Proceedings of the Standing Senate Committee on
Science and Technology
Issue 11 - Evidence - May 13, 1998
OTTAWA, Wednesday, May 13, 1998
The Standing Senate Committee on Social Affairs, Science and Technology, to
which was referred Bill S-13, to incorporate and to establish an industry levy
to provide for the Canadian Tobacco Industry Community Responsibility
Foundation, met this day at 3:50 p.m. to give consideration to the bill.
Senator Lowell Murray (Chairman) in the Chair.
The Chairman: Colleagues, we will now continue our consideration of Bill S-13,
Tobacco Industry Responsibility bill, sponsored by Senator Kenny and Senator
We are starting late this afternoon as there was an unexpected vote in the
Senate. We will have time, I hope and expect, to hear all the witnesses that we
had intended to hear and, if it is your wish, proceed with the clause-by-clause
study of the bill and decide how we wish to dispose of it.
We will hear from representatives of Statistics Canada. They will be followed by
what is referred to as a "technical panel" consisting largely of
legal experts on the constitutional, procedural and corporate governance
aspects of this bill.
Our final witnesses will be the co-sponsors, Senator Kenny and Senator Nolin.
Our first witnesses this afternoon are representatives of Statistics Canada,
namely, Ms Lecily Hunter, who is the project manager of the survey on smoking
in Canada, and Mr. Gary Catlin, the director of health statistics.
During the 12 hours or so that we have studied this bill, we have heard many
statistics from many sources on many subjects. Some of the statistics may have
been dubious, all of them were matters of contention. We expect you to settle
these problems and clarify these matters for the committee and for the public
who are watching us.
I do not think that there is another government agency that enjoys, with good
reason, the level of confidence and respect in this country that Statistics
Canada does for the professionalism and competence of its work. The confidence
and respect that it enjoys is not confined to Canada. Statistics Canada is
recognized as a world leader in this field. With that introduction, we are
expecting great things from you this afternoon.
Ms Lecily Hunter, Project Manager of the Survey on Smoking in Canada, Statistics
Canada: Honourable senators, Statistics Canada has been conducting smoking
surveys since 1966, for the most part at the request of Health Canada. We have
been doing annual surveys on smoking alone from 1966 until the mid-1970s and
then, starting in the mid-1970s, smoking became one topic in broader-based
general health surveys.
Starting in 1994, the National Population Health Survey was an initiative begun
by Statistics Canada with funding from other government departments through
Treasury Board, and that is now being conducted every two years. That is our
regular program now for monitoring smoking on a regular basis. Again, it is a
general health survey and smoking is one topic on the survey. I will talk about
two aspects. First, the historical trend in smoking for the total population
and then, second, I will focus on the 15- to 19-year olds.
Overall in Canada, for the 15-plus population, we saw a substantial decline from
the 1966 beginning of our data collection until the early 1980s. The smoking
proportion went from 45 per cent down to 35 per cent. From about 1986 to 1994,
the proportion of smokers remained relatively stable, at about 30 per cent or
31 per cent according to all of our surveys. In the last two years for which we
have data, 1995 and 1996, the rates were lower, at 26 per cent and 27 per cent.
Throughout the last 20 years males have always smoked for than females. However,
one thing that has changed substantially is that, in the 1960s, there was a
huge gap between the rate for males and the rate for females, whereas down to
the last 10 years or so that gap has narrowed substantially to about 5-per-cent
difference. There is data in the chart attached to the handout if you wish to
examine the trend lines.
These trends have not been completely consistent in the different age groups.
One of the age groups that is quite different is the 15- to 19-year olds.
Between the mid-1960s and the mid-1970s, the percentage of youth that was
smoking went up from 32 per cent to 37 per cent. From then until 1990, the
rates decreased to a low of about 21 per cent. Over the last few years there has
been an increase up to the current level of about 25 per cent.
As with the total population, there has been a gap between males and females.
However, in the 15- to 19-year-old segment, the female proportion of smokers is
now higher than the male proportion. The gap is not large, anywhere from two to
five percentage points.
Another aspect of smoking which we have looked at is the evolution of how people
begin smoking and their patterns of quitting. We know that about 85 per cent of
people begin smoking between the ages of 12 and 17. A fairly small rate of 5
per cent begin smoking below the age of 12, and 10 per cent begin smoking after
the age of 17, mostly between the ages of 18 and 24.
Approximately half of all smokers between the ages of 15 and 24 report making
repeated attempts to quit smoking. The attempts at quitting seem to drop off a
little bit as the age increases, with 40 per cent of people in the 25-to-64 age
group reporting attempts to quit and only 30 per cent of people aged 65 and
over reporting attempts to quit.
The survey data from the National Population Health Survey shows that there is a
strong relationship between the age at which a person starts smoking and the
number of years that they smoke, as well as their likelihood of quitting
smoking. I gave one example in the handout where, if a person begins smoking at
the age of 17, that person is twice as likely to quit smoking as someone who
began smoking at the age of 12. Also, someone who begins smoking at the age of
17 will smoke, on average, for 17 years, whereas someone who begins smoking at
the age of 12 will smoke, on average, for 21 years.
The reasons that most young people give for starting to smoke is generally
related to peer pressure; that is their family or their friends smoke. Studies
from the 1986 survey on smoking clearly indicated an increased likelihood of
smoking, particularly if your parents or a sibling smoke.
The reasons people give for quitting smoking also differ by age. Youth are more
likely to cite cost as a reason for quitting smoking, whereas older people are
more likely to cite either future or current health concerns as a reason for
The implications of this information for young people are at least threefold.
First, if people can get past the age of 17 without beginning to smoke, the
likelihood is that they will never become smokers.
Second, if the age at which a person starts smoking is delayed by even a year or
two, this will increase the likelihood that they will later quit smoking, and
it will also reduce the total number of years that they smoke.
Third, programs aimed at preventing young people from starting to smoke or to
help them quit should be oriented to the specific concerns which get young
people started smoking and which make it difficult for them to quit.
The Chairman: Thank you very much. That is very helpful. It gives us an
authoritative and objective number which we can deal with.
Senator Nolin: We heard yesterday that the percentage of smokers among Quebec
youth includes regular as well as occasional smokers. Do you draw that kind of
distinction in your numbers, or do your numbers relate only to regular smokers?
Ms Hunter: Most of this data refers to both daily smokers and occasional
smokers. In earlier surveys, generally only daily smoking statistics were
collected. However, for about the past 15 years we have asked specifically
whether people are daily smokers or occasional smokers and we collect both
Senator Nolin: You aggregate that into one number?
Ms Hunter: Yes.
Senator Nolin: Your figures refer to the age group 15 to 19. The numbers
provided to us yesterday refer to the age group under 13 and extend to the age
group over 17. It is a larger group.
Ms Hunter: Yes.
Senator Nolin: Did you have access to those numbers?
Ms Hunter: I did not.
Senator Nolin: I will give you the exact figure. The number of smokers in Quebec
doubled between 1991 and 1996 from 19 per cent to 38 per cent.
Would you care to comment on that?
Ms Hunter: We have two surveys that collect information on people below age 15.
The National Population Health Survey collects information on young people,
down to age 12. In 1994, through the school system, we collected information on
children aged 10 to 14.
From the youth-smoking survey, I know that the national figure in Canada for the
10- to 14-year olds was about 7 per cent.
Senator Nolin: Was 1996 the last year you conducted a survey?
Ms Hunter: The 1996 survey only goes down to age 15.
Senator Nolin: Would you assume it is steady at 7 per cent since 1994?
Ms Hunter: We have no data on that whatsoever.
Senator Nolin: We have a problem. We must reconcile those numbers. We could
conclude that the number of smokers under the age of 15 has dramatically
increased, which is possible. There are reasons for a survey being inaccurate.
However, from the numbers we have, we can conclude that it is dramatically high
Senator Kenny: Given that the Tobacco Act which was passed last year defined "minors"
in a specific way, is there any likelihood that, in the future, Statistics
Canada will be gathering data to conform with the act in order that we will be
able to measure the performance of the act? Obviously, you could not predict
what would be in the Tobacco Act, but now that you know how the Tobacco Act
defines a minor, do you anticipate that your agency will be changing the way it
Ms Hunter: As I mentioned earlier, the National Population Health Survey does go
down to age 12 for smoking data. The problem is that measuring that sort of
information on younger children requires a different methodology than we
normally use for our surveys, which is interviewing either in the home or by
telephone. Both personal interviews in the home and interviews by telephone are
somewhat problematic with younger children. If the interview is in the home, the
parents are generally listening and children are not likely to admit to things
their parents do not know about. If the interview is over the telephone, the
chances are not good that we will be allowed to speak to someone under the age
of 12 and ensure that they understand the questions.
Senator Kenny: I know that Statistics Canada recognizes the seriousness of the
problem and the importance of having accurate information on it to deal
adequately with the problem. How would you propose that information be gathered
so that we can have an understanding of the complete picture, given that we
have heard evidence that some decisions are made as early as the age of six, and
given that we have also heard evidence that 9- and 10-year-olds smoke?
Ms Hunter: The most reliable methodology that we have found for collecting
information on very young children is to go through the school system and
administer the questionnaires in the classroom. The problem with doing that is
that it requires a lot of administrative negotiations with the school boards to
get everything in place. It is something that we would not necessarily want to
do every year, but on a fairly regular basis. It is just a question of getting
everything in place to make that happen.
Senator Lavoie-Roux: My questions have already been asked more or less by my
colleagues because I was wondering how data were collected. It is easy to
establish how many children complete their primary, secondary or university
schooling because diplomas or certificates are granted.
To me, it was really an important issue to know to what extent your statistics
could be trusted -- I don't say that in a negative way -- since the methods
used for data collection are fairly weak. Most of my questions have already
With the methods you use, do you believe that we can trust the data? Are you
sure that it is accurate?
Ms Hunter: I think the data is reliable. When selecting samples, we select a
sample of households and then choose one person per household to respond to the
survey. The data collection is done over the telephone for some surveys, and
through personal interviews for other surveys.
The sample sizes are very large, generally 12,000, as was the sample for the
National Population Health Survey, of which at least 1,200 are in the 15- to
19-year-old age group. In terms of statistical reliability, our sample is large
enough that we can have a great deal of confidence in the estimates.
Generally, our surveys get, approximately, an 85-per-cent-response rate, which
is an indication that non-response is not a factor. We are not missing out on
people who are not responding to the survey and who have different
characteristics from those who do.
Overall, we are confident that the data we are presenting here are reliability.
Senator Lavoie-Roux: A child can certainly admit to smoking, but can you get
clear information from that child about the regularity of his or her habit of
Ms Hunter: We generally ask whether they currently smoke. We then ask questions
about how many cigarettes per day they smoke, or how many cigarettes they have
smoked within a 30-day period. In the past, especially for the youth smoking
survey where it was targeted at a younger age group, we asked the questions in
a different way from how we would ask them of an older child because we must
ensure that the language is simple enough for them to understand. After all,
they do not have the same language skills as older teenagers or young adults.
Senator Butts: If I take your reliable studies that say that most young people
stop smoking because of cost, would it not then follow that a bill such as
this, or another bill that increases the price, would stop someone smoking?
Ms Hunter: I cannot make that judgment. I just know that when we asked people
why they started smoking, most of them said it was as a result of things to do
with peer pressure, that their friends influenced them more than anything else.
Senator Butts: But you did say that cost is more important to them than health
Ms Hunter: Definitely cost is more important.
