency, this government has a habit of moving things away
from Parliament into quasi-judicial, semi-corporate, never-never land.
People in the other place do not object as strenuously as they should. People should be
on strike over these matters.
Two members of Parliament from the other place continue to talk about how they should
abolish the Senate. While they talk about us, the government is abolishing the powers of
the other place.
Therefore, I ask senators to examine this bill carefully. Hopefully, we shall defeat it
when it comes back for third reading.
The Hon. the Acting Speaker: If no other honourable senator wishes to speak on
this matter, I will put the motion. Is it your pleasure, honourable senators, to adopt the
Resuming debate on the motion by the Honourable Senator Poy, seconded by the Honourable
Senator Mahovlich, for the second reading of Bill C-64, to establish an indemnification
program for travelling exhibitions.
Hon. Jean-Claude Rivest: Honourable senators, Bill C-64 will not fundamentally
change the description of Canadian society. It is of importance in a very limited area and
is of considerable significance in the development of Canada's culture. It pertains to the
area of museums and the assistance the government must provide to this form of cultural
expression. When we talk about museums we think of Montreal, Toronto and Vancouver, but
there are a considerable number of individual museums of significant interest in terms of
their cultural expression of Canadian and regional realities.
With respect to this bill, we must underscore the importance of museum activities in
our communities, regions and major centres and recognize the value of this activity and
the people involved to the affirmation of Canada's cultural identity.
The context of this bill is a bit odd, in that we are watching the play bit by bit.
After the Liberal Party of Canada worked unfairly and often rough shod to destroy the
policies of the government of Brian Mulroney, we are now seeing a return of the policies
the Conservative government had proposed for the benefit of all Canadians.
The Leader of the Opposition pointed out today rather clearly, on the occasion of the
anniversary of NAFTA, just how far the Liberal government in its day-to-day actions,
contradicts the commitments and speeches it made during the election campaign in which it
fought the Conservative Party.
This bill is a small example among many. In the area of museums, when the Conservative
Party left power, Canadian government aid had reached some $15 million a year.
Then along comes the Liberal Party of Canada, which reduces or cuts the assistance to
museums down to an absolutely ridiculous level. Now, gradually, with a somewhat belated
awareness of the value and merits of the policies of the previous Conservative government,
they are restoring not only the direct assistance to museums but also one of the measures
introduced by the Mulroney government in the late 1980s, guarantees on the level of
insurance the museums are required to have in order for exhibits to circulate among the
museums in Canada. This was an important and significant cultural policy of the former
government, one which the Liberals had purely and simply done away with when they came to
Now, with a somewhat belated understanding, too late some would say, of the policy
adopted by the Mulroney government, the present government is following the same path and
beginning to correct its mistakes by reproducing exactly what the former Conservative
government proposed in the way of assistance to museums all across Canada.
These policies, of course, have a Liberal flavour now, and so they are only half as
generous as the Conservative ones, but at least they are a step in the right direction. Is
it not somewhat odd to see such a thing happen, probably a first in Canadian political
history? If this were a one-time thing, we could easily forgive our Liberal friends by
saying that they are correcting a mistake they made. But this is an increasingly general
attitude, not only limited to Mulroney government bills or initiatives, such as may be
found in the Senate.
Today's government is simply picking up and glorifying in a most dynamic manner the
actions the Mulroney government took on behalf of all Canadians in the area of economics,
which have led to the creation of thousands of jobs thanks to NAFTA. The government today
is copying those initiatives, glorifying what it tore down in the past. What a waste of
time for Canadians, returning to former policies it had a hand in destroying by
What a lack of imagination on the part of this government, which has simply copied the
praiseworthy initiatives undertaken by the Conservative government for all Canadians. I do
not want to insist or appear outrageous. I have another specific experience, which will be
celebrated over the summer. When Prime Minister Mulroney signed the agreement between the
Governments of Canada, Quebec and New Brunswick to permit the Governments of Quebec and
New Brunswick to take part in the Sommet de la francophonie, according to our friends
opposite, it was a sacrilege against the unique character of Canada's foreign personality.
Acadians and francophone Quebecers could not be allowed to take part directly in the
Francophone countries' summit.
Today, what are our good Liberal friends doing? They will be heading to Moncton during
the summer to celebrate one of the great achievements, once again, of the Mulroney
On the subject of museums, the government is proposing a bill that is similar to the
one introduced by the previous government. It comes back with a program to help museums
obtain insurance in the event of loss or damage. Once again, we must be patient and
continue to push our Liberal friends. They are incapable of being as generous as the
former government, since their bill will provide help for museums with insurance at simply
half the level established by the Conservative government.
Honourable senators, since the Liberals are now taking this approach, since they have
begun to understand that the basic policies of the Conservative Party were good,
progressive and in the interest of Canadians, we can only rejoice. Canadians, however, are
not fools. If they are going to have policy established according to the directives and
interests of the Conservative Party, in the next elections, instead of electing a pale
copy of the Conservatives, they will vote for the Progressive Conservative Party.
The Hon. the Acting Speaker: It was moved by the Honourable Senator Poy,
seconded by the Honourable Senator Mahovlich, that this bill be read the second time. Is
it your pleasure, honourable senators, to adopt the motion?
Resuming debate on the motion of the Honourable Senator Carstairs, seconded by the
Honourable Senator Maloney, for the second reading of Bill C-79, to amend the Criminal
Code (victims of crime) and another Act in consequence.
Hon. Noël A. Kinsella (Deputy Leader of the Opposition): Honourable senators, I
move that this order stand in the name of Senator LeBreton.
The Hon. the Acting Speaker: Is it your pleasure, honourable senators, to adopt
Second reading of Bill C-67, An Act to amend the Bank Act, the Winding-up and
Restructuring Act and other Acts relating to financial institutions and to make
consequential amendments to other Acts.
Hon. Céline Hervieux-Payette: Honourable senators, I am happy, probably too
happy in fact, to state my support for Bill C-67, which we are considering today and which
is intended to permit foreign banks to establish in Canada certain types of branches with
activities geared to the commercial sector.
The proposed system should increase competition in the Canadian banking sector by
encouraging the healthy presence of foreign banks. It should help increase sources of
financing available to large, medium-sized and small Canadian enterprises, as well as the
choice of certain types of consumer loans.
Allowing the establishment of such branches will lead to stronger competition because
it will be more profitable for many foreign banks to open Canadian branches than to create
separate subsidiaries, as required by the existing regulations.
A branch could obtain capital from the bank's head office for its loan activities here
in Canada, while a subsidiary, as a separate entity, must come up with its own capital for
Forcing foreign banks to operate through subsidiaries is a pointless regulatory barrier
for banks wishing to provide services in Canada.
We are the only G-8 country that does not allow such branches. The time has come to
review our regulatory requirements and bring them into line with those of our principal
This is an important change; I would even call it necessary. Many foreign banks have
eliminated or cut back on their activities in Canada. In 1987, there were a record 59
subsidiaries of foreign banks in Canada; by the end of last year, there were only 45.
The provisions in Bill C-67 for establishing branches are the result of exhaustive
consultations and have the general support of the parties concerned.
The proposal for this change came out of the consultations leading up to the 1997
review of financial sector legislation. The Standing Senate Committee on Banking, Trade
and Commerce, as well as the House of Commons Standing Committee on Finance, published
reports in which they recommended that the government allow foreign banks to operate
branches in Canada.
In September 1997, the Minister of Finance made public a discussion paper on foreign
bank entry and carried out extensive consultations of all parties concerned.
The MacKay task force examined this discussion paper and declared itself in favour of
allowing foreign banks to establish branches. The task force called on the government to
implement such a system without delay.
