Moved third reading of Bill C-32, An Act to implement certain provisions of the fall economic statement tabled in Parliament on November 3, 2022 and certain provisions of the budget tabled in Parliament on April 7, 2022.

He said: Honourable senators, I’m honoured once again to speak to the government’s proposed legislation that seeks to implement certain provisions of the fall economic statement, as well as certain provisions of the budget tabled in Parliament last spring.

Two days ago, at second reading, I spoke at length on some of the main measures contained in Bill C-32. Today, at third reading, I will focus my remarks on two issues that raised some concerns in committee and on which I said I would further elaborate.

The first issue is subparagraph (g) under “Summary,” which says Part 1 will implement additional reporting requirements for trusts, and the issue of solicitor-client privilege. The second issue is found in Division 3 of Part 4, which focuses on the Framework Agreement on First Nation Land Management Act.

Regarding Part 1, Summary, subparagraph (g) and trusts — as I explained on Tuesday, with Bill C- 32, the government hopes to improve the collection of beneficial ownership information with respect to trusts by proposing to require that trusts provide additional information on an annual basis to the Canada Revenue Agency.

Currently, a trust that does not earn income or make distributions in a year is generally not required to file an annual T3 return of income. This will now change with Bill C-32.

In addition, where a trust is required to file a return of income, the trust would be required to report the identity of all trustees, beneficiaries and settlors of the trust, as well as the identity of each person who has the ability to exert control over trustee decisions regarding the appointment of income or capital of the trust.

The government is proposing these amendments to help CRA acquire sufficient information to determine taxpayers’ tax liabilities and to effectively counter aggressive tax avoidance as well as tax evasion, money laundering and other criminal activities.

Collection of this information would also be consistent with Canada’s international obligation in relation to transparency and beneficial ownership. This point was reiterated by Minister Freeland when she appeared before our committee a week ago today. She said:

 . . . from my perspective, doing a much better job than Canada has done hitherto to on beneficial ownership is really important. That is an important part of tax fairness. It is an important part of Canada coming up to the standard of our international peers. I am a big champion of the work that we are doing on beneficial ownership.

It is also worth pointing out that general trust accounts of lawyers are exempt from these reporting requirements.

The rules also expressly provide that the new reporting requirements do not require the disclosure of information that is subject to solicitor-client privilege. This blanket exclusion was added to the legislation and can be found at line 3 on page 59 of Bill C-32.

The provision reads as follows:

For greater certainty, subsections (1.1) to (1.3) do not require the disclosure of information that is subject to solicitor-client privilege.

The Department of Finance told us that this blanket exemption was added in response to concerns raised by the Canadian Bar Association — the CBA — and other lawyers. Indeed, both the Canadian Bar Association and the Federation of Law Societies of Canada have expressed concerns regarding the constitutionality of this new reporting requirement. The CBA argues that the amendments “. . . would not withstand constitutional scrutiny given the jurisprudence from the Supreme Court of Canada.” The CBA also told us that the proposed reporting obligations for client-specific trust accounts are inconsistent with section 8 of the Canadian Charter of Rights and Freedoms.

As for the federation, it believes that:

. . . this blanket provision is ambiguous and not sufficient to prevent the likely breaches of the privilege as legal professionals attempt to comply with the obligation to report information on separate trust accounts. . . .

In its Charter statement, the Minister of Justice acknowledged that this new requirement to provide information about trusts “. . . potentially engages section 8 of the Charter.” However, the statement goes on to say that:

. . . the Minister has not identified any potential effects that could constitute an unreasonable interference with privacy as protected by section 8 of the Charter.

I obviously cannot speak on behalf of the minister or the government, but I would simply propose that the blanket exemption that addresses solicitor-client privilege ensures this privilege is upheld, and that no obligation is being put on lawyers to undermine their compliance with duty to their clients.

Minister Freeland told us that she is very confident that the provision is constitutional and that her department went over this issue in a lot of detail. They have consulted and they feel that they have struck the right balance.

In response to my question, she could not have been any clearer, when she said, “We are confident that there is no requirement to disclose solicitor-client privileged information under this measure.”

Last week, our National Finance Committee was lucky to have officials from the Department of Finance reappear before us to answer any outstanding questions. I asked Ms. Lindsay Gwyer, Director General of Legislation, to provide us with additional information on the matter. She stressed that the government consulted widely and explained that the broad exemption for solicitor-client privilege was included to take into account the Supreme Court decision that interpreted solicitor-client privilege broadly.

The exemption is in direct response to the court’s decision and stakeholder interventions to ensure that these rules will allow lawyers to not report any information that is under a broad interpretation determined to be solicitor-client privilege, as Ms. Gwyer stressed:

. . . the exceptions that we do have in the regulations are intended to find that appropriate balance between completely exempting any trust account that any lawyer could ever set up and providing targeted exceptions and clarifying that solicitor-client information does not need to be provided.

Colleagues, I am not a lawyer, but I have consulted with some of our Senate colleagues who are lawyers, and they agree with the government’s position on the matter.

In the end, I would simply add that I agree that solicitor-client privilege is essential to the proper administration of justice in our country. The government agrees, and it feels it struck the right balance in protecting this privilege with the blanket exemption provided in the bill.

I would now like to shift attention to Division 3, Part 4 of the bill that deals with the First Nations Land Management Act. Our colleagues Senators McCallum, Francis and Patterson spoke on this issue already. I will not repeat everything that they have said and the chronology of events, but allow me to provide you with some additional context on the matter.