Senator Butts: To focus on the health issues would not as much of a deterrent as
an increase in cost.
Ms Hunter: If the price were increased, you would have people stopping to smoke
sooner, but I cannot say how it would affect their starting.
Senator Butts: We were told at some point yesterday that more of the young
people who start are from low-income families, which would augment this
Senator LeBreton: I will concentrate on the 15-to-19 age group. You show that,
from the mid-1960s to the mid-1970s, the percentage of youth who smoked
increased from 32 per cent to 37 per cent. There was then a dramatic decrease
to a low of 21 per cent in the early 1990s. Then, between 1991 and 1996, there
was an increase to the current level, which looks like it has levelled off at 25
You also state that young people smoke mostly because of peer pressure -- their
siblings smoke, their parents smoke, their friends smoke -- and yesterday we
heard there is also a certain element of risk-taking and rebelliousness
involved. If that is the case, and if the incentive to quit is mostly cost, do
your data show what impact, if any, advertising and sponsorship have in young
people starting to smoke?
Ms Hunter: I do not have any good answer to that question because I have not
really looked at the data. In the youth-smoking survey, they did ask some
questions about brand recognition, and Health Canada has done some analysis on
that. Since I have not seen it myself, I cannot answer the question.
Senator LeBreton: Obviously, in order to elicit the responses as to why people
start to smoke, there would be some questions as to whether they are influenced
by sponsorship or advertising, and we heard that yesterday as well.
We heard an interesting presentation from a doctor who said that there really is
an element of society who are risk-takers and who are rebellious, and we shared
some stories regarding the fact that the more you tell someone of a certain age
not to do something, the more he or she is inclined to do it.
That is rather curious, in view of the intent of this bill.
Ms Hunter: One of the studies arising from the National Population Health
Survey, because it collects data on other aspects of health, showed a relation
between smoking and self-esteem, which may be another aspect of the
Senator LeBreton: Then again, advertising does not necessarily equate with
Senator Ferretti Barth: You state in your report that your data come from
interviews which are mostly done over the telephone. Do you think that the
results are reliable? I had some involvement with Statistics Canada. I did many
telephone interviews to fill out questionnaires. In our community, we have 11
000 members in our community center. I am very close to them. When they answered
me in person, they said they were tired. People don't take it seriously when
they are interviewed over the telephone. They want to cut it short, they don't
have time to do it. My feeling was that such statistics were not reliable.
In your testimony, you claim that female teenagers smoke more than male
teenagers. Do you have any data on the social background of those young people?
There are family and social problems. Do those girls live in foster homes? Have
they quit school, are they leading a normal daily life? Do they come from
divorced families? Do you have such data to be able to understand why at some
point in time they start smoking, even when they know that there is a risk?
Does anybody tell them that cigarette smoking makes them prone to disease?
Yesterday, I heard a physician say that cigarettes do not cause cancer but other
diseases. I'd like to know if you have any statistics on that and if your data
is reliable. You consider that the answers you get over the phone are
Ms Hunter: There were quite a few questions there. I will try to ensure that I
answer them all.
First, our telephone interviewers are extremely skilled at making people feel
comfortable in choosing times that are most convenient to them, in ensuring
that they feel comfortable in understanding that it is Statistics Canada and
that we are not trying to impose on their time, and that we will treat their
data with complete confidentiality. Our impression is that people do feel quite
comfortable in dealing with us and we do make an effort to ensure that the time
is convenient for them to reply to the surveys.
As to the types of households these people come from, because it is almost
always a household-based interview, it will only cover those who are living in
some kind of a home. People who are homeless, for example, will not be covered
by these surveys. However, standard households, or households with divorced
parents, or foster homes, or whatever, all these types of different variations
on households, are covered in the survey.
I am not sure of the extent of the data analysis that has been done.
Perhaps Mr. Catlin has something to say on that.
Mr. Gary Catlin, Director of Health Statistics, Statistics Canada: Various
pieces of data are available to us.When you are looking at 15- to 19-year olds
and you break that down by males and females, and further break it down by the
different types of households, you end up with a very small group, and the
smaller the group, the less reliability you can have in your data.
We can consider, for example, the impact of education or the impact of certain
other issues, without grouping by age, but we must break our analysis down into
We do have that data available to us.
Ms Hunter: We also know that low income and low education have an impact on
smoking rates for the general population, and there is no reason to suspect
that it would be different for younger age groups.
Senator Ferretti Barth: Did you take this social factor into account in your
statistics? Do you think that children and teenagers from an underprivileged
background are mor inclined to smoke than others? That's what I wanted to know.
If so, if we should launch a prevention campaign, we should start in this
environment rather than in others. If we should do some education, we should
start with the very underprivileged.
The Chairman: From time to time, there have been references to various studies
including one done by Health Canada. I thought that government departments
which commissioned or conducted studies or surveys, statistical studies of this
kind, had to clear them with Statistics Canada so that the sampling, the
methodology and so on, would be approved by you before the study was done. Is
that the case?
Mr. Catlin: Most of the surveys that Ms Hunter referred to earlier in her
presentations were surveys sponsored by Health Canada at Statistics Canada.
That includes all the data provided in her report.
The Chairman: When we hear references to Health Canada surveys, can we assume
that, if they were not done by you, that you can vouch for their authenticity?
Mr. Catlin: No, that is going down another channel. There are other omnibus
The Chairman: I understand that.
Mr. Catlin: Surveys are done where Health Canada may "buy" specific
questions in those surveys. They are independent of Statistics Canada.
The Chairman: Perhaps you should insist that, when they are publishing studies
that have your approval and your stamp of authenticity, they identify them as
such: that they are studies done for them by you.
Mr. Catlin: I think they do that in all cases. Typically, they quote the source
of the data as being Statistics Canada and these data are also made publicly
available to other researchers.
The Chairman: We appreciate your assistance today. We all appreciate the
clarification of these statistics, especially the one very succinct paragraph
where you set out the implications of this information on young people.
Another set of statistics was presented to us yesterday which dealt with the
damage done by tobacco and cigarette smoking. We have heard it said again and
again that 40,000 deaths annually can be ascribed to tobacco use. In my
recollection, they also said that cigarettes kill one out of every two smokers.
I saw that number on a presentation here. There were references to second-hand
smoke killing 4,700 people. There were other references to infant deaths. I
have a note that about 16,000 deaths occur from cardiovascular diseases
attributable to smoking. What can you say about those statistics? Are they
Mr. Catlin: No, typically they are not based on our data, although we do have
data on cancer and mortality. Typically, those kinds of data are taken from
more focused and controlled studies which are then extrapolated to a larger
population. They look at research that relates smoking with cancer, for
example, lung cancer in particular. Then they look at the fact that trends in
lung cancer are very closely related to trends in smoking and they draw
extrapolations from that.
I do not believe we have published any data that specifically looks at the total
number of deaths attributable to smoking in particular.
The Chairman: Do you know what research is being done in this country by Health
Canada or other agencies on this range of questions: deaths due to smoking,
deaths due to second-hand smoke? Someone will correct me if I am wrong, but
when I saw these numbers yesterday, I saw no source indicated.
Mr. Catlin: We certainly do not try to keep track of the varied research that is
being done on smoking. We try to use our data and address issues in our
publications that are relevant to issues such as smoking.
The Chairman: Do you not think this would be relevant?
Mr. Catlin: Yes, it would be relevant, but I do not think we have any data
currently that would allow us to produce those kinds of numbers.
Senator Lavoie-Roux: Mr. Chair, the various medical associations or medical
groups like the Canadian Cancer Society keep their own statistics. With other
diseases, the same thing happens.
The Chairman: I am aware of that but no indication was given as to the source or
the methodology, how this is done. Our friends from Statistics Canada have told
us how they collect their statistics. I wanted to try to identify the source of
those numbers and to get a handle on their authenticity.
Senator Ferretti Barth: Another thing that surprised me a lot yesterday was that
everybody was referring to 40 000 deaths annually from smoking. It's a
perfectly round figure. It's not only one or two individuals. It worried me a
The 40 000 people who die from smoking, can we find them in your statistics?
Senator Lavoie-Roux says that Statistics Canada, the Canadian Cancer Society or
the Lung association have their own statistics, and I agree with her. Everybody
says that 40 000 people annually die from smoking in Canada. This figure
At Statistics Canada, you collect also data from other organisations to be more
accurate. Do you think that this figure of 40 000 people is correct? If you
want me to be able to find some sleep tonight, you better answer my question.
Mr. Catlin: Without looking at the methodology used to calculate those numbers,
I do not think we can tell you exactly whether that was right or not. I can
tell you that the way they came up with the number of 40,000 was to use various
studies that say we can attribute a certain percentage of lung cancer deaths to
tobacco. We do have good statistics on the number of lung cancer deaths. They
can take a percentage of those.
The Chairman: Does it matter to the statisticians when they die? We will all
die. None of us is immortal. I remember a physician saying to me that, if you
live long enough, you will die of cancer. I think it is important to know,
whether you die at 50, 60, 70 or 80, if cigarette smoking contributed to your
death. I suppose that is what we should be looking at.
There was reference in a paper done for us by the Library of Parliament to
various international studies, which I will not take you through. However, the
paper stated that a study by federal health authorities done in July of 1995
estimated the annual deaths attributable to smoking in Canada at more than
45,000. This is 11 per cent higher, it stated, than previous estimates, as a
result of improved statistical methods.
The paper went on to state that the 1995 study projected increases in deaths
among women attributable to smoking would increase by 24 per cent from 1991 to
2000 and that, in the last 20 years, the rate of lung cancer among women has
increased five times. Three out of four cases appear to be caused by smoking.
It goes on to state that a 1993 study by the University of Toronto indicated
that women who smoke a pack of cigarettes a day for 40 years are, on average,
27 times more likely than non-smoking women to develop lung cancer, and that in
terms of lung cancer, it is about three times more dangerous for women to smoke
than for men.
In May 1994, Health Canada released statistics predicting that lung cancer would
will kill more women than breast cancer. These statistics, the report states,
correspond with the increasing prevalence of smoking among women.
Then it goes on to the risk of heart attack. For female smokers under 50, the
risk is 10 times higher than for non-smokers in the same group.
What do you know about any of these studies? Is Stats Canada familiar with any
Mr. Catlin: I have seen some of those studies. The data that we collect is
specifically on the number of cancer deaths in various years and the incidence
of various types of cancers in various years.
I think you were referring to a number of studies.
The Chairman: Yes.
Mr. Catlin: They have taken data from various sources and put it together in a
way that they can predict outcomes.
The Chairman: Can they make reasonable predictions? Do you have an answer to
Mr. Catlin: We have seen, for example, an increase in the incidence of lung
cancer among women over the last number of years. I do not have those numbers
with me, but we have seen that increase over the last number of years. It is
consistent with the fact that women, 20 years ago, started to smoke more.
Again, the difficulty is that you do not smoke and drop dead the next day or
develop cancer the following year. It has a long-term impact. We look at these
various trends and then can attribute them.
Senator Kenny: Senator Ferretti Barth is quite correct. Any time you hear
absolute, round figures, lights flash on and off in everyone's mind.
For the sake of simplicity and clarity in communicating, yesterday in my
testimony I used the figure of 40,000. The most recent figure I have from
Health Canada is 48,350 preventable deaths. They project that 80 per cent are
attributable to smoking-related diseases.