In addition, the Standing Senate Committee on Banking, Trade and Commerce and the House
of Commons Standing Committee on Finance confirmed their support for allowing the
establishment of branches when considering the recommendations in the MacKay report last
Under the provisions of Bill C-67, foreign banks will be able to apply to the Minister
of Finance for approval to establish branches in Canada.
In order to obtain this approval, foreign banks will have to meet requirements with
respect to their size, experience and financial position. In addition, their capital will
have to be broadly distributed in their country of origin and they will have to be
regulated in that country by the competent regulatory body to the satisfaction of Canada's
Superintendent of Financial Institutions.
The branches could operate essentially the same way as Canadian banks except for retail
deposits, that is deposits of less than $150,000. The branches' loan activities will not
Let us point out that foreign banks wanting to take in retail deposits may now do so
through a Canadian subsidiary, which has all the powers of the Canadian banks.
The restriction on retail deposits is explained by the fact that we cannot set up
regulations that are less exacting and demanding for banks and yet maintain high standards
in Canada on the protection of funds on deposit.
I note in this regard that the MacKay task force, the Senate Committee on Banks and
Trade and the House of Commons Finance Committee all concluded that foreign bank branches
should not be allowed to take in retail deposits.
In order that foreign banks may have greater latitude, they will be able to establish
full-service branches or loan branches.
A full-service branch will be able to take deposits over $150,000, something a loan
branch will not be able to do, regardless of the amount of the deposits. Furthermore, the
loan branch will not be able to borrow from other financial institutions.
Proposing two types of branches provides the advantage of tailoring the level of
regulations to the activities of foreign banks in Canada. As loan branches do not take in
deposits, they would be subject to fewer regulatory requirements than full-service
I want to point out that the bill under consideration includes a number of amendments
made by the government as the result of the work of the committees. These technical
amendments are intended to respond to the concerns expressed by the foreign banks after
the bill was introduced initially.
As I have said, in general terms, full-service branches will not be able to take
deposits of less than $150,000.
The purpose of this is to ensure that depositors to full-service branches are informed
investors, and understand the nature of the institution with which they are doing
The bill includes a provision whereby full-service branches may accept deposits under
$150,000 if these account for less than 1 per cent of the total branch deposits. Although
this confers a certain amount of leeway, foreign banks justifiably feared that this
$150,000 limit would result in their ability to serve the needs of their business clients
To remedy this, the government amended the bill to include an exception to this
$150,000 deposit limit under certain circumstances set out in the regulations. The
regulations will afford the branches the flexibility they need to service their business
clients while not extending access for regular retail deposits. We believe this is a very
important change for attainment of the fundamental strategic objective, which is to
broaden Canadian businesses' access to credit.
Another amendment has to do with the borrowing options of lending branches. Bill C-67
allows them to borrow from financial institutions but they prohibits the subsequent sale
of any debt obligations, bankers acceptance or guarantee issued by that lending branch.
The amendment would permit these instruments to be subsequently traded to other
financial institutions, but only under conditions set out in the regulations.
Another amendment extends the time allowed for filing of auditor's reports to five
months, which is the period allowed for Canadian branches of foreign insurers.
I would also like to touch briefly on four technical changes contained in bill C-67.
First, if the foreign bank is a member of the World Trade Organization, it will no
longer have to seek approval to establish individual branches in various different
locations in Canada.
The second amendment eliminates the reciprocity provisions in the financial
institutions statutes to reflect the most favoured nation principle of the WTO. Under this
principle, parties to the agreement must not discriminate among financial institutions
from different countries and must grant most favoured nation treatment. This means that
Canadian firms can expect to receive the same treatment as other foreign firms in WTO
The third amendment will authorize the Office of the Superintendent of Financial
Institutions to accept delegated legislation or regulatory responsibility from a province
if it so desires. The mechanisms of the agreement will be negotiated to the satisfaction
of both parties.
The fourth and final amendment will provide authority to OSFI to make regulations
restricting the disclosure of supervisory information by financial institutions.
In conclusion, I would point out that the purpose of Bill C-67 is to do away with a
regulatory obstacle which limits the avenues available to foreign banks wishing to carry
on business in Canada.
It will encourage a healthy presence of such banks in Canada and will encourage
competition in the financial services sector. What is more, Canadian policies will then be
brought in line with what is done in other G-8 countries.
I therefore encourage honourable senators to support this bill.
Hon. Donald H. Oliver: Honourable senators, I should like to join in the second
reading debate on Bill C-67, which, of course, is commonly known as the Foreign Bank Bill.
The purpose of this legislation, as has been explained by both the Finance Minister and
the Minister of State for Financial Institutions, and today by Senator Hervieux-Payette,
is to make it easier for foreign banks to enter and work within the Canadian market, thus
bringing more competition to existing Canadian financial institutions. That is the
principle of the bill before us, and I accept that principle.
The main problem, as I see it from the point of view of someone who has been a member
of the Standing Senate Committee on Banking, Trade and Commerce for many years, is that
this legislation is very late in coming and it may not accomplish the goals that it set
out to achieve.
While the government pays lip-service to increasing competition for our banking
industry in Canada, it has taken a very long time to bring this legislation forward, and,
at least initially, the government maintained sufficient tax roadblocks that few, if any,
foreign banks or bank branches would have been established in Canada.
It is important to trace the path of this legislation to indeed determine if this
government is serious about encouraging competition for the Canadian banking industry.
It was in June of 1996 that the government released a white paper entitled, "A
Review of Financial Sector Legislation, Proposal for Change." While that paper
proposed changes to the foreign bank legislative regime, it also announced the creation,
at some time in the future, of the MacKay task force on the future of the Canadian
financial services sector. Both the contents of the white paper and the fact that a task
force would be created spelled the end of quick action to encourage competition from
Throughout all this, the Senate Banking Committee knew exactly where it stood on this
issue. In August of 1995, in its report on the 1992 financial services legislation, the
committee discussed competition in the following terms:
Competition is the goal of the deregulation process. Competition means more consumer
choice and, ultimately, a more efficient financial services sector. Moreover, rapid and
extensive globalization of the world's financial markets means that Canada cannot afford
to fall behind in developing the full potential of its financial services market-place - a
sector of Canada's economy that has been traditionally a very important contributor to
this country's international economic growth.
In its 1996 report on the aforementioned white paper, the Banking Committee termed the
proposals with respect to the foreign bank entry as "seriously flawed." In fact,
the committee outlined for the government what it considered to be the policy goals that
should be applied to the regime for foreign financial institutions. The regime should:
ensure safety and soundness; protect consumers; enhance service offerings; and promote a
reasonably level playing field with Canadian financial services providers.
The committee, after studying the issue, came forward with a recommendation dealing
with foreign banks. The committee recommended that the government adopt a policy toward
foreign banks that will offer these institutions the options of running their operations
in Canada through a foreign branch, through a subsidiary, or through both a branch and a
subsidiary. Based on this report, I thought that the government might move ahead on the
foreign bank file, but that was not to be.
We had to wait for the Baille, and then the MacKay task force to report, and MacKay
came down solidly in favour of increased competition. This competition was to come from
encouraging the location and activities of foreign banks in Canada and from fundamental
reforms of the cooperative movement which, if implemented, could challenge the existing
Now, it was up to both the House and the Senate to study the MacKay recommendations
before any action could be taken - and study them we did. The Senate Banking Committee
held comprehensive hearings across Canada. Again, the Banking Committee endorsed changes
to the foreign bank regime in Canada, but it added a word of caution. Paragraph 86 of the
committee report bears repeating here. It states:
The proposed foreign bank branching policy, first outlined in the 1996 report of the
Standing Senate Committee on Banking, Trade and Commerce, and supported in the Task Force
recommendations, will not lead to increased competition in retail banking. Neither will it
lead to increased competition in wholesale banking overnight. Thus, opening Canada's
borders to foreign banks, while highly desirable as a public policy, is not a panacea. The
Committee does not believe it will lead to the immediate creation of a multitude of new
second tier consumer-oriented deposit-taking institutions.