As honourable senators know, for most First Nations, reserve lands are managed by Canada according to the Indian Act. The Framework Agreement on First Nations Land Management enables participating First Nations to enact and administer their own land codes and move out from under the application of the land-related sections of the Indian Act. This framework agreement was ratified in legislation in 1999. Today, nearly 25 years later, the government is proposing new legislation to ensure that the framework agreement becomes the central authority through which First Nations govern their lands. Some confusion and inconsistencies exist in the current act that necessitated some cleaning up. Bill C-32 is doing just that and making the framework agreement the overarching or controlling document where one needs to look for the law on this subject.

The proposed new legislation found on pages 144 to 155 in Bill C-32 was co-developed with the Lands Advisory Board, the Indigenous organizations that represent First Nations who are signatories to the framework agreements.

The government contends that replacing the First Nations Land Management Act would modernize the First Nations land management process to better align legislation with the needs and expectations of signatory First Nations and to recognize the First Nations-led nature of First Nation land management.

As I mentioned on Tuesday, the proposed legislation is supported by the 194 First Nations across Canada, most of which are in the development process or operational under the act.

As ably summarized by Ms. Roxanne Gravelle from Crown‑Indigenous Relations and Northern Affairs Canada before our committee, the new bill:

. . . will be shorter, simpler and will point to the Framework Agreement on First Nation Land Management as the central authority under which First Nations transition away from the Indian Act for 44 land-related provisions. . . .

It is really shortening the process and reducing bureaucracy involved in making changes to this framework as First Nations communicate them and advocate for them through the Lands Advisory Board. . . .

Now I will take a brief moment to address concerns expressed by MKO — the Manitoba Keewatinowi Okimakanak — which generated much interest among us. Senator Patterson reminded us that the brief that senators received from MKO included strong language about the gaps in enforcement of bylaws created using the authorities granted to First Nations communities by the First Nations Land Management Act, and that coordinating amendments to various related legislation was suggested by MKO in an effort to address these major concerns about enforcing the provisions of the new First Nations Land Management Act.

Last week, Ms. Gravelle explained to our committee when they started working on the drafting of the bill, their objectives were to simplify the legislation and to reinstate “. . . the framework agreement as the central authority under which First Nations govern their lands.”

She clearly said that they did not have policy authority to go beyond the scope of the existing legislation. The government acknowledges the concerns raised by MKO over enforcement and recognizes there are some challenges. It is Ms. Gravelle’s understanding that the Lands Advisory Board is engaging the signatory First Nations on enforcement specifically. In fact, she even suggested that Bill C-32 will give the framework agreement force of law and it will allow the Lands Advisory Board the ability to actually implement the solutions or changes a lot more easily instead of coming forward with complex legislative changes.

In my view, MKO has legitimate concerns that deserve greater attention, and I would respectfully suggest that parliamentarians may not, at this late hour, be best equipped to advance MKO’s demands without fulsome debate. Additionally, the amendments proposed by MKO to the Royal Canadian Mounted Police Act and the Director of Public Prosecutions Act may be a bit out of scope at this time, considering the fact that these two acts are not even addressed in Bill C-32. They are valid issues, but perhaps they would be best addressed through other channels.

As I mentioned on Tuesday, in a letter dated December 9, Chief Robert Louie, Chair of the Lands Advisory Board, confirms that they are generally supportive of MKO’s position and efforts on First Nation law enforcement, but they are not able to support any amendment to the act at this time for the following reasons:

We do not have the approval of the signatories to the Framework Agreements to make any changes to the FAFNLMA wording . . . [and] Amendments to the Act would create an inconsistency with the guiding Framework Agreement document, which is to say there is nothing in the Agreement now that addresses or refers to the RCMP or Public Prosecutions legislation.

Chief Louie adds that the board hopes to continue to support and work with MKO, and is:

. . . proposing to continue its joint work on enforcement with Provinces and the Federal government and to continue to obtain its direction from signatory First Nations regarding any appropriate changes to the Framework Agreement.

Chief Louie writes — and I agree — that:

. . . granting amendments to the [Act] before seeking First Nation approval is counterproductive to the mutual respect and nation to nation relationship we have worked so hard to build and maintain since the signing of the Framework Agreement in 1996.

To summarize, I will offer two final points. First, the changes proposed in Bill C-32 were co-developed and unanimously supported by all signatories of the First Nations Land Management Act. This is what they want. Second, the amendments that MKO are calling for are legitimate and deserve greater attention, but I would advance that Bill C-32 is not the way to go about seeking these changes. In fact, some might even argue that it would go against advancing reconciliation and supporting First Nation self-determination.

In conclusion, honourable senators, I hope the explanations I have provided on these two matters will give you confidence in voting in favour of Bill C-32. By no means am I suggesting that we disregard the concerns raised with respect to the Land Management Act or the reporting requirements for trusts. Rather, I think these are valid concerns that should be closely monitored, but I feel that the government has done its due diligence and I am happy to vote in favour of the passage of this bill.

Before I wrap up, I want to thank, once again, our colleagues on the National Finance Committee for all their hard work in properly reviewing the bill and, ultimately, in adopting it without amendments yesterday morning. Thank you.

A big thank you to all the witnesses who appeared before our committee, too. I was particularly impressed with our government officials. On behalf of all Canadians, I thank them for everything they do. It’s often thankless work, but I certainly appreciate it when they come before our committees and answer tough questions from senators.

I also wish to extend my gratitude to the administrative staff associated with our committee, including our clerk, Mireille Aubé , and Tracy Amendola, her assistant. We appreciate all you do in the background.

Finally, I will take this opportunity afforded to me to wish you all a very happy holiday season, and I hope you will all enjoy some good quality time with family and friends.

Colleagues, I thank you for your attention and I hope we can adopt this bill today. Thank you.