I have figures for 1989 from a report by Collishaw and Leahy entitled, "Mortality
Attributable to Tobacco Use in Canada," and figures from a Statistics
Canada report entitled "Causes of Death, 1989," found in Health
Reports, Supplement Number 11, Volume 3, Catalogue Number 82-03-S-11. In 1989,
they attributed 38,357 deaths to smoking.
A decade has passed since then, so I confess to a certain amount of rounding.
However, we are in the ballpark; we are in the range. Whether it is a few
hundred more or a few hundred less, I think that we are generally talking about
Senator Butts: I wish to interject one number, which is not related to the
number of deaths.
Two years ago in my province if Nova Scotia, we had 568 new cases of lung cancer
in women. Four of those women did not smoke. That is a fact because I did the
The Chairman: It is good to have another former academic at the table.
I would like to thank the witnesses from Statistics Canada for their testimony.
It has been most helpful.
Honourable senators, our next panel of five members will be discussing the
legal, procedural, constitutional and corporate governance issues in this bill.
This format works best when there is a dialogue between the senators and the
witnesses, and an opportunity for senators to ask questions. I assure you that
all the relevant information will be elicited by the senators in question and
I will ask the our witnesses to restrict their opening remarks to about five
minutes each. We will then open the floor to discussion and questions. I assure
you that you will have an opportunity to adduce all the relevant information
and the matters you wish to get on the record in the course of that dialogue.
The witnesses are Mr. Rob Cunningham, a lawyer and senior policy analyst with
the Canadian Cancer Society; Professor Gerald Gall of the University of
Alberta; from the University of Ottawa, Professor Joseph Magnet; Mr. Michael
Clegg, Q.C., an expert on parliamentary law and procedure; and Mr. Mark Siegel,
senior tax counsel at the Ottawa Law Firm of Gowling, Strathy and Henderson.
Mr. Rob Cunningham, Senior Policy Analyst, Canadian Cancer Society: Honourable
senators, by way of introduction, Professor Gall and Professor Magnet will
follow me and they will be talking about division of powers and charter issues
relating to the Constitution. Mr. Clegg and Mr. Siegel will talk about the
question of levy versus tax from a legal and parliamentary perspective. I will
have a number of legal comments to make, blended with a few policy comments.
I thank you on behalf of the Canadian Cancer Society for this opportunity to
testify today. We support this bill quite strongly. We congratulate Senators
Kenny, Nolin and the others for this bill which is now before this committee.
We have analysed the bill. Our recommendation is that it is worthy of report
without substantive amendments. The industry did offer some criticisms of the
bill but without specific suggestions for improvement.
We have furnished you with a number of documents including an opinion poll from
Environics released today in which there was a preamble describing the contents
of the bill. The poll disclosed that 67 per cent of Canadians indicated they
were supportive of the bill, and 25 per cent were opposed to it. This is yet
another reason, in our view, for the Senate to pass this bill.
In terms of corporate governance, the health community does support the
structure in the bill. The Canadian Tobacco Manufacturers' Council indicated
yesterday that the foundation would not be accountable to Parliament. I do not
agree. Clause 34 of the bill indicates that an annual report must be tabled in
both Houses of Parliament, board meetings are to be open to the public, and the
members of the foundation are to be appointed by the minister, who is, of
course, accountable to Parliament.
The industry testified that there was no requirement for an evaluation of
programs undertaken by the foundation. Clause 34(1)(d) specifically requires an
evaluation to be included in the annual report tabled in Parliament. The
industry indicated, with respect to administrative costs, that if the
foundation had other revenue from interest, or bequests and so on, the levy
could increase beyond 10 per cent. I disagree with that interpretation and
point to clause 30(3) of the bill which, in my view, places a ceiling on
administrative costs in terms of a percentage of the levy.
With respect to the testimony regarding the potential risk of smuggling, Mr.
Parker did concede that he did not think that the magnitude of the levy
contemplated in the bill would increase that risk. I agree with that. One
reason is that the levy would apply to tobacco products sold both on and off
reserves. It would not increase the differential between the price for products
in those on-reserve and off-reserve locations. Further, it would apply in all
provinces, thus there would not be an increase in the price differential
between low-tax and high-tax provinces.
I will not go into detail, but I will note with respect to statistics, as a
complement to the testimony you have just heard from Statistics Canada, there
are excerpts from my book, Smoke and Mirrors, which reproduce statistics from
Statistics Canada and from the tobacco industry documenting the trends in
per-capita consumption, youth smoking and adult smoking, and I believe the
numbers are clearly there to rebut the allegations that we have heard, and the
claims from Mr. Luik and Mr. Parker that past efforts have been a failure.
As to the amount of revenue that would be collected, I believe that the $120
million is proportional to the $200 million per year which is the estimated
retail value of products that are sold illegally to those under age. Further, I
believe it is proportional to the amount of money we have heard testimony about
with respect to California and Massachusetts. However, there is also a
considerable amount of product liability litigation in the United States and we
have seen an agreement signed by the major tobacco companies in the United
States, who have their sister companies in Canada, the three members of the
Canadian Tobacco Manufacturers' Council. This agreement, signed June 20, 1997,
includes -- and it must be approved by Congress before it will take effect --
$3.5 billion per year to fund various programs: research, education, mass media
and so on. As it relates to Canada, it is a great deal of money if you divide
that by 10.
A further document handed out to you, "Questions Relevant to Bill S-13, the
Tobacco Industry Responsibility Act," contains various excerpts of
quotations by tobacco manufacturers in Canada and the United States in which
they acknowledge that education can work to reduce smoking and in which they
acknowledge that health organizations are better positioned to carry out and
manage these programs than the tobacco industry. That is relevant in
consideration of the corporate governance aspects.
Professor Gerald Gall, University of Alberta: The true nature and purpose, or
the pith and substance of the legislation before you, is clearly that of public
health; that is, the promotion of public health on a national basis. The stated
purpose of the bill is to protect young people from becoming addicted to
tobacco through early usage.
What is the constitutional justification for the legislation? As I have said,
the major justification is health promotion, which is national in scope. Health
is an amorphous matter. It is not specifically mentioned in the Constitution
Act except for provincial jurisdiction related to hospitals. There is both
federal and provincial authority over health, and the jurisdictional dividing
line is sometimes not very clear. For example, the recent Krever inquiry
struggled with the issue of which order of government had jurisdiction over
Canada's blood supply. That is why, notwithstanding the recent controversy, the
compensation package for hepatitis C victims is a shared federal-provincial
Some matters are clearly within federal authority. One judge described the
federal jurisdiction over health as part of the protection of national welfare.
Another judge felt that, if a health concern were national in scope, there was
federal jurisdiction to deal with that concern. Some judges feel, more
specifically, that the federal authority derives from particular, enumerated
heads of power, either as incidental or ancillary to a particular head of
power, or directly subsumed under a specific head of power such as a health
concern falling within the ambit of crime.
These conclusions all involve judicial interpretations of the particular
enumerations in the Constitution. One such interpretation that is central to
this question is the margarine case, where the court identified health as one
of the five federal public purposes supported by section 91.27, the federal
criminal law power. Peace, order, security, morality and health are the ordinary
purposes sought to be achieved by that power. Moreover, the criminal law power
has been held to extend to such peripheral reaches as Sunday observance, civil
liberties, et cetera, but including legislation dealing with food adulteration
or food additives, another health matter.
Moreover, and this should be emphasized, in the protection of health there is
case authority that Parliament can overkill or overprotect in the protection of
health. In an old case, for example, called Standard Sausage v. Lee, the court
said that, when prohibited from doing so, the adding of sulphur dioxide to meat
products as a preservative, even at safe levels, would not be tolerated because
Parliament can overprotect when it comes to health.
More recently, no one challenged the banning of saccharin as a sweetener in soft
drinks. The ban followed laboratory results which showed that second generation
male offspring of rats fed an inordinate amount of saccharin had a high
incidence of bladder cancer. Even though these results have been somewhat
discredited, the ban remains.
Parliament has the authority to over-protect in the area of health. Through its
spending power, Parliament has the authority to regulate health in the funding
of universal medical care, even though Medicare is a provincial matter. The
Supreme Court of Canada justified this in the reference on the Canada
Assistance Plan. On the other hand, courts have held that the provinces have
jurisdiction over health concerns that are purely local in nature, such as
compulsory heroin treatment in British Columbia.
Another source of jurisdiction over this legislation is the peace, order and
good government clause in section 91 of the Constitution Act. In particular, in
the national dimensions interpretation of that general power it has been held,
in the Crown Zellerbach case, that matters that have a singleness,
distinctiveness and indivisibility that clearly distinguishes them from
provincial matters, and a scale of impact on provincial jurisdiction, that is
reconcilable with the fundamental distribution of legislative power, will be
justified. That permits federal jurisdiction to promote public health measures
designed to prevent youthful addiction to tobacco.
Is this act an infringement of the provincial responsibility over education
under section 93? While Professor Magnet is the expert in the constitutional
aspect of education, I believe that the simple answer is "no."
First, section 93 deals only with formal educational structures. This bill does
not. Second, this bill deals with health promotion, and any educational mandate
in the act is ancillary or necessarily incidental or integrally related to the
federal health promotion function. Moreover, as I have said, through its
spending power, Parliament can authorize spending in provincial areas.
With respect to the foundation making grants to the arts, cultural and sporting
industries, and to tobacco farmers, because of a dependency built up for
decades between the tobacco manufacturers and the arts, cultural and sporting
industries, and between tobacco manufacturers and tobacco producers, there is a
rational and functional linkage between these provisions and the rest of the
bill. To put that another way, there is a nexus between the source of the funds
and the purpose of the distribution of the funds in the bill.
With respect to the transitional funding of arts, cultural and sporting
industries, it is simply not unusual or unprecedented for Parliament to create
an agency to do so, whatever the source of funds. In this case, it is done by
creating an arm's length foundation. In the past, it was done by creating other
agencies, such as the Canada Council. If Parliament has the authority to create
the latter; namely, the Canada Council, it surely has the ability to create the
former, the new arm's length foundation.
With respect to the farm subsidy, since most tobacco farming is functionally
related to interprovincial marketing, there is likely federal jurisdiction
under the traditional trade and commerce power. There might be a problem,
because of the particularity of the industries targeted. to justify the subsidy
under the power over general trade, but it is not necessary to do so. As I have
said, there is already sufficient grounds of justification for the law without
resort to general trade.
With respect to Charter issues, I would first like to comment on freedom of
expression. Unlike the Tobacco Act, any alleged violation of freedom of
expression in this bill is tenuous at best. There are various recitals in the
bill concerning the tobacco industry's ability to unilaterally address the
problem of youth smoking without some kind of assistance. Whether or not these
recitals are a correct representation of the industry's position, they are,
nonetheless, not an interference with the industry's freedom of expression. It
is no different from the situation that would arise if a crime bill stated
that, due to dramatic increases of crime, it is necessary to enact tougher
measures to deal with that crime increase. If StatsCan has statistics to show
that crime is on the decrease, it can issue a statement in rebuttal. In both
instances, it is Parliament speaking, whether accurate or not. It is certainly
not an interference with the freedom of expression of the tobacco industry.
In any event, an analysis of the freedom of expression or section 2
jurisprudence, as discussed in an article in the U.B.C. Law Review by David
Schneiderman, the Executive Director for the Centre for Constitutional Studies,
shows that, when the law is framed, or when it is argued in court that the
purpose of the law is to protect vulnerable persons from the evils arising out
of some kinds of expression, the Supreme Court of Canada, in its justification
process with respect to the prohibited expression, will side with the
vulnerable and uphold the prohibition.