Therefore, even with legislation allowing foreign branch banking, it is not at all
clear that competition of the nature hoped for earlier by the Banking Committee would
With all this work as background, on February 11, 1999, almost three years from the
time of the release of the white paper, the government introduced legislation supposedly
to make it easier for foreign banks to locate and operate in Canada. However, even then,
the government could not get it right. It is no wonder that the number of foreign banks
operating in Canada dropped from 59 in 1987 to approximately 45 in 1998.
What did the government forget to do when it introduced Bill C-67? It forgot to change
the Income Tax Act to make the changes sought by the bill financially feasible for the
foreign banks. It was not until May 11 of this year, three months later, that the Minister
of State for Financial Institutions announced amendments - not legislation, but amendments
- to the original Ways and Means Motion that would allow a foreign bank to transfer
property from its subsidiary to its new Canadian branch office on a tax-deferred basis.
Also, the withholding tax would be deferred on the transfer of all or part of a
subsidiary's retained earnings to a Canadian branch office of its foreign parent bank.
These tax changes are helpful. Without them, probably nothing would have happened in
the foreign bank arena, but why were they not introduced when Bill C-67 was introduced? Is
it simply because the government does not understand the issue or is it because the
government does not really wish to foster a climate of competition? Why did we not have
those changes in bill form before today?
As I have said earlier, I do not believe foreign banks will rush in to take advantage
of this legislation. Let us look at what Bill C-67 does and at the hurdles it puts in
front of foreign banks.
The bill provides for two types of branches. The first would be a full-service branch
that could only take deposits of at least $150,000. That is wholesale banking rather than
the retail banking recommended by the parliamentary committees. Foreign banks that wished
to take retail deposits would have to set up a Canadian subsidiary. Full-service branches
will be able to join the Canadian Payments Association.
The second kind of branch would be a lending branch that could not take deposits and
could only borrow from other financial institutions. These will be in the business of
making loans in Canada. They will not be able to join the Canadian Payments Association.
Foreign banks may not operate a lending branch in combination with either a full-service
branch or a subsidiary. They may, however, operate through a subsidiary and a full-service
branch if they so choose.
The government requires lending branches to deposit $100,000 to $10 million for
full-service branches, in approved assets with an unaffiliated Canadian financial
institution. Currently, a foreign bank operating a subsidiary in Canada must hold $10
million in approved assets with an unaffiliated Canadian financial institution. Therefore,
a foreign bank that has operated through a Canadian subsidiary for many years and now
wishes to open full-service branches will have to hold another $10 million in capital for
a total of $20 million.
A foreign bank wishing to establish a full-service branch would need to meet the
following criteria: It would have to have a minimum of $5 billion in worldwide assets;
possess a proven track record in international banking; demonstrate favourable financial
performance over the last five years; and be widely held.
I have a few questions which I look forward to asking when the bill is referred to
committee for study. For example, what is the policy rationale for the $10 million floor?
If there is not one, why impose it if it will hinder competition?
Full-service branches are restricted to deposits of more than $150,000. Why can there
not be exemptions to this rule for so-called sophisticated depositors? Why limit
competition when there is no public policy benefit? Foreign banks want to be able to
operate and maintain both a subsidiary and a lending branch in perpetuity. Why discourage
a foreign bank from doing both? This limits competition. It does not increase it. Why does
the legislation restrict the type of structure a foreign bank must fit into? The Senate
Banking Committee's report on the MacKay task force dealt at some length with the
imaginative use of holding companies. Why put these restrictions on the corporate
structure of foreign banks within Canada?
This bill represents a beginning and a slight opening of the window to allow in
competition for Canada's Schedule I banks. However, I believe it is not sufficient and it
is certainly not nearly imaginative enough to promote competition.
We will study this bill in committee. I look forward to hearing the rationale behind
the bill, and what the government believes it has accomplished through its introduction.
For me, the bill simply does not do enough to encourage competition in the financial
The Hon. the Speaker: Honourable senators, if no other honourable senator wishes
to speak, I will put the motion.
It was moved by the Honourable Senator Hervieux-Payette, seconded by the Honourable
Senator Maloney, that Bill C-67 be now read the second time.
Is it your pleasure, honourable senators, to adopt the motion?
Consideration of Motion to Adopt Report of
Committee-Speaker's Ruling-Debate Adjourned- Notice of Motion for Time Allocation
The Senate proceeded to consideration of the motion of the Honourable Senator
Carstairs, seconded by the Honourable Senator Callbeck, for the adoption of the twelfth
report of the Standing Senate Committee on Transport and Communications (Bill C-55,
respecting advertising services supplied by foreign periodical publishers, with
amendments) presented in the Senate on May 31, 1999.- (Speaker's Ruling)
The Hon. the Speaker: Honourable senators, I always attempt to make rulings on
bills very quickly because I do not think the Chair should delay bills in the Senate.
However, it was impossible for me to make my ruling yesterday. The session was short and
we were unable to deal with all the technical matters. I am prepared to proceed now.
On Tuesday, June 1, when Senator Poulin, the Chair of the Standing Senate Committee on
Transport and Communications, was about to move the adoption of the twelfth report
recommending certain amendments to Bill C-55, respecting advertising services supplied by
foreign periodical publishers, Senator Lynch-Staunton raised a point of order. The Leader
of the Opposition claimed that several of these amendments would have the effect of
reversing the principle of the bill, which is contrary to established parliamentary
In making his case, Senator Lynch-Staunton explained what he understood to be the
principle of the bill. In his words:
...the intent of Bill C-55 was to prohibit absolutely the possibility of Canadian
advertising being placed in American periodicals known as split runs.
Citing Canadian and British parliamentary authorities, he noted that amendments that
effectively reverse the principle of the bill are out of order. Senator Lynch-Staunton
also suggested that the amendments involve a possible tax expenditure, rendering the bill,
as he assessed it, a money bill.
Honourable senators, Senator Poulin then explained how the amendments recommended in
the committee report were in order procedurally. Based on her analysis of the title of the
bill and the legitimate scope of committee review of a bill as characterized in the 6th
Edition of Beauchesne's Parliamentary Rules & Forms, citations 688 and 689 at
page 205, she maintained that the recommended amendments were in order. In the senator's
view, Bill C-55, as amended by the committee, and I quote:
...remains unequivocally a bill respecting advertising services supplied by foreign
The fundamental policy behind the bill continues to be, as she put it, and I quote:
...the preservation and defence of our culture by enhancing the ability of Canadian
magazines to succeed in the market-place.
For his part, Senator Murray was not persuaded. In his brief intervention, he stated
that the committee amendments had the effect of reversing a long-standing policy to
exclude foreign split-run publications from the Canadian market.
Speaking against the amendments, Senator Kinsella cited another Canadian parliamentary
text, the fourth edition of Bourinot's Parliamentary Procedure and Practice in the
Dominion of Canada, and invoked the standards of Aristotelian logic. Though admitting
that the amendments to Bill C-55 recommended by the committee were not the absolute
negative of the bill's original proposition, he was in no doubt that they constituted
"contrary opposition by any standard of logic." Accordingly, the senator
contended that the amendments denied the principle of the bill and were unacceptable.
