Moved:

That, pursuant to rule 5-7(b), the question under debate be referred to the Standing Senate Committee on Legal and Constitutional Affairs for examination and report; and

That the committee submit its final report no later than March 31, 2022.

Senator Tannas, we have a few senators that are in line to ask you some questions. Will you accept questions?

I will, any and all.

Yes, for the reasons I just said, that’s a great question. Whatever we do here, particularly if we pass this motion, I’m convinced that we will be asked to pass the same motion from Manitoba and from Alberta. We will have, I think, morally foreclosed our ability to look critically at those requests when we’ve waved the first one through. So I think it’s equally important that we have a look at this.

Let me just say that I think we need to do it — I’m going to join the chorus. We need to do it quickly. This is not a stalling tactic. I think we need to do our homework quickly and efficiently and get to the bottom of it and have the facts presented to senators, continue our good debate and then make a decision. Thank you.

I feel lucky that I don’t have to answer for the Government of Alberta.

This has been a really interesting piece of news. I didn’t realize that this existed — that there was a perpetual tax break for Canadian Pacific as it relates to the operation of their railroad in Manitoba, Alberta and Saskatchewan, which were not provinces at the time the deal was struck. I think that’s why they were stuck with this.

So I can’t say why it hasn’t been more of a news story. It was news to me, and I thought it was interesting news.

Will the senator take a question?

Yes.

Senator Tannas, you know I don’t dispute the authority of this chamber to review and study any matter that comes before us, but, in this case, when our concurrence is necessary for Saskatchewan to amend its own laws, and since nearly 400 — I believe the number is 399 — elected officials both in Saskatchewan and here in Ottawa have already approved the motion, are you not concerned that having the committee review the motion — and the time that it will take, especially as we approach a break week — might send the wrong message to Saskatchewan? After all, this is an example of cooperative federalism at its best. I wonder if we could have your thoughts on that.

No, I’m not bothered by it. We have a job to do. We could pass everything that came here unanimously or that came through other legislatures, with our apologies for being in the way, if that’s what you think we ought to do.

We need to do our due diligence. Quite frankly, this has turned into something that is a little more complicated than was presented to us. I would also say the unanimity, and the lack of debate and research in the other legislatures, create a flashing red light — not a green light for us to do the same. It should be encouragement for us to actually perform sober second thought rather than wave it through. Therefore, no, I’m not at all troubled by us taking the time.

There are two elements to your question. One is whether we would be showing disrespect to the House of Commons or the Legislative Assembly of Saskatchewan by holding committee meetings and trying to get to the facts so we can have an informed vote. I don’t think that’s the case.

Regarding the time issue, my motion is for March 31. In that time frame, I believe there are three weeks of sitting time for study by the Legal Committee, which I don’t think is seized with any legislation right now; I could be wrong. That should be plenty of time to get to the facts. I think they can be garnered with a relatively small number of witnesses.

As far as timing goes, the fact is that the rush about this, as I’ve come to understand — and I might be wrong — is that Saskatchewan and Canadian Pacific have their final arguments in court set for sometime in May and that we’re being asked to do this because there is some calculation that Saskatchewan will lose this lawsuit, so we must take the legal rights away from Canadian Pacific before the judge rules.

So now that we all know that — or at least I think I know that; maybe the committee will tell me that’s wrong — and if those are the facts in the case, I think we have time to go to March 31 and do the deed if it needs to be done in April. That would be well ahead of final arguments and a decision by the judge.

Thank you, Senator Tannas.

First, I don’t think Saskatchewan should be punished, because Saskatchewan took some proactive steps to get a sizable amount of money they believe is justifiably ours. To this point, Alberta and Manitoba have not taken those particular steps.

My question to you is about the House of Commons. You described it as a “listless debate,” to quote you. However, I just wondered if you knew that that was an entire opposition day motion that the official opposition Conservatives brought forward and debated. An opposition day motion takes about six hours of debate, so a substantial length of time was devoted to that debate in the House of Commons. Then it was unanimously passed in the House of Commons, including by the federal justice minister. I wanted to get your opinion on that.

When I said “listless,” I think there were members from different sides who were talking about their hesitation on this.