This was not done in the RJR argument and the government lost its case. This was
done in Keegstra with respect to hate propaganda and the vulnerable position of
those in targeted groups. It was done in the prostitution reference with
respect to the vulnerability of those associated with the prostitution milieu
and its related drugs and violence, and it was done in the Butler case with
respect to the dangers to women posed by obscene material.
So as long as a law is couched in terms of protecting the vulnerable, any
violations of freedom of expression will be tolerated.
Finally, with respect to freedom of association, any assertion by the industry
that they may have been coercively associated with the foundation under the
bill, and therefore its freedom of association was violated, may be rebutted by
yesterday's brief by the Canadian Tobacco Manufacturers' Council in which the
tobacco manufacturers complained about their exclusion from membership on the
foundation. In any event, I do not believe that the term "association"
in the Charter envisages the kind of association contemplated in the bill.
In summary, I believe that this bill is constitutionally valid. Moreover, as an
afterthought -- and I have not looked at this specifically in relation to this
bill -- I would venture a guess that this bill would further Canada's
health-related obligations under the International Covenant on Economic, Social
and Cultural Rights.
Professor Joseph Magnet, University of Ottawa: Thank you for inviting me to
attend your meeting. I have prepared a written opinion which has been tabled
and which I will summarize briefly.
From the point of view of the division of powers, there is little question but
that the bill in general is constitutionally valid as a national health
promotion scheme under the federal general power. There may be some questions
raised with respect to these subsidies to arts, culture, sports organizations,
and to tobacco farmers. If those were raised in a court, the argument would be
that this is a single-industry regulation of the type that has been seen in the
courts before that takes money from one sector of the industry -- the tobacco
manufacturers -- and gives it to another one -- the farmers and the arts -- and
that that is a matter of provincial jurisdiction. I think that is the only
remotely questionable part of the bill.
It is my opinion that these subsidies are rationally related to the general
regulatory scheme of health promotion and, for that reason, constitutionally
With respect to the Charter of Rights and Freedoms, it is possible, I suppose,
to say that there is a free expression violation. This would not be my opinion.
If there were such a free expression violation, I think it would be
demonstrably justified as a reasonable measure in pursuit of health objectives.
My arguments are developed in my opinion. I would be happy to respond to
questions. Thank you.
The Chairman: Many thanks, Professor Magnet.
Mr. Clegg, please proceed.
Mr. Michael Clegg, Q.C., Expert on Parliamentary Law and Procedure, Gowling,
Strathy & Henderson: Mr. Chairman. I am very pleased to appear before the
committee. The opinion I wrote has been tabled. I will summarize it and comment
briefly on how it interacts with other points that have been raised in
connection with this matter.
The first part of my opinion deals with whether this bill appropriates any
public money. It clearly does not, as the Speaker has already ruled.
The second portion of the opinion addresses the issue of whether this is a tax
or a levy. This issue is central to the question of whether it may be dealt
with by the Senate at all. The distinction is important and is founded in the
Crown prerogative of financial initiative; that is, that the Crown has the
power to do those things which control the state's money in the broadest sense;
to raise money and to spend it. We are dealing here with the raising side, as
to whether or not this is an tax.
The principal authority on these matters from the parliamentary procedure point
of view is the text on Westminster parliamentary procedure, Erskine May. We are
hoping that Bourinot will be revived in a few years.
The citation in Erskine May reads that a levy on an industry for its own
purposes is not a tax. To step back, it has been stated by my colleagues, and I
agree, that the general subject of this bill is the issue of health. The
specific technical purpose of the bill is stated in the bill itself. It is to
enable and assist the tobacco industry to carry out its publicly stated
objectives of reducing the use of tobacco products by young persons throughout
Canada. They have said themselves that they feel they do not have the
credibility to do this kind of thing, and this bill therefore steps in and does
it for them, as it were.
One of the questions that arises in the analysis of whether something is a tax
or a levy is whether the funds are actually part of the public money. This bill
makes it very clear that these funds never become a part of the Consolidated
Revenue Fund, nor does any residue fall back to the Consolidated Revenue Fund.
If it is not spent, it is returned to the industry.
This is a public money issue and the principal tests are whether this money
emanates from public money sources and whether it goes back to public money
sources. In this particular case, it is clear it does not do that.
To be a levy rather than a tax within the meaning of section 53 of the
Constitution Act, therefore, two conditions must be satisfied. It must be a
levy on the industry and it must be a levy, and not a tax, for the industry's
own purposes. Clearly this is a levy, a charge, on the industry itself. There is
no other source of funds other than the industry and there is no provision for
any liability, subsidy or guarantee to be a charge on public funds.
We must look carefully at the purpose of the levy. Arguments may be advanced
that the purpose is a public one, and there are arguments that it is for an
industry purpose. The arguments that it is a public purpose rather than an
industry purpose would be to say that the primary purpose of this is to carry
out a public policy of preventing youth from entering the smoking population.
However, this bill does not replace or fund an existing government program. It
states that it is to carry out the industry's stated objective, the industry's
responsibility, of attempting to stop youth from starting to smoke. This is its
purpose. Now, what effect will this have on the industry? We get to the aspect
of whether this is an industry purpose. The view that the levy is for an
industry purpose is both directly in accord with the express provisions of the
bill, wherein subclause 3(1) specifically states that purpose which I have set
out. It will also very much improve the image of the industry, and that is of
vital importance to it, given the possibility of restrictive litigation and
growing civil litigation that threatens the industry's very existence.
Smoking is now generally agreed to be addictive, toxic and in many cases fatal.
The industry's defence to liability lies in the smoker's voluntary acceptance
of these risks. Addiction is recognized as being more likely in youth, and the
ability to assess and make an informed decision to accept risk is lower among
youth. Regardless of whether the purpose of the bill is fulfilled, it will be a
part of the industry's defence against liability for causing the addiction of
youth that it has made great efforts to combat youth smoking. The effect of
this program will be evidence of those efforts. Therefore, the effect of this
program provided by this bill, not provided by the industry because they have
admitted they have no credibility in this field, will be to help them with
their stated argument that the only issue is one of consent.
If you are educating youth, they may say it is creating an informed consent. The
proponents of the bill and those people you have heard will hope that the
effect of the bill will be to stop people smoking, not to create an informed
consent which they must then accept.
However, this is the interpretation which is consistent with the bill's
expressly stated purpose to assist the industry in its objective. It is not
based on a speculative outcome as to whether it succeeds. We do not know
whether it will succeed. We hope that it will succeed. There is nobody who does
not wish it to succeed, but it is not certain. It is certain that it will
fulfil that stated purpose of protecting their position, trying to show their
responsibility in society and, therefore, it is an industry-purpose bill.
A number of bills have been ruled on in Westminster. Erskine May always gives us
well-documented analyses of these bills. A large number were ruled as being
levies, and some were ruled as being taxes. In most cases they were ruled as
being taxes because the money was clearly not for the industry's purpose, and
the money reverted to the Consolidated Revenue Fund if not used up.
The most similar bill to this one was a bill that dealt with sea pollution.
There was a levy on the industry tankers. That was ruled a tax and not a levy,
but there was a large difference there. It was already public policy to provide
funds for this. This did, in fact, provide the funds for the public policy and
the government was under a legal obligation already, under its international
convention obligations, to carry out those duties, and they stated that it was
so clearly not for an industry purpose that it was dealt with as a tax bill.
In other cases, Westminster has recognized an industry purpose. There was a case
of a bill to protect travellers which regulated travel agencies and required
them to pay a levy. From the text in Erskine May, it is clear that that would
have been ruled a levy because it was a recognizable industry purpose -- to
restore confidence in the industry. However, there was one very important
difference. In that case, the money that was not used went to the Consolidated
Revenue Fund, so we do not have a clear precedent, at least not one that I
However, following the principles that emanate from that analysis, it seems
clear to me that we have here a bill that is entirely in accordance with its
stated words in clause 3, "...to enable and assist the Canadian tobacco
industry to carry out its publicly stated industry objective..."
One other matter that is mentioned in the analysis of these bills is the
question of whether the industry itself controls these funds. I believe it was
the tobacco council's testimony that they did not even have a chance to control
the funds. In this particular case it is clear why they do not control these
funds. They themselves have stated that they do not have the credibility to do
that. That is why that is not being done.
If we were in different circumstances, it is quite likely that they would be
participants in the fund, but there is a specific reason why that is not the
case. I do not think that bears on whether or not it is a levy.
The next question is: Who is to determine the acceptability of the bill once it
is introduced? The Speaker has already ruled that it is not an appropriation
bill. The question of whether it is a tax or a levy is more an issue of law
than of procedure. Traditionally, speakers have shied away from making rulings
of law. It is my view that this is a matter for the Senate to determine. If the
Senate decides that this is a levy and deals with the bill, then that is the
end of the matter within the Senate. That determines it.
The other question is: How should the Senate view its capacities in these
matters? Should it be exceptionally cautious? Should it always stay many feet
inside the borderline, or should it be bold and positive in its duty? I believe
that the Senate has a public duty and that public duty is well defined. I think
that it serves its interest best if the Senate is vigorous in its activities
within that duty, and goes as far as it feels it should towards the lines where
its jurisdiction ends. I do not believe that the Senate is obliged to be
exceptionally cautious and to back away from anything where there is a small
chance of dealing with a money bill. The Senate has a clear choice here to say
it believes that, on this analysis, the bill is what it says it is: an
assistance to the industry to carry out its own purpose, to take things out of
its own hands which it cannot do by itself because of its own lack of
credibility. I believe that is how the Senate may and could proceed.
The Chairman: Thank you. The idea of a vigorous Senate pushing the envelope ever
forward is certainly in accordance with my views, at least since I returned to
Our next witness is Mr. Siegel.
Mr. Mark Siegel, Senior Tax Counsel, Gowling, Strathy & Henderson: Thank
you, Mr. Chairman, for inviting me to speak. I have prepared a written opinion,
which I understand has been tabled already, so I will quickly summarize the
issues previously raised in my opinion.
I was asked to speak on the issue of whether the charge to be imposed pursuant
to the proposed bill would be considered a levy or a tax.
A tax is generally considered to be a compulsory charge levied upon a person by
a government body for the purposes of financing public goods and services, and
redistributing income among different economic groups within society.
The issue of whether a charge is a tax, or is something else, has been
particularly described in provincial cases under the Constitution Act because a
province can only impose a direct tax. If an indirect charge is imposed upon a
taxpayer, a citizen, then the amount must be a charge, and not a tax, for the
purposes of the Constitution Act, in order for it to be available for use as a
revenue raising source for the government body.
This issue has been examined three times in the recent past by the Supreme Court
of Canada, in the first instance dealing with an agricultural marketing board.
In all of the previous cases of a marketing levy being imposed, the courts
consistently ruled that this charge was a tax, and ruled it invalid where
imposed by a province. In the agricultural products case, however, the court
examined the issue in greater detail, and came to the conclusion that where a
levy was being imposed upon the users of an industry, and that charge
corresponded almost directly to the expenses that would be incurred with
respect to the operation of that agency, it was not a tax; it was a charge. As
such, it was validly imposed by a province.
Similarly, in the very recent past, there have been two cases, Allard
Contractors v. Coquitlam and the Ontario Home Builders' Association v. York
Region Board of Education.