The discussion on the point of order continued with interventions by Senator Carstairs
and Senator Graham, as well as further statements by Senator Poulin, Senator
Lynch-Staunton, Senator Murray, and Senator Kinsella.
It was at this stage that a second element of the point of order became the focus of
some comment. Senator Lynch-Staunton, in his first intervention, had suggested that Bill
C-55 might be a money bill. Senator Kinsella noted certain statements of the minister
during her appearance before the committee referring to a publishers' fund to be created
to compensate those who will suffer financially as a result of the amendments now being
proposed to this bill. By way of response, Senator Graham challenged the opposition to
point to any section of the bill that provides for the expenditure of any money. He
asserted flatly that, and I quote:
...this bill does not create such a fund, nor does it authorize any money whatsoever
for any such fund.
I want to thank those honourable senators who participated in the discussion on the
point of order. I have since had an opportunity to review the arguments presented and to
assess the parliamentary authorities mentioned with respect to the scope of committee
amendments to bills and the underlying importance of the principle of a bill as adopted at
second reading. I have also read the clerk's copy of the bill with the amendments
incorporated into it, in order to have a better understanding of their significance.
I shall deal with the second aspect of the point of order first. A connection has been
made between the amendments to the bill and the minister's remarks about a related program
that the government might put in place to aid publishers adversely affected by the
consequences of Bill C-55 as amended by the committee's report. Senator Kinsella indicated
that he regarded these two elements as interlocking, as a package. At the very least, he
suggested that I consider the matter as problematic.
Senator Graham, on the other hand, challenged anyone to show any text in the bill that
provides an expenditure of any government money. In his judgment, there is none to be
found. This is certainly a critical point.
Any amendment that authorizes an expenditure from the Consolidated Revenue Fund would
be out of order. As the chamber of sober second thought, it is not within the power of the
Senate to introduce such an amendment. That is the responsibility of the other place.
It is not enough to suggest that there are consequences that might flow from the
amendments, that there might be expenditures as a result of programs the government might
establish following the implementation of Bill C-55. While such a program might be part of
a package, they are not directly part of the bill itself or the amendments now before the
Senate. As Speaker, I can only look at the bill and the amendments. What I see does not
explicitly provide for the appropriation of any funds from the CRF. Accordingly, the
incorporation of these amendments would not convert Bill C-55 into a money bill. The
amendments are not out of order based on this second objection.
The original argument raised by Senator Lynch-Staunton is more problematic, but equally
fundamental. It is his position that the amendments go against the principle of the bill.
Citing the summary of the bill in clause 3, he maintains that the bill is seeking to
prohibit absolutely the placement of Canadian advertisements in American split-run
magazines. Any variation of this policy, whether 1 per cent or 99 per cent, would,
according to the senator, violate this principle.
Holding a contrary position, Senator Poulin argues that the amendments are not contrary
to the bill as understood by its long title which states that Bill C-55 is an Act
respecting advertising services supplied by foreign periodical publishers. Furthermore,
the senator explained that the amendments fall clearly within the scope of the bill and
are relevant to it. The committee, in making its recommendations to amend the bill, was
Reliance on the long title of the bill as a guide to assess the procedural
acceptability of amendments to a bill is derived from British practice. In the United
Kingdom, the legislative drafting conventions, as I have been advised, provide for titles
that are more fully descriptive of the bill's contents. In Canada, however, the long title
of bills is rarely as descriptive. More often, the title simply suggests its
subject-matter. Indeed, with respect to amending bills, the title usually indicates only
what acts are being amended. Frequently, there is little substantive difference between
the long and short titles of the bill whether they are creating original acts or amending
parent acts. That appears to be the case with Bill C-55. Consequently, the long title
cannot always be used as reliable guide in assessing the procedural merits of any
A more useful approach, and one that must always be considered in examining the
procedural acceptability of amendments, is to determine if they are within the scope of
the bill and relevant to it. In the case now before us, the only amendments that seem to
be in dispute are the ones that add new clauses 20.1, 21.1 and 21.2.
I do not think that there is any doubt that the amendments are relevant to the bill.
There is nothing in their content that suggests that they are bringing into the bill
anything that is extraneous or foreign to it. The real question is whether they are
destructive of its principle. Do they have the effect of reversing this principle? Unless
they do this unmistakably, I would feel obliged as Speaker to allow them and so let the
Senate itself come to a determination on their merits.
It has been argued that the principle of the bill is enunciated in clause 3, which
states that the provision of advertising services by foreign publishers should be
restricted. With respect, I do not think that just one clause can capture the entire
principle or scope of a bill, unless, of course, it is a very simple bill. Indeed, the
principle of the bill can be difficult to identify precisely. As Speaker Jerome from the
other place once pointed out in a ruling he made in 1976, past precedents give
"absolutely no assistance in attempting to define what is the principle of the
bill." Certainly I had the same challenge when I was asked to rule on the
acceptability of amendments proposed to Bill C-28, dealing with the agreements for the
redevelopment of Pearson International Airport, considered in the second session of the
In summary, therefore, I would suggest that the identification of the principleof
a bill can encompassthe understanding reflected by senators during debate at
second reading as well as its title and content.
With respect tothe principle of Bill C-55, the debate at second reading by
several senators on both sides seemedto includea somewhat broader meaning
than just clause 3. As was explained then, the principle or objective of Bill C-55 is to
provide some means to ensure the continued viability of the Canadian magazine industry.
Moreover, the text of the bill suggests that clause 3 can be subject to some
qualification. For example, clause 20(c) states that the Governor in Council has
the authority to make regulations respecting, and I quote:
...criteria to determine whether advertising services are directed at the Canadian
Even more important, clause 21 provides for what is described as the non-application of
the act. This clause spells out an exemption that is aimed to protect some foreign
publishers from the punitive operations of Bill C-55. The proposed amendments, new clauses
21.1 and 21.2, expand upon the scope of that non-application within certain other
parameters. Whether these are desirable objectives is not for me to decide. My
responsibility is to assist whether these proposed amendments are beyond the scope of the
bill, whether they are clearly destructive of the bill's principle or whether they
unmistakably reverse that principle. It does not appear to me that they do this.
It is my ruling that the amendments are in order. Debate on the twelfth report of the
Standing Senate Committee on Transport and Communications recommending several amendments
to Bill C-55 can now proceed.
Hon. John Lynch-Staunton (Leader of the Opposition): Point of order! The motion
was moved by Senator Carstairs. Therefore, I assume that Senator Carstairs will lead off
the debate. Honourable senators, yesterday, the Speaker ruled - for some strange reason,
which I do not want to get into - that we had to have a motion before the point of order
would have been accepted. I will argue that with His Honour at another time, I hope. In
any event, Senator Carstairs made the motion. Therefore, I assume she is the person who
will speak to it.
Hon. Sharon Carstairs (Deputy Leader of the Government): Honourable senators, I
defer to the Honourable Senator Poulin.
The Hon. the Speaker: Honourable senators, before we proceed, partly in response
to Honourable Senator Lynch-Staunton's comments, I do not believe that I ordered that the
second reading should proceed. There was some confusion as to what would happen, and I
asked, "Is it the wish of the Senate that you proceed now?" That was my
recollection of the event.
Senator Lynch-Staunton: Honourable senators, I said that I did not wish to get
into an argument. We are not proceeding to second reading now, we are proceeding to the
Hon. Noël A. Kinsella (Deputy Leader of the Opposition): Honourable senators, I
think we should have clarification on that point, for the record. In examination of the
Hansardfrom yesterday, it was my understanding that, when this item was called, it
was pending the Speakers's ruling. His Honour did rise and say that he was not ready with
his ruling and that perhaps honourable senators would like to take advantage of the time
to do something, namely, present a motion that the report be adopted.