There is a political element to this that I think we need to recognize in the unanimous motions that went through both houses. That’s not supposed to influence us here. So to me, again, it begs us to do our homework even more than if they had done in-depth studies and made those decisions.

You raised another good point, though. How did Saskatchewan, Alberta and Manitoba get hung with this bill? How did they come to shoulder the burden for tax exemptions for the CPR? What role did the federal government play in this?

The Canadian Pacific Railway line from coast to coast is a benefit to all Canadians. Why are those three provinces the only ones where this right exists?

Is there some obligation or role that might rightly be put to the federal government? That’s an interesting question for our committee to delve into as well. It might not get answers, and we’re certainly not going to bind the Canadian government to anything.

Again, there are so many questions that deserve an answer before we have a vote.

Honourable senators, I understand from the questions asked of Senator Tannas, and from the answers he gave, that it is suggested that we focus on this issue sooner rather than later. I would like to point out, for those who say it has been adopted unanimously by the House of Commons and the legislature and suggest that the Senate should maybe not carry out due diligence, that section 47(1) of the Constitution Act provides that if we have not adopted the motion “within one hundred and eighty days,” then the House of Commons can vote again on that motion and the Senate will not be able to say anything about it.

So what you’re proposing is that we send it to committee, look at it, report and decide within six months following the date that the House of Commons adopted the motion.

Actually, I’ll put a date a little sooner than that, just because I think there is an intention to pull the rights of Canadian Pacific away before this court case happens. I don’t see any other explanation for it than that.

If that’s what we’re being asked to do, we should not foreclose that by saying we’re going to wait six months. We should deal with it in a forthright and expeditious manner and get the facts before us here so we can make the decision.

Senator Tannas, I have two or three questions. As you know, I’m not in opposition to the matter being considered in a timely way, and I want to state that publicly and on the record.

I would invite you to offer your thoughts on this dimension of it. In the lawsuit that was brought against the federal government, the judge found that large exemption in relation to federal taxes had been — which was also to run for a very long time — taken away by federal legislation over the years. Are you offended by that happening in the way in which you’ve just described this seeming to be unfair to a corporation that made a contract a long time ago? I guess I’m saying that the Government of Canada made the same contract with respect to itself but then took away CP’s rights over the decades.

I have another question after this, but I would be interested in your thoughts.

I agree. That is an interesting twist to all of this; that the initial lawsuit that CP put forward to try and assert what they believed were their rights with respect to federal taxes, they lost. Part of that decision where they lost has given rise to the fact that that court, as I see it, provided a lot of light for CP to then go to the next step to assert their rights in the provinces, and in particular in the provinces of Saskatchewan, Alberta and Manitoba.

The federal government seems to have their fingerprints in different spots all over this, including this famous 1966 agreement that was done on behalf of the provinces. Frankly, the best result, rather than asking legislatures to yank, retroactively, legal contracts out from under parties, would be for the federal government to work toward solving this problem in a way that didn’t involve the courts. I guess they’ve had 100 years or so to do that and haven’t done it. It is an interesting element to this.

Senator Simons, me and others, we did a bit of research — and I know you’ve done a lot of research — but in the bit of research I did, I felt there was a story that needed to be clear in all of our minds when we do this, especially because I’m sure we’re going to be asked twice more to do the same thing.

Thank you. I appreciate the answer. I actually hope that we’ll be asked twice more. In fact, we might be the initiators of it. We might ask others to do what we want.

I would offer this context. The federal government seems to have gotten out of its obligations with this tax exemption vis‑à‑vis CP. My guess is that the Government of Saskatchewan and the Government of Manitoba and the Government of Alberta would have done the same thing if they could have, but they are kind of handcuffed by the constitutional constraint. There is an equity that cuts across all four of the folks that got sued, but three of those folks have their hands tied behind their back by this constitutional constraint.

It seems that if we continue to be sympathetic to that constraint, we’re basically saying we’re sympathetic to CP not paying its share of taxes in these three provinces for a very long time. While it’s not a purely legal kind of interpretation — you seem to be, strangely enough, embracing the legal framework and I’m wandering into the political sphere — we really should be looking for the fairest solution. That might require some dialogue. Are you open to that as a way of thinking it through?