In Allard Contractors, there was an imposition of a charge upon those persons
removing gravel so that the municipality in which that gravel was being removed
could repair roads. There was an assumption that gravel would ruin the roads,
so if a charge was imposed upon those persons removing the gravel, it would be
a fair charge upon that user group to assess an amount to repair the roads to
which they caused damage. In that case, the court found that the amount was not
a tax, and that there was a direct correlation between the imposition of the
charge, and the expense that it was intended to cover.
In the Ontario Home Builders' decision, the municipalities imposed charges upon
home builders, which were then intended to be used to cover the costs of
schools. A determination was made that, if more homes were built, there would
be more children. As such, there would be a need for an increased number of
schools. In that case, too, the court found that there was a direct correlation
between the charge imposed upon home builders, and the expense that the charge
was intended to cover.
In a recent Ontario Court of Appeal decision dealing with probate fees imposed
by the Province of Ontario, an issue was once again raised as to whether this
was a tax. The Ontario Court of Appeal ruled that the probate fees imposed by
the Province of Ontario were intended to cover the costs of administering the
court. They were not a charge intended to go into the public purse for public
purposes. That case has been appealed to the Supreme Court of Canada, so we will
have to wait on that decision.
In one other case where the court found against a charge, the charge in that
issue was found to be a tax, because it had a much broader purpose. As such, it
could not be directly associated with the expenses intended to be incurred.
After analysis, it is my view that this charge is clearly intended to provide
funds for the purposes set out in clause 5 of the proposed statute. In
addition, the revenue produced by the levy will not be transferred to a public
body to be used for public purposes. It is intended to be assessed for the
purposes of dealing with the costs referred to in the statute.
It is my view that the charge imposed is not a tax. Some assistance to this
opinion can be found in subclause 36(3) of the proposed legislation, which
indicates that, in the event that the use of tobacco by young persons in Canada
is reduced, the levy imposed pursuant to the legislation would itself be
reduced. I think that this is intended to show the connection between the levy
and its intended purpose of achieving the objectives in clause 5 of the bill.
The Chairman: When Mr. Parker from the tobacco industry was here yesterday, he
said that he believed the bill was likely ultra vires the federal Parliament,
and that it was possibly in contravention of the Charter. However, he adduced
no argument on either of those issues.
We invited the industry to have someone address this question with you, or to
send a brief. Neither has been done. I am not in the position to speculate on
what grounds the industry might have for either a division of powers argument,
or a Charter argument. However, Professor Gall has taken us through, in some
detail, the various division of powers arguments, as well as the Charter
arguments. Professor Magnet has given us his opinion on the matter.
Senator Kenny: Mr. Chairman, there are only two reasons for not commenting on a
panel. The first is that the senators do not believe it is worthy of comment,
and the second is that they agree with what they have heard. I submit that it
is the latter; that they have heard a compelling case from a very competent
panel. If other parties have views, they have had every opportunity to place
them before this committee, and in my view, silence means consent.
The Chairman: Let me try my hand here in a general way.
Previous government attempts to regulate in this industry have met the fate that
we know of in the Supreme Court of Canada. One of you has said that none of the
elements that produced those unhappy results in the courts are present in this
private member's bill. Is that truly the case? I presume you have considered
this private member's bill against the decisions taken on previous attempts by
the government to regulate this industry. Does anyone wish to speak to that?
Mr. Gall: The Tobacco Control Act of 1987 primarily emphasized the restrictions
on advertising, and also the labelling of tobacco products. It came into direct
conflict with the Charter provisions dealing with freedom of expression.
I have two comments. Firstly, we do not have a comparable type of bill in this
case. The industry's freedom of expression is not restricted. Both Professor
Magnet and I agree that this is not really a freedom of expression issue.
I want to reiterate the point that I raised earlier. If it were a freedom of
expression argument, clearly the jurisprudence shows that if the government
emphasizes the necessity of a freedom of expression abrogation to protect
vulnerable people in society, the court is sympathetic in each and every case.
That is based on the assumption that there is a freedom of expression argument
here, which I do not think there is.
The Chairman: Professor Magnet said that he thought it would be saved anyway, by
way of the "reasonable restriction" that is deemed to be reasonable
in a democratic society.
Senator Stollery: I do not know what this committee will do, but I hope that the
Senate passes this bill. Taking these various approaches to stop young people
from smoking is very timely. I have read the material from the tobacco
companies, and they too are in favour of it. However, they have said in several
of these briefs that they lack credibility.
The industry's first position will be that the charge is a tax, and not a levy.
If the bill proceeds through the system, the industry's position will change,
depending on what defence might work to kick this bill.
If the bill is approved, the next step will be its introduction to the House of
Commons. The same argument that took place before the Speaker of the Senate as
to whether it is a tax or a levy will then take place in the House of Commons.
The Speaker of the House of Commons will then make a decision.
In Westminster, there have been considerable precedents for this kind of
argument. The difference between a levy and a tax is an old story. Are there
not many precedents in Erskine May?
Mr. Clegg: Indeed there are. To summarize briefly, some of the bills have been
ruled one way or the other. Many of them provided that a surplus ended up in
the consolidated fund, and they were ruled as taxes. There were a number of
bills cited where they did not discuss the details, and they were ruled as
levies. There are perhaps 15 or 20 bills mentioned there. A number are listed by
name, and I did not research the exact details. As I said, these were all
happily agreed to be levies, because they were a charge on an industry for its
own purposes. It then dealt in more detail with those which were not ruled to
be levies but taxes. The greater discussion is on the exception, and about four
or five bills are mentioned. Most of those, in fact, were ruled to be taxes. In
my earlier remarks, I commented on why those particular bills were different
from this one.
Senator Stollery: I understand what you were saying. It is important. Opponents
of the principle will disguise themselves and hide behind an argument. The
opponents of this bill will never say, "I am opposed to the principle of
stopping young people from smoking." They will say, "I am in favour of
stopping young people from smoking. I will just oppose everything that would
actually make it possible to explain to young people why they should not smoke."
That is how the process will take place.
It is important for the Senate and the members of this committee to understand
that. This research is crucial.
The precedents are important, because that is where the argument will go. The
opponents will hide behind the argument by claiming that this is a tax, and
therefore cannot originate in the Senate, although it is a great idea. They
will kill it in that way.
Would you not agree that Erskine May is more credible that Bourinot or
Mr. Clegg: Yes, I would. Most of what is written in other books is actually
drawn from Erskine May. Everywhere I have been in the Commonwealth, I have
found people referring to Erskine May.
I should just like to mention one other possibility. If the other place chose to
favour this bill and ignore the issue, or even if some members thought it was a
tax but nevertheless passed the bill, in all practical terms the problem would
have been repaired. I would be very surprised if the courts could be persuaded
to pry their way within the walls of Parliament, to determine how Parliament
passed the bill.
The Chairman: There is another issue, not a legal or procedural issue, but a
policy issue. The Department of Finance has a holy terror of what it calls
dedicated taxes. We all know that argument, and minister of finance and the
department have traditionally opposed this. The department has been ominously
silent on this bill so far.
Senator Kenny: Pleasantly silent.
The Chairman: We will see whether they make that argument or whether, as Senator
Stollery suggests, they use some other ruse to have their way.
Senator Butts: I am not a lawyer, but something comes to mind from what you said
about taking it out of the industry's hands. Clause 3(1) states the purpose of
the bill. Can anyone enable and assist any corporate body that absolutely
abhors that assistance?
Mr. Clegg: It is not easy to help someone who does not wish to be helped.
However, the industry has said that it want to do this. In their testimony, its
representatives expressed dismay that they had not been involved in the
preparation of the bill. They expressed that dismay in rather strong terms, as I
recall. It is possible to help someone without consulting them beforehand,
however. If this bill does what it says it will do, it will be helping them
whether they like it or not; taking their money and spending it in the way they
claim they would, if only they had the credibility.
In practice, one would have to see what will happen. It is difficult to rescue a
drowning person if they are trying to hit you, but there are ways of dealing
with that problem, too.
Mr. Cunningham: Laurence Tisch, who is chairman of one of the American tobacco
companies, spoke before a U.S. Congressional committee with fellow CEOs of
other tobacco companies at his side. He said:
...the proposed resolution...says, look, we're not going to look to the tobacco
companies to educate people on the risks of smoking and whether young people
ought to smoke or not. We think public health groups and others can do a better
job on anti-tobacco advertising than the tobacco companies can do. And I don't
mean that facetiously.
That is consistent with testimony heard before a Senate Committee last April.
Senator LeBreton: My question is for Mr. Cunningham. There may be a perception
problem in the Canadian public, and perhaps a little confusion. Here we have
the Canadian Cancer Society appearing to align itself with a bill, the stated
purpose of which is to improve the image of an industry; in this case the
tobacco industry. Of course, you are also supported by many medical
How will the Canadian Cancer Society and the various medical associations go out
to the public and explain that they are, in effect, supporting a bill whose
purpose is to improve the image of the industry?
The Chairman: That is Senator Keon's point, which he made at second reading.
Mr. Cunningham: I have seen that excerpt from the debates. We considered that
question, and we support the bill strongly. We look at the end result of what
will be achieved. We will see a foundation independent of both the tobacco
industry and government, and which will have $120 million per year for
programming, research, and so on, to reduce smoking. Is that good for public
health? Yes. Is that good for cancer control? Absolutely.
The proposed legislation has been drafted in such a way as to have this levy
imposed and collected. Recognizing that it was drafted quite carefully, we look
at the bottom line of what it will achieve, and that is what we support.
Senator LeBreton: I have a concern about the group of people who will be
administering this $120-million fund. If, in fact, it will step in and offer
replacement funds for sponsorship, who decides?
I happen to be a car racing fan. My husband happens to like boxing and car
racing. Many people in this country do not like those sports and prefer others
-- lawn bowling or something. In any event, I am very fearful that there will
be a group of people who will decide for the rest of us where this $120 million
will be spent. Many of us who enjoy the sports that heretofore have been
sponsored by the tobacco companies and others, such as beer and alcohol, have
reason to fear that this $120-million fund will end up being a huge boondoggle.
Mr. Cunningham: This is a question that the sponsors of the bill may have
contemplated as they were drafting the provisions. The bill contemplates
subsidiary corporations that can be created to administer the transition
funding. There is a requirement in clause 47 with respect to certain membership
on the board of directors of a subsidiary corporation; people who have
experience with respect to arts and sport or the promotion of these events.
I do not see a situation where you would have highly qualified professionals in
health promotion administering the transition portion of the bill. There are
certain criteria with respect to the ability to receive funds and transition
funds. First, you must be receiving tobacco sponsorship money. It must decrease
as a result of a decision by the tobacco companies, and there is a ceiling on
how much you can get. Some of the concerns are addressed by the wording of the
Senator LeBreton: That begs another question. If I were presently involved with
an unsponsored cultural or sporting event, I would be after the tobacco
companies to get on the list, so that when this alternate fund were set up, I
would qualify for it.
As to the potential for the administering of the fund, I wonder if we have
thought this through.
Mr. Cunningham: In a sense it is too late, because once this bill is passed you
cannot get on the list. Tobacco companies say that they are decreasing the
amount of sponsorship they will do, because of the provisions of the Tobacco
Act passed a year ago by Parliament.
Those groups who, up until this point, have made the decision not to receive
tobacco sponsorship, would be eligible in terms of the health promotion aspect
-- as would those currently receiving tobacco sponsorship money -- to be in a
position, as in Australia, where they used a "Quit" theme, a health
promotion message. The Canadian women's soccer team could be sponsored by this.