The suggestion was then made that the point of order that had been raised the day
before by Senator Lynch-Staunton, somehow, was out of order and that we should have had a
motion from the government side to the effect that the report be adopted so that debate,
as most commonly occurs, would proceed.
It was my opinion that the house had it properly before it, because on the previous day
the report from the Standing Senate Committee on Transport and Communications was tabled.
It was also on the Order Paper. A matter that has been tabled, circulated to honourable
senators and is on the Order Paper but has yet to be moved is subject to a point of order
if an honourable senator is of the view that that report, in and by itself, is out of
I think that Senator Lynch-Staunton was very much in his right to be able to raise the
point of order, notwithstanding the fact that the motion to have the report adopted had
not theretofore been made. I rose yesterday to register that objection, but I was not 100
per cent sure and I am only 30 per cent sure today. I think it would be helpful if His
Honour could give us guidance on that matter.
The Hon. the Speaker: Honourable senators, I will be very pleased to do so. I
will go back and check again. I believe that what you are saying reflects what has been
done in the past. Senator Lynch-Staunton was quite proper in what he did when he raised
his points of order. I was only making the point that I do not recall that I ordered that
the motion be made. However, I shall be happy to check that again.
Honourable senators, are we prepared to hear now from the Honourable Senator Poulin?
Senator Lynch-Staunton: To finish that, His Honour the Speaker said yesterday:
Honourable senators, I have not received the ruling as yet....
There is, however, a bit of business that we might complete. The motion was not moved
His Honour thus indicated that he preferred to have a motion before the chamber. That
may not have been an instruction, but it was a strong indication.
Hon. Marie-P. Poulin: Honourable senators, as chair of the Standing Senate
Committee on Transport and Communications, I would first like to explain the nature of the
amendments proposed in the committee's report on Bill C-55, respecting advertising
services supplied by foreign periodical publishers, and then to make a few comments.
The purpose of this bill is to ensure the long-term viability of our periodicals
industry, while respecting our various international obligations. Bill C-55 is based on
the traditional Canadian approach of protecting and promoting our cultural industries.
During its many meetings on this bill, the committee heard close to 40 witnesses
representing various interested groups. The committee made four amendments to Bill C-55.
These amendments follow on the agreement between Canada and the United States to end the
dispute between the two countries on this issue.
The first amendment changes the rules on the rate of foreign participation in Canadian
periodical publishing companies. Under this amendment, Canadian companies will henceforth
be allowed increased foreign content. Magazines that are more than 50 per cent owned and
managed by Canadians will be considered Canadian.
The second change is a new clause in the bill. Clause 20.1 gives the Canadian
government increased regulatory power in order to establish a system for determining
Canadian advertising revenue with respect to total advertising revenue from a foreign
periodical. This amendment will make it possible to enforce the next clause, which is a
so-called de minimis exemption provided for in clause 21.1.
This third amendment incorporates a de minimis exemption clause in the bill.
This amendment to Bill C-55 will give foreign publishers limited access to the Canadian
advertising market. The day the legislation takes effect, foreign publishers will be able
to publish advertising up to 12 per cent of which is aimed at the Canadian market. This
access will be gradually increased to 18 per cent 36 months after the legislation takes
The final change, clause 21.2., is an exception which allows a foreign publisher to
invest in an area of commercial activity relating to Canadian cultural heritage or
national identity. The publisher must submit to an approval process under the Investment
Canada Act in order to establish in Canada. Only those offering a clear advantage to
Canada will be accepted. The parameters defining this concept of clear advantage will be
available shortly in the guidelines to be drawn up for release by the Department of
Honourable senators, Bill C-55 has generated a great deal of public debate. These
amendments make the bill more acceptable. This ground was covered during our debate on the
point of order earlier this week.
It was surprising to hear during that debate the assumption that my remarks, as Chair
of the Standing Senate Committee on Transport and Communications, had been prepared by
ministry officials. I was relieved when Senator Kinsella indicated during a rebuttal by
Senator Carstairs that he would withdraw the erroneous assertion, and I truly appreciate
his coming to me later on to apologize. I thank the honourable senator for his generous
Honourable senators, when we as senators study legislation in committee, we always take
into account the reality surrounding the bill. The reality here is plain enough.
First, new technology is transforming our world into the "global village."
Second, we have no cultural exemptions before the World Trade Organization. Canada
fought that battle once three years ago and lost. This time the committee feels that, with
Bill C-55 as amended, Canadians have a victory within their grasp. Let us not allow the
opportunity to protect and promote our culture slip away. The fact that the Americans have
recognized a foreign country's right to protect its culture in trade negotiations is a
significant advancement. We ought to be proud of this accomplishment.
Striking an accord that recognizes cultural integrity and avoids triggering a trade war
in which both countries, Canada and the U.S., would suffer sounds like a good deal.
Ms Copps noted at the committee that Gordon Ritchie was dead right in his assessment of
retaliatory measures by the U.S., and she acknowledged that she was unsure that Bill C-55
unamended was the best possible solution. The cultural implications, the advantages of the
legislation as amended, cannot be overemphasized. The words of the minister at the
committee meeting of May 31 put the situation we are dealing with into perspective:
From the beginning of this process, I said that if the Americans put something on the
table specifically related to a recognition of the uniqueness of culture and content, we
were looking for an agreement. The fact that we have an agreement gives us the certainty
of knowing that we will not be dragged before future international tribunals.
Another poignant observation by the minister also puts the amendments to Bill C-55 in
I do not want to overstate the legislation, but I do know that never before in history
has the American government agreed that a foreign law that permits discrimination on the
basis of content is unappealable to their tribunals, domestically and internationally. It
happened because the Prime Minister felt strongly enough that he took this issue all the
way to the President of the United States.
This is not political rhetoric, honourable senators. The Washington Post had
this to say:
...for the first time, the United States was forced to accept the principle that, even
in a free-trade environment, foreign countries could take steps to limit access to their
markets by American firms in an effort to protect the viability of local culture - in this
case, a Canadian magazine industry that could provide an outlet for Canadian writers to
tell Canadian stories and deal with Canadian themes.
That, honourable senators, is not a symbolic recognition. Therefore, I invite you to
embrace these achievements by adopting the committee report concerning Bill C-55.
In closing, honourable senators, I must thank the Deputy Chair of the Transport and
Communications Committee, Senator Forrestall, as well as all the senators who took part in
the numerous hearings.
Hon. Noël A. Kinsella (Deputy Leader of the Opposition): Would the honourable
senator take a couple of questions for clarification?
Senator Poulin: Certainly, honourable senators.
Senator Kinsella: Could the senator explain to the house the relationship
between the amendments included in the report and the negotiations we have all heard about
that have gone on between Canada and the United States concerning the magazine bill?
Senator Poulin: I thank the honourable senator for his question.
As honourable senators know, the Transport and Communications Committee sat for several
weeks to hear from over 40 witnesses on Bill C-55.
We, unfortunately, did not have the opportunity to sit at the negotiating table. What
we heard about the negotiations was related to us by the witness who made a presentation
and who received our questions, the Minister of Trade Sergio Marchi. Also following this
negotiation, we heard from the Minister of Heritage, Minister Copps.
I take for granted that their presentations and their answers instructed all members of
the committee on the links between what was tabled in the negotiation itself and these
Senator Kinsella: When Minister Marchi appeared, did he not tell us that, when
he appeared before us, there was as yet no agreement?