I think that’s a role we potentially could play in bringing all of this to light. With the parties retreated to their corners, and if we bring them together, maybe a solution with the hammer still in the hand of the Senate — there may be something that can be done over the next little while.

I think it’s worth the discussion and us getting educated and taking this matter seriously. I agree that it was a fundamental unfairness that happened when those provinces were formed.

On the other hand, there’s a great, wonderful story of Canadian Pacific to be told there — the fact that for their 25 million acres of land there were parcels side by side that the federal government took and used to sell and generate money for the treasury and populate the country. It was, no thanks to Pierre Berton, a wonderful story of an organization that got done what others couldn’t get done and helped us fulfill the national dream.

I think we owe it to everybody to try to fix this without a sledgehammer as crude as we have here.

Would Senator Tannas take a comment more than a question?

This goes back to Sandford Fleming and the Bank of Montreal and Edward Seaborne Clouston and all that was going on back in the 1880s, 1890s up until about 1910. If you’re going to study this, I think you have to go back a long way. I wonder if that’s what we’re prepared to do. I thought I would mention that.

Thank you. I don’t know how far back we have to go. But you’re right, this had its beginnings a long time ago. It seems there is an issue of fairness and there are multiple parties involved. We are doing something that I don’t think has ever been done. We have extinguished what is a constitutional right of somebody. We’ve not only done that but made it retroactive.

We need to get this in front of a committee. We have an excellent Legal Affairs Committee. I think they could do this justice in short order and make it clear to folks like me what exactly it is we’re doing and why, so I can vote with a clear conscience.

Senator Richards is right to refer to the fact that the source of the issue here is a contract that was entered into between the federal Crown and the Government of Canada in 1880. That’s an old contract. I agree with that. That is a clear definition of it. But the judgment of the Federal Court of Canada that was released in September, before the Saskatchewan legislature adopted the motion, is essentially about the scope of this contract. Since the Federal Court has decided that the scope of this contract does not encompass income tax, GST, excise tax or tax on carbon, maybe we should look at these issues carefully and make sure that what is left for Saskatchewan — Saskatchewan is forced to provide an exemption as long as the exemption is provided in the contract.

So if there’s not much in the contract, maybe we’re not talking about $391 million. Maybe we’re talking about the tax on capital according to provincial, Saskatchewan law for the periods that are not yet time barred. Maybe we are talking about a few million dollars. Maybe it’s something we should be looking at as you suggest. I certainly appreciate your suggestion and think it’s a good one.

We did hear about a large number here in debate and in the bit of work that I was able to do. That certainly appears to be the high side of things. The Federal Court, as I understand it, is a lot narrower. Nonetheless, it is still $100 million or something like that. It’s a lot less, but it’s a lot of money and there is still the issue of going forward. This has to stop. It should. By the way, so should Canadian Pacific’s obligations. They have obligations in perpetuity as well. The Saskatchewan legislature, I don’t think, thought to relieve Saskatchewan of that obligation that’s in the contract, but they do have an obligation to operate a railroad across the country in perpetuity.

Who knows? One hundred years from now, that might not be a good bet, but that’s for another day. The point is that there was this money issue. Just in the little bit of work I did, I agree, Senator Dalphond, that the numbers I heard from other sources, other than what I heard in the chamber here, are significantly less.

Senator Tannas, I do believe your motion was seconded by Senator Wallin, to send it to committee? Thank you.

Are honourable senators ready for the question?

I move the adjournment of the debate.

It is moved by the Honourable Senator Quinn, seconded by the Honourable Senator Downe, that further debate be adjourned until the next sitting of the Senate.

If you oppose adjourning the debate, please say “no.”

I’m hearing a “no.”

Those in favour of the motion and who are in the Senate Chamber will please say “yea.”

Those opposed to the motion to adjourn and who are in the Senate Chamber, please say “nay.”

I believe the nays have it.

We’ll have a vote at 6:01. Call in the senators.

Honourable senators, it being after 6 p.m., pursuant to rule 3-3(1), the Senate is now suspended until 7 p.m.