I do not see an effort by those not currently receiving tobacco money to join
the queue to get it. Tobacco companies will not give them the money, because
there is no time for the events to be organized. I am not concerned about that
Senator Nolin: I have one question for Mr. Clegg. However, I wish to refer to a
paragraph in Mr. Spiegel's presentation. You say:
The general principle that flows from these cases is that a levy imposed by a
public body can be characterized as a regulatory charge, as opposed to a tax,
if the amounts received pursuant to the levy are to be used for a specific
governmental service and the amount of the levy reasonably relates to the cost
of providing the service.
Mr. Clegg, you have repeated many times in your testimony that the levy is for
specific industry objectives, and the bill uses those words. How can you
reconcile what I have just read of Mr. Spiegel's testimony and what you have
said in regard to what our bill is stating?
Mr. Clegg: Mr. Chairman, there is a distinction between the analysis of whether
or not it is a tax from the point of view of taxation law, and whether it is a
tax or a levy under the parliamentary procedure in the meaning of the
provisions of the Constitution Act that limit the Senate's ability. The two
things are not quite the same. However, they are not really inconsistent here.
From the point of view of taxation law, what has been determined is that, if a
charge is for a limited and specific purpose, and regulated to that purpose, it
is not a tax from the point of view of general taxation legislation. That would
take it into a federal power of taxation.
Under the procedural issue, the test is whether or not this is public money,
which it is not, whether the money comes from the industry, and whether it is
used for its own purpose. The two things are not the same. That is because the
tax and charge distinction is not quite the same as a tax and levy distinction.
What we are both agreed that it is not a tax. I say it is a levy, and I do not
address the issue of whether it is a charge from the point of view of taxation
law. From the point of view of parliamentary law and procedure, I say that it
is a levy and not a tax, and should be reviewed as such.
The imposition of this and the expenditure of it does not interfere with the
Crown prerogative of financial initiative, which is what should be the concern
of the government at this point in time. The question ought to be whether the
Senate is getting into spending public money, appropriating public money, or
raising taxes to raise revenue. Clearly the bill does not do any of these
things. It is a safe definition; where the money is drawn from an industry for
its own purpose, it is not a tax. There could be other things which are not
taxes as well, but in that particular safe haven it certainly is not a tax.
Mr. Siegel: I addressed the issue from the specific perspective of tax and tax
law, rather than procedure. I looked for similar points of legislation from
which I could make a comparison.
The most topical from a tax-only viewpoint was section 92 of the Constitution
Act as between a province imposing only direct taxes, and if was not a tax, it
was invalid, was unconstitutional. So the analysis, as Mr. Clegg has pointed
out, is slightly different but essentially the same. We are coming to the point
of view of whether this thing -- for lack of a better word -- arises from an
intention of a government to impose a general revenue-raising objective. If
there is no general revenue-raising objective intended by virtue of the
imposition of the charge, then it is not a tax.
The Supreme Court has consistently agreed in the last 20 years, and most
particularly in the last five years, that if you cannot show that the charge is
for general public purposes and not for a specific governmental service then it
is a charge and not a tax -- which would lend credence to any potential
argument that the imposition pursuant to this proposed statute is a tax. It does
not meet any of the tests. Whether from the procedural point of view or from
the pure tax point of view, it does not meet any of the tests that would make
it a tax.
The Chairman: Thank you for your appearance, gentlemen. Your testimony has been
Honourable senators, we will now hear from the final witnesses on this bill, the
co-sponsors, our colleagues Senator Kenny and Senator Nolin.
Before I call on them, I want to bring to your attention a couple of letters I
have received and which I have circulated to members of the committee. I want
to refer to them now for the record because they are of some importance and, in
several ways, rather disturbing.
The first letter was dated May 11. It came to me from the Alliance for
Sponsorship Freedom, and I refer to it because they are writing to state for
the record why they have decided not to request an appearance before this
committee during our consideration of Bill S-13. The points they make are as
follows. First, they say that when they appeared before another Senate committee
last year, on Bill C-71, their members were treated very disrespectfully.
Second, they say that their earnest attempts to outline difficulties with the
sponsorship restrictions in that bill were flatly rejected and dismissed by the
Senate. They say they spoke to Senator Kenny during the drafting of this bill
but that their comments were ignored, and they have come to the conclusion that
their views are of little consequence in the Senate. They are obviously opposed
to this bill and they continue to believe that Parliament should extend the
transition period beyond October 1 by five to seven years.
I bring that to your attention because it is quite unusual. I must say that, in
the almost 19 years that I have been here, most people and organizations who
have appeared before Senate committees have found the experience to be a very
positive one, whether or not the committee and the Senate accepted their
representations. They went away feeling that they had had a fair, respectful,
attentive and informed hearing from senators. This letter, the May 11 one, is
signed by the representatives of five organizations, and I will name them: Mr.
Max Beck, Ontario Place, Toronto; Andy Nulman, Just for Laughs, Montreal; Léon
Méthot, Grand Prix Player's de Trois-Rivières, Quebec; Robert
Kerr, Coastal Jazz and Blues Society, Vancouver; and Mary Moulton, the Atlantic
Canada representative, of Halifax.
The second letter was dated May 12, and I read it this morning. It is from the
Ontario Flue-Cured Tobacco Growers' Marketing Board. It raises one question of
process and one question of substance, both of which I want to put before you.
The question of process is that they were not invited to appear. I have to take
responsibility for that, as your chairman. The co-sponsors of the bill,
Senators Kenny and Nolin, provided us with a list of witnesses they wanted us
to hear and who obviously would be supportive of their efforts and of the bill.
We have heard a good many of those witnesses. The tobacco industry was invited
to send representatives, which they have done, and to suggest witnesses, and I
think we have heard most of the witnesses they have suggested. They did not
suggest the Tobacco Growers' Marketing Board. It was an oversight on our part
-- specifically, on my part -- not to have thought of them and to have invited
them. They say they are not requesting an appearance, but they do wish to convey
their thoughts and views.
Their thoughts and views are that this bill is a duplicitous attempt to further
tax Canada's tobacco consumers in the name of compensating the farmers and
other groups while, in fact, as they say, transferring hundreds of millions of
dollars into the hands of the anti-tobacco industry whose only contribution to
tobacco issues has been personal attacks on all of those involved in the tobacco
business, and the previous wasting of tens of millions of dollars in tobacco
funds on failed anti-tobacco programs.
They then cite various economic statistics, which I need not go into in detail,
however, in particular, they say that in Ontario the crop generates
approximately $453 million in GDP or added value, 5,900 jobs, $80 million in
wages and so forth.
They make a point about substance which I must bring to your attention. This is
something we have all known in this committee, but we have not really addressed
it. Let me read the paragraph.
Two weeks ago I am told your Committee approved a Bill that will ban every
tobacco product now on the market in Canada.
They are referring to Bill S-8, which did get second reading in the chamber and
then passed through this committee. It is waiting for debate at third reading.
The letter continues:
Now you propose a tax on those same products to fund people who have never been
able to obtain enough public support to finance their activities through
What they are pointing out here is a fundamental incoherence between Bill S-8,
in which we would drastically lower the nicotine content in tobacco products on
sale in Canada, and Bill S-13, which is of an entirely different order and
which obviously assumes that the same tobacco products would continue to be
sold as they are now.
If I were in the House of Commons and those two bills arrived from the Senate, I
would say: What do you want; which one of these bills do you want to go
through? There is a certain incoherence. Perhaps we should have raised this
before. I am not suggesting that we can solve the problem here. It may be
something that we will have to decide upon when and if this bill goes forward to
the floor of the Senate.
I am raising this issue now so that senators can discuss it. There may be a
problem if we vote both bills out of the Senate and send them to the House of
Commons. I will leave it at that. I raise those matters now so that our
friends, Senator Kenny and Senator Nolin, and other senators, obviously, will
have an opportunity to comment on this issue now.
After Senators Kenny and Nolin are finished and we have had some discussion
here, we will break for 30 minutes for dinner. I suggest we go in camera for
about 10 minutes to discuss future business of the committee on this bill. We
will then resume our public hearings for clause-by-clause consideration.
Thank you for bearing with me on those matters.
Hon. Colin Kenny: Thank you, Mr. Chairman, for the opportunity to address the
committee once again. First, I should like to ascertain that every member of
the committee has a copy of the letters to which you have referred. Before we
get into our final comments, I should like to have an opportunity to address
both of the letters so that members of the committee will have an opportunity to
perhaps see the correspondence in perspective.
It is fair to say, in terms of dealing with the first letter to which you
referred, which came from the Alliance for Sponsorship Freedom, that we have
endeavoured to engage in a dialogue with this organization for the better part
of eight months. We tried to meet with Mr. Beck on a variety of occasions and
eventually succeeded in having a meeting with him.
Mr. Beck made it very clear to us at the time that he was waiting for the
government to come forward with regulations in relation to Bill C-71. As you
will recall, Minister Rock promised to come forward with regulations on the
implementation of that proposed legislation by December 9 of last year.
We have yet to see those regulations. However, all five of the gentlemen who
have signed this letter have indicated to us that their first position is the
status quo. What they would like to have is a continuation of tobacco companies
funding their events, exactly as they have done in the past.
Their second position is that they would like to see the regulations rolled back
for seven or eight years. In other words, they would like to see Bill C-71 not
come into force for another seven or eight years, a continuation of the same
sort of promotion that the bill is designed to stop next October.
Their third position was that they wanted this bill amended to provide ongoing
and perpetual funding for their groups. Their last position, if all else
failed, was that they would take the money provided under this bill.
I confess that in the absence of the government coming forward with regulations,
it has been very difficult to get these people to come to the table. I received
a letter very similar to the one you have in front of you that is signed by
these gentlemen, that was also signed by the same gentlemen, and I replied to
it on January 17. We have a copy here that we can circulate to the members of
the committee. At that time, I made it clear to them that I had been trying for
months to contact them. I made it clear that we needed their comments on the
total amount of funding necessary to replace tobacco sponsorships. I asked them
what was necessary, in terms of a reasonable length of time, to find
alternative sources of funding. I then asked them whether the funding should
decrease mathematically by a fixed percentage for each organization each year,
or whether the foundation subsidiary board should have the capacity to
reallocate funds between organizations according to need.
By now, you should all have a copy of this letter, dated January 17, before you,
where we not only replied to the gentlemen who signed this letter but sent a
copy to each one of their constituent organizations urging them to come forward
and provide their views.
The message that came back from these organizations was that they did not intend
to engage in that sort of discussion, that they were confident that the
Minister of Health was, in fact, going to roll back the regulations for seven
or eight years.
As you can see, I have, in the course of this letter, gone through and said that
I thought that that was highly unlikely. I urged them to come forward to help
us perfect the legislation.
Until these groups see what sort of regulations come forward from Mr. Rock, they
will maintain the position that is reflected in this letter. If Mr. Rock is
good to his word, and I have no reason to believe that he will not be good to
his word, he has indicated to me personally, and he has indicated publicly on
December 9, that he intends to bring in a tough set of regulations to Bill C-71
with the smallest possible exemption for Formula 1 racing he can, and he does
not intend to roll it back for seven years or eight years or at all.
That is what I have to say regarding the Alliance for Sponsorship Freedom's
letter. In the absence of hearing from them, the bill stands as it is for your
consideration and, hopefully, for your approval.
Regarding the Ontario Flue-Cured Tobacco Growers' Marketing Board -- and I
assume that everyone has a copy of that letter before them -- we did make
consultations there. We approached the Member of Parliament who happens to
represent the majority of these individuals, and they undertook to consult with
the industry. The response was basically that tobacco prices have never been
higher, that they have never had better revenues than now, and that they do not
see any particular need for a replacement fund, and thank you very much.