Senator Poulin: Honourable senators, I do not have in front of me the blues of
the hearing when Minister Marchi was before the committee. I must rely on my memory. I do
not honestly remember hearing the minister say that there was no agreement. I do remember
hearing Minister Marchi saying that he was very open to an agreement.
Senator Kinsella: Honourable senators, it is my recollection that Minister
Marchi did tell us that he was hopeful there would be an agreement, but there was none
when he was the witness before us. Then when Minister Copps appeared, we asked her if she
had a copy of this agreement and she said no, she did not.
Is that your understanding of what happened at the committee when Minister Copps
Senator Poulin: Once again, honourable senators, I do not have the blues of the
meeting at which the Honourable Sheila Copps appeared. If I remember correctly, in her
opening remarks she very reliably related to us the key issues on which there had been an
understanding between both countries. I would not wish to comment on the agreement itself.
I believe that was the responsibility of the minister herself.
Senator Kinsella: Has the honourable senator yet seen a copy of this agreement
upon which the amendments were based?
Senator Poulin: Honourable senators, my role as chair of the Transportation and
Communications Committee is to ensure that due process is followed in the review of Bill
Senator Kinsella: The report that we have received includes amendments that are
tied to an agreement between the United States and Canada, which agreement neither the
Minister of International Trade nor the Minister of Canadian Heritage could present to us.
Earlier this afternoon during Question Period, I asked the Leader of the Government in
the Senate whether he had seen a copy of this agreement upon which the amendments are
Does the honourable senator think it is good practice for us in this house to be
adopting legislation that is based on travaux préparatoire that we have not seen and to
which we have no access?
Senator Poulin: We recognize the moral and real authority of the ministers who
appeared before us, and have therefore accepted the testimony of both ministers as
objective and honest.
Senator Kinsella: The honourable senator recognizes that there is a common
practice, when committees or other tribunals have witnesses giving testimony, to have
witnesses appear sometimes under a summons known as duces tecum. The witnesses
arrive with documents that may be germane to the testimony that they will give.
This places all of us in the situation, including the distinguished Chairman of the
Transportation Committee, where all we have to rely on is the testimony given. There are
certain lacunae in the testimony. We have serious amendments based upon an agreement.
Neither of those witnesses was able to give us a copy of that agreement.
In your report then, you speak of the amendments and the time line to be followed
within which foreign publishers may publish Canadian advertisements up to the level of 12
per cent. There is another time line for up to 15 per cent and yet another specific period
for 18 per cent within three years.
Did your committee receive any assurance that percentages of 12, 15 and 18 within those
time lines are the same conditions agreed to by the negotiators for Canada and the United
States? How do we know that it was not 9, 13 and 26 per cent?
Senator Poulin: When the honourable senator uses Latin words, he takes me back
to private school where I studied Latin for five years. Unfortunately, that was so long
ago that I cannot remember the appropriate words to answer in that language.
I return to the same answer that I gave earlier. We fully accepted the testimony of the
two ministers on these matters. We know that the implementation of the bill will be the
responsibility of the Department of Canadian Heritage.
The Hon. the Speaker: I must point out that the 15-minute period for speech and
questions has expired.
Senator Kinsella: Honourable senators, it is not for me to request an extension.
Since one has not been requested, I do now rise to move the adjournment of the debate.
Hon. Sharon Carstairs (Deputy Leader of the Government): Honourable senators, I
give notice that tomorrow, Friday, June 4, 1999, I will move:
That, pursuant to rule 39, not more than a further six hours of debate be allocated to
dispose of both the report stage and third reading of Bill C-55, respecting advertising
services supplied by foreign periodical publishers;
That, when debate comes to an end or when the time provided for the consideration of
all stages of the bill has expired, the Speaker shall interrupt, if required, any
proceedings then before the Senate and put forthwith and successively every question
necessary to dispose of all remaining stages of the bill;
That any recorded vote or votes on the said question be taken in accordance with the
provisions of rule 39(4).
Honourable senators, a few moments ago I gave notice for time allocation on Bill C-55.
At that time, I neglected to mention an important part of that notice.
In order for there to be no confusion on the matter, I would like the record to show
that there had been discussions with the opposition about allocating a specified number of
hours for debate at report stage and third reading. Unfortunately, we have not at this
point been able to agree, which is why I gave notice earlier this day.
Resuming debate on the motion of the Honourable Senator Lavoie-Roux, seconded by the
Honourable Senator Butts, for the second reading of Bill S-29, to amend the Criminal Code
(Protection of Patients and Health Care Providers).-(Honourable Senator Corbin)
Hon. Eymard G. Corbin: Honourable senators, I rise today to speak on Bill S-29
which, in my opinion, is a positive step forward in dealing with so-called
Modern medicine has given humankind the opportunity to live longer and healthier lives.
However, despite medical advancements, many Canadians of all ages suffer from a multitude
of debilitating terminal diseases. The fact that medicine can delay or slow down dying
processes has fired the debate on whether or not medical techniques should be applied,
and, if so, in what circumstances. Some Canadians believe that terminally ill persons have
the right to be left to die, whereas others believe that medicine should do everything in
its power to postpone death. Of course, consideration of the issue comes in a multitude of
degrees, shades, and colour.
This debate over life and death is not new. In 1983, the Law Reform Commission of
Canada examined end-of-life issues and recommended that the Criminal Code be amended to
give patients the right to reject medical treatment. In addition, they asked that
physicians not be permitted to violate this right.
Later, in 1995, the Special Senate Committee on Euthanasia and Assisted Suicide,
chaired by now-retired Senator Joan Neiman, of which Senator Lavoie-Roux was the deputy
chair and myself and other senators were members, produced a report entitled "Of Life
and Death." That report examined the highly controversial issues of euthanasia and
assisted suicide. Our study constituted a Canadian parliamentary breakthrough and will
stand in the annals of the Senate as one of its brilliant, avant-garde pieces of work. Our
committee recommended that amendments be made to the Criminal Code in order to clarify the
circumstances under which withholding and withdrawal of life-sustaining medical treatment
are legally acceptable.
Despite this ongoing debate, Canadian legislators have failed to implement clear
guidelines for doctors and nurses who treat and care for terminally ill patients. It is
particularly annoying that members of the other place have yet to give these matters
proper attention. Canadian health care workers are treating terminally ill and near-death
patients outside the framework of clearly defined and up-to-date legal parameters.
During our study, the committee heard witnesses who explained that there was confusion
among health care workers around the issues of withholding and withdrawing life-sustaining
treatment, of administering medication to control pain, and fear of the imputation of
criminal responsibility for improper actions, though such deeds have yet to be determined
within the broadly based consensual legal framework. More frightening is the practice of
some to impose their personal code of ethics on suffering humanity. As Senator Keon
indicated in his recent speech on Bill S-29, these fears have led to the improper
treatment of some terminally ill patients.
Some health care workers administer inadequate amounts of pain medication because,
among other reasons, they have insufficient training and knowledge regarding palliative
care. Indeed, our committee was appalled by the lack of knowledge surrounding proper
pain-management techniques. These fears and the inadequate care are what we as
parliamentarians must address. My goodness, even His Holiness Pope John Paul II addressed
these issues in a positive manner. Canada's political parties, including successive
governments, are avoiding the subject and, in my considered opinion, are failing to assume
their prerogative of initiative and leadership in this respect.
We are not doing the country, hospital administrators, the professions, the patients
and their families and friends, and even the local coroners and juries any good by
delaying or refusing to address these matters so as to collate them in a proper corpus of
law. We are allowing our prejudices to come into play. We have been stalled at the
crossroads. This is a complicated challenge, considering the number of interested parties
and split jurisdictional difficulties. If the government has a plan or strategy to deal
with this challenge, we should be told about it. It has had almost four years to reflect
on our report, and yet not a word of reaction.