The situation that faced us when we were drafting the bill was this: If this
committee and this Parliament choose to pass this bill, the result is likely to
be a significant reduction in the consumption of tobacco in this country. We
have seen the evidence in California, where 400,000 less packages of cigarettes
were consumed as a result of Proposition 99. In the event that this bill goes
forward, it seems highly likely to me, and I hope to members of this committee,
that these tobacco farmers who are presently doing quite well may need
transition assistance onto another crop; however, if they do not, there is no
need to apply. The bill makes it very clear that the funding does not just flow
out automatically. They must show cause; they must demonstrate that there is a
need; they must show the subsidiary foundation that there is a problem. When
they do that, then and only then do the funds flow forth.
If it turns out that these people are not in need of this money, all of it will
transfer over to the health groups and the education program involved with
If you read the letter, you will find that there is a fair amount of
dissatisfaction generally with any form of legislation that deals with tobacco.
That does not surprise me much, given the fact that these people earn their
livelihood growing tobacco. However, I felt, and I hope the committee feels,
that there is something missing if we go ahead and cause the consumption of
tobacco to be reduced and leave these people hanging out there without any
assistance to transition to another crop. That is why it still exists in the
Hon. Pierre Claude Nolin: In the last two days, we have heard testimony from a
range of witnesses, from large and small organizations, from across Canada and
from the United States. We heard positive testimony on what is happening in
other jurisdictions; we also heard about promising projects. We heard from the
American Cancer Society, California Division, the Heart and Stroke Association
in Montreal, and the Waterloo smoking project. These witnesses reveal a positive
and effective model of anti-smoking programs for youth, but stable funds are
needed for implementation.
We also heard that cultural events need funding. Two witnesses confirmed that
there is a great void to be filled where a tobacco company will no longer be
sponsoring events. There is a great financial need and few viable options
available. Dr. Poirier detailed the paradox of sponsorship funding and the
quandary groups face with accepting tobacco funding. Viable alternatives are
critical. New arguments were articulated as to why the transitional funds
should not be accepted through the adoption of Bill S-13.
We also heard comments and criticism from the tobacco industry and Dr. Luik,
criticism limited in scope and given without much elaboration. The industry had
the opportunity to present suggestions or amendments to the bill and to have
their legal counsel present. They chose not to take advantage of either. This
could be indicative of not regarding this bill as a serious opportunity to
demonstrate their sincerity about their claim to be interested in reducing
youth smoking. The absence of industry lawyers suggests that their legal
counsel has weak arguments against Bill S-13.
We have also heard reassuring legal testimony. We have just heard five witnesses
very expert in that field give lengthy and thorough explanations as to the
legality, constitutionality, and procedural legitimacy of this bill. The legal
panellists have spoken in support of the Senate Speaker's ruling that the levy
imposed in the bill is not a tax. This bill is legally and constitutionally
Senator Kenny: This committee has what I believe to be a unique opportunity. It
is apparent that there is a huge disproportionality between the $2 billion that
the federal government takes in each year in tobacco taxes and the $20 million
spent fighting tobacco use. We all need to be conscious of the 40,000 lives
that are lost each year. I do not view it just as lives -- I view it as families
that are broken.
We have an opportunity here for a win-win proposal. This bill is an opportunity
to provide a continued, sustained, sizeable effort to attack the tobacco
problem amongst adolescents in Canada. It is an opportunity to do it in a way
that politicians will not interfere with it, as we have seen in other
jurisdictions. It is an opportunity to let the groups that are expert at dealing
with these issues get on with it and solve the problem. The more you look at
the issue, the more you realize that the only element missing from the equation
is that the groups who are trying to address the issue of youth smoking do not
have adequate funding. This bill provides that on a continuing basis.
This bill also corrects two imperfections in the Tobacco Act, formerly Bill
C-71. It provides for transitional funding for those groups that are dependent
on tobacco funding. As of October 1 of this year, they will no longer be
receiving that sort of funding.
This bill, instead of cutting them cold and setting them loose, provides for a
phase-down of 20 per cent per year so they have an opportunity to find other
sponsors to carry on the events. It does not guarantee it, but it gives them a
fair crack at it. Those of you who have been involved in fundraising know that
it takes time to find alternative sources of support.
The bill also provides for farmers, who no one has taken into consideration in
the past, notwithstanding the letter you see before you. It is one thing to
have a position like this when times are good, but if this bill is as
successful as is Proposition 99 in California, things will not be as good for
these farmers. The bill makes it very clear that they cannot draw on these funds
unless they incur a loss changing over to another crop.
I encourage members of the committee to put a face on this problem. We heard
from our witnesses in the past that this problem does not have a face. Put a
face on it. Think of someone in your family, think of someone you know, and
think of whether or not a bill like this might make a difference in their
Senator LeBreton: I raised this question with the last set of witnesses when
Senators Kenny and Nolin were sitting at the table. My concern is this $125
million fund and its administration. As I pointed out earlier, there could be a
lot of interference.
I am a fan of auto racing. My husband is an auto racing fan and a boxing fan.
Some of my colleagues in the Senate would like to see boxing banned.
Senator Stollery: Not me. I like boxing, too.
Senator LeBreton: You are on my side, Senator Stollery.
I am very concerned that a group of people, when looking at this replacement
funding for the sponsorship of sporting events, will decide what is good for us
to watch and what is not. Only a certain type of people like auto racing or
boxing, and that cannot possibly be the majority of Canadians. What if they
decide that there are other events, and they control the dispensation of the
funds. I would like to know how you intend to address that.
Senator Kenny: That is a very good question, Senator LeBreton. I would encourage
you look at page 19 of the bill, subclauses 46(d) and 47(2). Subclause 46(d)
reads as follows:
(d) to provide financial support, on a transitional basis, to persons and
entities who suffer a decrease in sponsorship and in-kind support of their
events, activities and permanent facilities from the tobacco industry following
the enactment of the Tobacco Act.
You need not worry about people rushing out to get sponsorships right now
because the list is closed. Only people receiving funds at the time the Tobacco
Act -- formerly Bill C-71 -- was enacted would be eligible to apply in this
case. It is designed to continue the existing events that you said you liked
and you wanted to have continue. The events that we have seen up on the screen,
that have been receiving tobacco funding, are eligible to apply under this
Subclause 47(2) reads as follows:
(2) The affairs of the subsidiary corporation referred to in subsection (1)
shall be managed by a board of not more than 14 directors who are
representative of the diverse perspectives and skills that the subsidiary
corporation's board will require in order to carry out its objects, and of whom
at least one member is a representative of non-profit arts in Canada, a second
member is a representative of the arts and cultural industries in Canada, a
third member is representative of the sports industry in Canada and a fourth
member has demonstrated expertise in the production and promotion of artistic,
cultural and sporting events, activities, or permanent facilities.
Frankly, the folks who have been deciding what you are watching up to now have
been the elites you are talking about. I doubt very much that they have
consulted you about whether something should appear on television.
Having said that, we are only providing funding to the group that was already
receiving funding. We are saying that when Bill C-71 was passed, there was an
unintentional injury done to those organizations. The injury was that their
funding was cut off cold after 18 months. Under Bill S-13, we will give the
same groups five years. Instead of cutting funding off cold, this bill will
reduce their funding by 20 per cent per year so that they will have time to
find alternative funding, but there will be encouragement each year for them to
get on with it to find the funding.
Senator LeBreton: That is a given. I understand the point that people cannot run
out now. However, I still have the same concern. Who will pick these people?
Who will decide? If I were the poor person who happened to be representing the
sporting industry and the non-profit arts and cultural industry, who will
decide? I can envisage a granting body being all caught up in huge arguments
over the dispensation of funds. Who decides? Is it the industry? Will people
who work in auto racing or with the jazz festivals recommend who will sit on
this granting body?
Senator Kenny: The folks who will be receiving the money will be the people
already receiving the money. They will make applications based on what they
have already received. They will come forward with their books and say, "Here
is what we received from the tobacco companies, and we would like a
replacement, please." They will have to demonstrate how much money they
received from whichever company.
When they make that presentation and establish what they received, with
presumably audited records, then the board will be in a position to say, "Yes,
we think you have made a case that this is what you will receive, so that will
be your starting point."
Senator LeBreton: What if they say no because they do not like boxing or auto
Senator Nolin: Every year the foundation will have to produce an annual report
for Parliament. In that report, the effectiveness of their activity will be
analyzed by a third party.
I have those concerns, but I do not know the future. At least we will be able to
assess the effectiveness of this.
Senator Kenny: The board meetings are in public. Again, subclause 46(d) states:
(d) to provide financial support, on a transitional basis, to persons and
entities who suffer a decrease in financial sponsorship and in-kind support of
their events, activities and permanent facilities from the tobacco industry
following the enactment of the Tobacco Act.
The bill is quite clear with respect to directing the board about what it is to
Senator LeBreton: Yesterday we heard from David Bonfilio, the immediate past
chair of the American Cancer Society. His testimony was interesting. He talked
about Proposition 99; he talked about the success of education programs. Yet,
as he told us about the First Amendment in the United States, they have not,
and cannot because it is against the law, restricted the advertising of tobacco
products in print, although I believe he said they do not allow them on
television and radio. They are permitted to advertise in print and they are
allowed to sponsor sporting events.
Why then in this country could we not have a bill such as that and follow the
California example, where we allow companies to advertise but where we direct
the proposed levy at education and health concerns?
Senator Kenny: You are asking me a question as though I were a member of the
government and fortunately, I suppose, I am just a back-bench senator. The
government has proceeded with Bill C-71 and Bill C-71 has been passed into law.
The Senate dealt with it last year. That issue has already been dealt with by
Parliament. Whether Parliament was right or wrong, I do not feel it is for me to
debate at this point.
What Bill S-13 does is attempt to bring forward some of the better elements of
Proposition 99 and allow us to take advantage of them so we can experience the
same sort of success rate in Canada as they have in California.
I take your point, and it is a good one, but I do not believe it diminishes the
bill before you.
Senator Johnstone: My understanding from what you have reiterated often is that,
again, it is only those organizations that have already been funded that will
be funded at this time. Is there a mechanism built in under the bill that it
could be expanded to take into consideration other organizations down the road
that might have an equal problem?
Senator Nolin: That is not its purpose.
Senator Kenny: The transition fund is not designed to do that. The transition
fund is designed to assist those organizations which, in my view, were unfairly
damaged by Bill C-71. However, if you will recall the testimony of Mr. Poirier
yesterday, he made the point that they had come to the conclusion in Quebec
that if you could get some entertainment groups or sports groups to actively
oppose the use of tobacco amongst adolescents it might be an effective tool to
reduce smoking amongst adolescents. In other words, if you can imagine Jacques
Villeneuve driving a racing car with a red circle on it and a cigarette with a
red slash through it instead of a logo, if in the view of the foundation that
was an effective way to reduce youth smoking, then there is no reason why they
could not fund a racing team.
Senator Johnstone: You are saying that there is a possibility that an exception
can be made.
Senator Nolin: It is not the transitional funding that will cure that. The bill
is not there to cure that kind of problem. There is a specific problem arising
from the passage of Bill C-71, and this bill is trying to solve it.
Senator Johnstone: It is for the transitional stage only.
Senator Nolin: Yes.
There is a propositional possibility of using an event that is not actually used
by the tobacco industry; the foundation will have all the authority to do it.
Senator Cohen: My question deals with the letter from the Ontario Tobacco
Growers' Marketing Board. I do a great deal of work in the area of poverty.
Make me feel more comfortable with the displacement of jobs that could happen
as a result of the tobacco growers' crops being less and less and the jobs that
are generated as a result of the tobacco industry. They list 17,460 full and
part-time jobs and $80 million in wages. That would probably include the corner
store, the drugstore, wherever, but that will still affect unemployment.
This transition fund will be fine in the interim, but what about the jobs of
these people? Bill S-13 is a good bill, and I would like to see it passed, but
that is what brothers me. That is probably what I have to answer to for the
people that I work with.
Senator Kenny: It is a terrible irony and it is one of the conundrums that I am
in right now. In California, as a result of Proposition 99, 2 billion fewer
packs of cigarettes were sold.
At the same time, the people who are growing tobacco are saying that they do not
want the money. They are saying that they do not want this piece of
Senator Nolin: They said they do not need it.
Senator Kenny: They told us to stay out of their affairs. When we made inquiries
of them, they told us that tobacco prices are good. They told us they were
doing very well, thank you very much, and for government to please stay out of
their our lives.
If the bill works, as I hope it will work and I presume you hope it will work,
it seems that it inevitably will result in a decreased demand for tobacco. In
order to meet your very concerns, Senator Cohen, there is the transition
component of the bill and the section in it relating to tobacco growers covers
it off. It allows them to apply to the subsidiary corporation for losses they
incur while they are trying to move to another crop. I am acutely aware of
those sorts of problems.
If you want to move to tomatoes, for example, you need a contract from Heinz. If
you want to move to cucumbers, you need a contract from Bic. If you wish to
grow grapes it takes three years for the first crop, for apples it is five
years and ginseng it is seven.
There are real problems for these people to choose to move to something else.
There is no requirement that the money be spent, but for those tobacco farmers
who choose to move and suffer losses, this bill will assist them.
Senator Cohen: Maybe we should look at getting them into growing hemp.
Senator Nolin: I will suggest that. The legal committee looked into that two
years ago and that is an easy crop to grow.
Senator LeBreton: The consumption of cigarettes seems to have gone down. Do we
have any statistics that show how many tobacco farmers have changed their
crops? How many fewer tobacco producers are there? What has happened to them;
have they just retired?
Senator Kenny: This issue varies with the price of tobacco and with the demand.
The export of tobacco has been increasing. Ontario had a program called the
Ontario Tobacco Assistance Program, whereby producers were required to sell 50
per cent of their quota because it is done through a marketing board.
This program was terminated in 1991. There is another program in Ontario, which
is sort of an Ontario-Quebec program. All of the flue-cured is grown in
Ontario, and the remaining tobacco is grown in Quebec. I understand that the
crop in Quebec is used more for wrapping cigars than it is for making
cigarettes. There was a federal exit compensation program in Ontario which
provided up to $15,000 at a rate of $500 per acre. That was in place for a
period of time, and there was some update. There is significant export demand
right now, however. When the market is up, farmers quite reasonably say that
they like things they way that they are.
This portion in the bill will not necessarily be spent. It will only be spent on
those farmers who choose to go. If they find that they are not selling their
tobacco, or cannot export it, the money is there to assist their transition.
Frankly, I think that this is a socially responsible way to go about this.
Senator Stollery: In 1956, itinerant labourers could make $500 cash in six weeks
in the tobacco fields in Ontario. That is over because, due to the programs to
which Senator Kenny has referred, many people have gone out of tobacco.
Senator Nolin: The statistics we saw this afternoon showed the decrease in
The Chairman: Does anyone know how significant the export side of that industry
is for Canada?
Senator Kenny: I am not an expert, but my understanding is that it is
approaching 50 per cent.
The Chairman: I am indebted to those at the Library of Parliament for the
research paper which they prepared. They point out that none of the alternative
crops is as lucrative as tobacco with government price supports. They say that
in recent times, tobacco returns have averaged about $4,000 per acre, which is
10 times the return of alternative crops. They point out that in 1986
Agriculture Canada established a $30 million program to help tobacco farmers
diversify. The Ontario Flue-Cured Tobacco Growers Marketing Board, however,
asked for $200 million to $300 million from government cigarette taxes for this
purpose. Even so, many people have left tobacco farming in the past few years,
as sales dropped, profits declined and debts mounted.
Senator Kenny is telling us, by way of anecdotal evidence, that those who are
left behind are doing rather well. Prices are up and so forth. A
federal-provincial exit program in Ontario now pays farmers to stop planting
tobacco. In October 1988, the federal government added $30 million to this
program, and an additional $5 million for farmers outside Ontario. Nevertheless,
a group of Ontario tobacco farmers calling themselves Fair Compensation for
Tobacco started lawsuits against both the federal and Ontario governments to
seek compensation for damages to their industry caused by rising tobacco taxes.
According to this paper, in September 1996 it came to light that the federal
Department of Agriculture and Agri-food Canada was contributing funding to
research aimed at developing better tobacco crops. Have you ever seen tobacco
The committee recessed.
Upon resuming in public.
The Chairman: We are back in public session now. We are joined by Law Clerk and
Parliamentary Counsel Mr. Mark Audcent.
We have heard all our witnesses on Bill S-13. We have had an opportunity to
consider the bill. As I see it, here are the options before the committee: The
chair would entertain a motion that the bill be reported without amendment; the
chair would entertain a motion that the bill be reported with amendments; the
chair would entertain a motion that the bill be not now proceeded with; and the
chair would entertain a motion, which is in order at any time, to adjourn. What
is your pleasure?
Senator Nolin: I move that we report the bill with amendments. We have technical
amendments to propose. I would ask my colleague Senator Kenny to propose those
The Chairman: The sponsor of the bill has technical amendments to propose. How
many amendments, Senator Kenny?
Senator Kenny: I believe the number is seven.
The Chairman: Proceed with them one by one, please.
Senator Kenny: I draw your attention to clause 2 on page 1. I move that clause 2
on page 1 be amended by replacing line 14 in the French version with the
cants des produits du tabac. Y est assimilié son succes-
I would explain briefly. This amendment would correct the French name of the
Canadian Tobacco Manufacturers' Council which is currently incorrect in the
existing version of the bill.
The Chairman: Any there any comments, senators? All those in favour?
Hon. Senators: Agreed.
The Chairman: The amendment is carried.
Senator Kenny: I move that clause 11 be amended on page 5 by replacing line 27
with the following:
tives of health groups and such other
It would then read "representatives of health groups." This amendment
is required for consistency. Currently, clause 11 refers to health care groups,
whereas clause 5(1)(i) refers to health groups. The intent was to refer to
health groups generally, since "health care groups" may be
The Chairman: Are there questions or comments? All those in favour?
Hon. Senators: Agreed.
The Chairman: The amendment is carried.
Senator Kenny: I move that Bill S-13 be amended in clause 25, on pages 9 and 10,
by replacing lines 41 and 42 on page 9 with the following:
remuneration of directors and officers of the Foundation and
and on page 10 by replacing line 27 with the following:
two thirds of the members entitled to vote at that meeting.
This amendment does two things. It amends clause 25(1)(h) which deals with the
powers of directors to make by-laws for the remuneration of directors,
officers, employees, and agents of the foundation. It is unduly restrictive to
provide for the remuneration of employees and agents of the foundation by
by-law. It is better corporate practice to leave the remuneration to be set by
the officers of the corporation.
It also amends clause 25(2). This subclause requires that any by-law be
sanctioned by a general meeting of the members by at least two-thirds of the
members entitled to vote in order for it to be valid. However, for
clarification, it is important to expressly indicate that we do not mean
two-thirds of the members generally, but two-thirds of the members entitled to
vote at that meeting. The amendment, therefore, will avoid ambiguity about the
validity of the by-law.
The Chairman: All those in favour?
Hon. Senators: Agreed.
The Chairman: The amendment carries.
Senator Kenny: I move that Bill S-13 be amended in clause 30, on pages 11 and
(a) on page 11 by replacing line 42 with the following:
"further its objects, but nothing in this subsection" ; and
(b) on page 12, by replacing line 1 with the following:
"nothing in this subsection applies to other".
I would ask the law clerk to comment on this please.
Mr. Mark Audcent, Law Clerk and Parliamentary Counsel: Honourable senators, the
purpose of this amendment is in two places to delete the word "section"
and replace the word "subsection." This brings clarity to the
intended scope of the subsection.
The Chairman: All those in favour?
Hon. Senators: Agreed.
The Chairman: Carried.
Senator Kenny: I move that Bill S-13 be amended in clause 41, on page 15, by
replacing line 37, in the English version, with the following:
This amendment to paragraph 41(a) corrects a terminological error. The last line
in the paragraph refers to "advisory committee" and this should read "advisory
The Chairman: All those in favour?
Hon. Senators: Agreed.
The Chairman: Carried.
Senator Kenny: Honourable senators, I move that Bill S-13 be amended in clause
48 in the English version.
(a) on page 19, by replacing line 49 with the following:
"under Part II of this Act in the Founda-"; and
(b) on page 20,
(i) by replacing line 2 with the following:
"under Part II of this Act in the Founda-",
(ii) by replacing line 5 with the following:
"under Part II of this Act, in the Founda-,
(iii) by replacing line 8 with the following:
"under Part II of this Act in the Founda-",
(iv) by replacing line 11 with the following:
"Part II of this Act in the Foundation's fifth".
The amendment would replace the expression "the Act" with "this
Act" in order to clarify that clause 48 is making reference to Bill S-13,
and not another act of Parliament.
The Chairman: All those in favour?
Hon. Senators: Agreed.
The Chairman: Carried.
Senator Kenny: I move that Bill S-13 be amended in clause 51, in the English
(a) on page 21, by replacing line 48 with the following:
"under Part II of this Act in the Founda-"; and
(b) on page 22,
(i) by replacing line 2 with the following:
"Part II of this Act in the Foundation's sec-",
(ii) by replacing line 5 with the following:
"under Part II of this act in the Foundation's third",
(iii) by replacing line 8 with the following:
"Part II of this act in the Foundation's", and
(iv) by replacing line 11 with the following:
"Part II of this Act in the Foundation's fifth".
This amendment would replace the expression "the Act" with "this
Act" for the same reason outlined in relation to clause 48.
The Chairman: I see the word "under" on line 5.
Mr. Audcent: You are reading from the wrong draft. I will provide the correct
Senator Maheu: Senator, I do not see subclauses numbered (i) or (ii) or (iii) in
Senator Kenny: The bracketed letters and the Roman numerals are provided for the
purpose of numbering the amendments themselves, and do not correlate to the
The Chairman: I am sure that this makes for exciting television.
Senator Kenny: Let the record show that the Chairman observes these amendments
should have been done in camera.
Senator Cools: It shows how much care we are taking.
Senator Stollery: I think that it was a brilliant strategy, and I approve.
The Chairman: All those in favour of these amendments to clause 51?
Hon. Senators: Agreed.
The Chairman: Carried. Are all other clauses, the preamble and the title
Hon. Senators: Agreed.
The Chairman: Carried. Is it agreed that Bill S-13 be adopted as amended?
Hon. Senators: Agreed.
The Chairman: Carried.
Thank you, Senator Kenny and Senator Nolin, and congratulations. I will report
this bill, as amended. The comments, as agreed, will be brought forward as an
appendix to the report.
The committee adjourned.