Recent Canadian cases show that there is a pressing need to legislate and regulate
critical end-of-life issues. It will not satisfy this former member of the House of
Commons and this senator to have the Supreme Court of Canada assume our legislative
responsibilities with an occasional trickle of commentary and guidelines. I only ask for
an opportunity to exercise my legislative duties.
Other senators who have spoken to Bill S-29 have mentioned the case of Dr. Nancy
Morrison as a recent example, but I will not dwell on specific legal cases at this time,
though I may do so when I rise to speak on Senator Carstairs' inquiry.
Bill S-29 is a most important initiative in the effort to establish clear guidelines,
which Canadians, the medical profession and health care workers have indicated are
necessary to provide more responsible and competent care for the patients. The guidelines
proposed by Bill S-29 include amending the Criminal Code to absolve or exempt a physician
from the responsibility of having to administer medical treatment where such treatment is
against the patient's wishes. In addition, Bill S-29 calls for the requirement of health
care providers to obtain free and informed consent from the patient or substitute
decision-maker concerning pain control and medication and to respect living wills.
Many senators believe that Bill S-29 respects the patient's right to control his or her
own treatment and protects health care workers, who act in accordance with these legal
standards, from criminal prosecution. I also believe that this bill has the potential to
achieve these goals. Therefore, I am anxious to have Bill S-29 referred to the appropriate
committee for a detailed and in-depth study. Bill S-29 proposes important changes to the
Criminal Code, and it is imperative that we fully understand their impact on patients,
their families, and health care professionals for the immediate and long term.
Once again, I thank Senator Lavoie-Roux for this important statutory initiative, which
should have the effect of inciting the Government of Canada and the elected house to join
with us in assuming their responsibilities and putting some order into the laws and
regulations concerning end-of-life issues. I do trust, however, that she will not lose
patience with the process. There are no quick fixes to these important fundamental issues.
Though she may have seen the light, others remain to be convinced. That goes to the very
heart of what this institution is all about.
A thorough examination of the bill, with the assistance of the best available legal
experts, is also very much a part of the process. We cannot afford, as the house of
legislative review, to put forward flawed proposals for the other place's approval. I do
hope that the members of whichever committee of the Senate this bill is referred to will
apprise themselves of the painstakingly arrived at report and recommendation of the
special committee to which I already alluded so that the bill is examined in its proper
If the Senate can meet the challenge across party lines and come up once more with a
first-class piece of work, we will have solidly anchored our claim to political leadership
in the field of end-of-life issues.
Let our detractors from the other place waste their time pedalling hot dogs, if it
amuses them. The quality of our work will be mustard and ketchup on their haughty faces -
and may their buns be soggy! The Senate does care about the sick, the dying, and health
care professionals and institutions. We will not be distracted by jokers.
Resuming debate on the motion of the Honourable Senator Maheu, seconded by the
Honourable Senator Ferretti Barth, for the adoption of the ninth report of the Standing
Committee on Privileges, Standing Rules and Orders (independent Senators) presented in the
Senate on March 10, 1999.-(Honourable Senator Kinsella)
Hon. Marcel Prud'homme: Honourable senators, I wish to ask Senator Kinsella if
he intends to participate in this difficult issue. In a few minutes, we will have received
a report amending a report that was already amended.
We would like to know what is going on. The ninth report was accepted in committee. It
has been amended, to our chagrin and regret. There is a new report dealing with many other
matters and squeezed in as part of the ninth report.
I would like to know if there will ever be a debate. This item has been on the Order
Paper for 10 sittings now; it can only remain on the Order Paper for five more days. I
hope that it will be back to zero soon, but not today.
Hon. Noël A. Kinsella (Deputy Leader of the Opposition): Honourable senators, I
thank the senator for his inquiry. It is not my intention to speak on this item today.
Indeed, the notes that I had prepared I now wish to review in light of the subsequent
report to which the senator has alluded.
Senator Prud'homme: May I ask for direction from the Chair?
If we arrive next week with this item having been on the Order Paper for 15 sittings,
it will die on the Order Paper the day following. Any senators who have permission to say
a few words will kill the deadline and it will revert to zero. Do I understand the process
The Hon. the Speaker: The accepted practice is that even though a matter stands
in the name of a certain senator, any other honourable senator who wishes to speak may do
You are correct that, if an item reaches 15 sitting days on the Order Paper and someone
speaks even briefly before that, the order returns to day No. 1.
Consideration of Interim Report of Banking,
Trade and Commerce Committee on Study-Debate Continued
On the Order:
Resuming debate on the consideration of the sixteenth report (Interim) of the Standing
Senate Committee on Banking, Trade and Commerce entitled: "The Governance Practices
of Institutional Investors," tabled in the Senate on November 19, 1998.-(Honourable
Hon. Noël A. Kinsella (Deputy Leader of the Opposition): Honourable senators, I
shall be brief on this item. I rise to say a few words in consideration of the sixteenth
report of the Standing Senate Committee on Banking, Trade and Commerce entitled "The
Governance Practices of Institutional Investors."
This report is the committee's second stand-alone report on issues relating to
governance practices. The work of the committee on issues of corporate governance is
unprecedented, as will be evidenced in upcoming amendments that we will see relating to
the Canada Business Corporations Act in which it is expected that all recommendations of
the committee's first report might find favour in this place.
As Senator Meighen will state in this chamber next week, when he speaks to this report,
he has found that the report has already brought about change in the institutional
investor industry through voluntary standards from various associations.
The work of the Banking Committee is an example of the wealth of value that this place
provides to Canadians, Parliament and government.
The Hon. the Speaker: Honourable senators, this matter will remain standing in
the name of the Honourable Senator Meighen.
Hon. Sharon Carstairs (Deputy Leader of the Government): We must clarify that it
will revert to No. 1 .
Motion to Maintain Current Regulation of
Caffeine as Food Additive Adopted
On the Order:
Resuming debate on the motion of the Honourable Senator Spivak, seconded by the
Honourable Senator Cochrane:
That the Senate urge the Government of Canada to maintain Canada's current regulation
of caffeine as food additive in soft drink beverages until such time as there is evidence
that any proposed change will not result in a detriment to the health of Canadians and, in
particular, to children and young people.-( Honourable Senator Carstairs)
Hon. Sharon Carstairs (Deputy Leader of the Government): Honourable senators,
caffeine has been listed as a food additive in Canada's Food and Drug Regulations since
the inception of the food additive regulations and tables in 1964, and had been used in
cola-type beverages long before that time.
Caffeine, while not having much flavour in itself, is intensely bitter and is used as a
bittering agent. That is to say that it modifies by making bitter the other flavours.
Canada is one of the few countries that regulate closely the use of caffeine in soft
drinks. The United States, United Kingdom and members of the European Community and many
other countries of the world allow its broad use in soft drinks.
Caffeine, like some other substances used in soft drinks - for example quinine, a
flavour often used in tonic waters, or saponins, used as heading or foaming agents - has
some physiological activity and can be used both as a food additive and as a drug.
Caffeine is physiologically active in the body and is well known for its stimulative
effects. As Senator Spivak stated in her remarks, some individuals experience insomnia,
headaches, irritability, nervousness and hyperactivity after consuming caffeine. Caffeine
is naturally present in several foods like coffee, tea, cocoa, chocolate, chocolate milk
and guarana extracts. The level in soft drinks is six to nine times lower than the level
in filter-drip coffee. Unlike naturally occurring caffeine, when caffeine is used as a
food additive, it must be declared so in the list of ingredients appearing on the label.
This allows those who do not wish to consume caffeine to avoid it.
Let my take a few moments to outline the events that prompted Senator Spivak to move
the motion before us today.
In October 1996, a major international beverage manufacturer requested, in accordance
with requisite preclearance procedures under the Food and Drug Regulations, an amendment
to provide for the use of caffeine in all soft drinks. Specifically, this company has
marketed a citrus-flavoured product in North America for a number of years. In the U.S.A.,
this product has contained caffeine for many years, whereas in Canada caffeine cannot be
added to this type of product. The company wishes to standardize its formulation for North
America at the same level, unfortunately, as that used in the U.S.A. The purpose of
caffeine in the formulation is to add to the specific bitter flavour and taste in the soft
Preliminary internal assessment of this proposal within Health Canada did not raise any
health concerns for the consumer, as the projected intakes of caffeine in general are not
expected to increase if citrus-based, caffeine-containing soft drinks are substituted for
traditional caffeine-containing, cola-type soft drinks. It was recognized, though, that
acceptance of this proposal would result in more types of soft drinks containing caffeine
and therefore a slight increase in the general overall average consumption of this
A proposal to allow the addition of caffeine to non-alcoholic, carbonated,
citrus-flavoured beverages at a maximum level of 200 parts per million was pre-published
in Part I of the Canada Gazette on January 3, 1998, with a 90-day closing date for
A targeted consultation was conducted at the same time with a number of medical
associations, consumer groups, regulatory agencies, government agencies and health
professionals. Of the 13 respondents to these consultations, four expressed no concern
with the proposal, eight were against the proposal, and one, a major addiction and mental
health organization, stated that it had no position.
The predominant concerns expressed against the proposal dealt with the potential lack
of availability of non-caffeinated alternative beverages and the proper labelling of
products containing caffeine.
As a result of comments received through the consultation process, including comments
from the Centre for Science in the Public Interest and from the Women's Health Clinic of
Winnipeg, Manitoba, Health Canada conducted an extensive review of the physiological and
toxicological effects of this food additive. This review focused particularly on
consideration of any potential impact on children and women of child-bearing age. The
review has been peer-reviewed internally by Health Canada scientists and will also be
peer-reviewed externally by qualified scientists outside of Health Canada.
To date, the extension of the use of caffeine has not been approved. Health Canada
indicates that a final decision on this submission will be made when the scientific review
and consultation process has been completed.
Honourable senators, the public health of Canadians must be a first priority. I applaud
the government for undertaking the scientific review of caffeine, and I applaud Senator
Spivak for bringing this motion before us. I agree with her that a comprehensive review
must be completed to ensure that such a change would not be to the detriment of Canadians
in general, but particularly not to the detriment of Canadian youth. I urge honourable
senators to support this motion.
The Hon. the Speaker: If no other honourable senator wishes to speak, I will put
the motion. Is it your pleasure, honourable senators, to adopt the motion?
Hon. Vivienne Poy rose pursuant to notice of May 31, 1999:
That she will call the attention of the Senate to the Dragon Boat Festival.
She said: Honourable senators, June is the time for the Dragon Boat Festival, which is
one of the three most important festivals in Chinese culture. The festival, also known as
the Poet's Festival, is called Duan Wu Jie in Chinese. It is celebrated on the
fifth day of the fifth month of the Chinese lunar calendar, the timing of which is closely
linked to the summer solstice.
In the fourth century B.C., near the close of the warring states period in China, lived
a poet-statesman named Qu Yuan, a member of the Royal House of Chu and minister of Huai,
King of the State of Chu. Qu frowned on the corruption of the court and proposed effective
domestic political reforms, a legal system, and a civil service to hire only people of
great competence and integrity. He was opposed by other advisors to the king, as well as
by the queen consort. His advice to King Huai to make an alliance with the State of Qi
against the State of Qin was ignored. Qu was banished and wandered around the country
writing many odes and poems showing his concern for his country, and he gained great
respect from the people.
In the year 278 B.C., Qin troops defeated the State of Chu and absorbed it. Not wanting
to see his country vanquished by the enemy, Qu Yuan, the age of 62, held a rock in both
arms and drowned himself in the Miluo River, present-day Changsha.
When the news of his death came, the people rushed to the scene, rowing boats in the
river in an attempt to find his remains, which had drifted downstream and were never
recovered. According to legend, this happened on the fifth day of the fifth month of the
Chinese lunar calendar. Qu Yuan's fame spread across the land, and every year the people
mourned his death by rowing boats in the river and the sea, throwing in bamboo leaves
filled with glutinous rice symbolically to prevent the sea creatures from mutilating Qu's
There is so much respect for Qu Yuan in China that in 1957 he was one of the four
cultural giants the World Peace Council called on the people of the world to commemorate.
The painting of boats to look like dragons began in the late neolithic period in China.
A tribe called Raiyue that lived in ancient Wu and Yue, present day Jiangsu and Zhejiang
provinces, offered sacrifices to their totem, the dragon. The men cut their hair short and
tattooed their bodies with dragon designs, for they considered themselves as scions of the
dragon. They also pointed dragon designs on their boats and tools and threw rice wrapped
in reed leaves into the water as an offering to the dragon on the fifth day of the fifth
Today's Dragon Boat Festival has its origins in both the tradition of commemorating the
people's poet, Qu Yuan, and in honouring the dragon. Over the centuries, the people of
China celebrated the event annually by holding a dragon boat race, imitating the day the
people took to their boats to try to retrieve Qu Yuan's body. The boats were decorated
with dragon heads at the bows.
The culinary traditions of the festival still reflect the glutinous rice wrappings that
people threw in the water. At this time of year, steamed glutinous rice wrapped in bamboo
leaves, sometimes stuffed with pork or red beans, is consumed by Chinese all over the
This year, the Dragon Boat Festival falls on June 18 in the Gregorian calendar. Over
the past 10 years, more and more Canadian cities are hosting their own dragon boat races.
Most of the races occur in June and July, though some cities celebrate as late as
This celebration draws Canadians from all walks of life and has become a mainstream
Canadian festival in Victoria, Vancouver, Calgary, Edmonton, Winnipeg, Regina, Montreal,
and Halifax. In Ontario, races are held in Ottawa, Toronto, Guelph, Pickering, Hamilton,
Waterloo, Woodstock, London, and Stratford.
Internationally, they are held all over Asia and Europe, as well as in South Africa,
Australia and New Zealand.
In Toronto, the dragon boat races are now in their eleventh year. Last year, the races
drew over 100,000 people. This year, the celebration will include more than 30
multicultural performances, and 85 races with 160 teams participating.
Honourable senators, the Dragon Boat Festival is a wonderful opportunity for us to
celebrate our multicultural heritage in Canada. I hope that many of you will have the
opportunity to participate in the festivities in your respective parts of the country.
On motion of Senator Prud'homme, debate adjourned.
Leave having been given to revert to Government Notices of Motions:
Hon. Sharon Carstairs (Deputy Leader of the Government): Honourable senators,
with leave of the Senate and notwithstanding rule 58(1)( h), I move:
That when the Senate adjourns today, it do stand adjourned until Monday next, June 7,
1999 at 4 p.m.
Hon. Marcel Prud'homme: Honourable senators, again, I speak on behalf of another
independent senator, as well as myself.
Indeed, there has been an agreement between the two parties. However, we will consider
that there was also consultation with us. We will not push further. However, we will
pretend, or do, or act, as if there were consultations with at least two of us. I do not
wish to speak for the other independent senators.
The Hon. the Speaker: Honourable senators, is leave granted?
Some Hon. Senators: Agreed.
Motion agreed to.
The Senate adjourned until Monday, June 7, 1999 at 4 p.m.