Pursuant to notice of February 8, 2022, moved:

Whereas on October 21, 1880, the Government of Canada entered into a contract with the Canadian Pacific Railway Syndicate for the construction of the Canadian Pacific Railway;

Whereas, by clause 16 of the 1880 Canadian Pacific Railway contract, the federal government agreed to give a tax exemption to the Canadian Pacific Railway Company;

Whereas, in 1905, the Parliament of Canada passed the Saskatchewan Act, which created the Province of Saskatchewan;

Whereas section 24 of the Saskatchewan Act refers to clause 16 of the 1880 Canadian Pacific Railway Contract;

Whereas the Canadian Pacific Railway was completed on November 6, 1885, with the Last Spike at Craigellachie, and has been operating as a going concern for 136 years;

Whereas, the Canadian Pacific Railway Company has paid applicable taxes to the Government of Saskatchewan since the Province was established in 1905;

Whereas it would be unfair to the residents of Saskatchewan if a major corporation were exempt from certain provincial taxes, casting that tax burden onto the residents of Saskatchewan;

Whereas it would be unfair to other businesses operating in Saskatchewan, including small businesses, if a major corporation were exempt from certain provincial taxes, giving that corporation a significant competitive advantage over those other businesses, to the detriment of farmers, consumers and producers in the Province;

Whereas it would not be consistent with Saskatchewan’s position as an equal partner in Confederation if there were restrictions on its taxing powers that do not apply to other provinces;

Whereas on August 29, 1966, the then President of the Canadian Pacific Railway Company, Ian D. Sinclair, advised the then federal Minister of Transport, Jack Pickersgill, that the Board of the Canadian Pacific Railway Company had no objection to constitutional amendments to eliminate the tax exemption;

Whereas section 43 of the Constitution Act, 1982 provides that an amendment to the Constitution of Canada may be made by proclamation issued by the Governor General under the Great Seal of Canada where so authorized by resolutions of the Senate and House of Commons and of the legislative assembly of each province to which the amendment applies;

Whereas the Legislative Assembly of Saskatchewan, on November 29, 2021, adopted a resolution authorizing an amendment to the Constitution of Canada;

Now, therefore, the Senate resolves that an amendment to the Constitution of Canada be authorized to be made by proclamation issued by Her Excellency the Governor General under the Great Seal of Canada in accordance with the annexed schedule.

SCHEDULE

AMENDMENT TO THE CONSTITUTION OF CANADA

1.Section 24 of the Saskatchewan Act is repealed.

2.The repeal of section 24 is deemed to have been made on August 29, 1966, and is retroactive to that date.

CITATION

3.This Amendment may be cited as the Constitution Amendment, [year of proclamation] (Saskatchewan Act).

He said: Honourable senators, it’s an honour for me to rise and move Government Motion No. 14, dealing with the proposed constitutional amendment in relation to Saskatchewan.

I want to begin by acknowledging and thanking our colleague Senator Cotter, who is the seconder of this motion, for having brought this to the chamber’s attention, and to all my colleagues from Saskatchewan for their work on this matter.

Before I begin, I would like to put on the record a correspondence I received yesterday from the Honourable David Lametti, Minister of Justice and Attorney General of Canada, which serves as the genesis of the motion before you:

Dear Senator Gold,

Today, the House will consider an important constitutional amendment to the Saskatchewan Act, S.C. 1905, c. 42., which forms part of our Constitution. As you are aware, on November 29, 2021, the Legislative Assembly of Saskatchewan unanimously adopted a resolution to amend the Act, thus initiating a constitutional amendment process through the bilateral formula found in s. 43 of the Constitution Act, 1982. The amendment aims to remove a historical exemption from provincial and municipal taxes granted to Canadian Pacific Railway (CPR) in the Saskatchewan Act, as a result of a prior agreement between the federal government and CPR. The Government will be supporting this vital amendment to support the Province of Saskatchewan and its economy. The amendment will promote tax and fiscal fairness, as well as cooperative federal provincial relations that would be beneficial to national unity. The amendment would also have the benefit of reflecting in the law the ongoing practice whereby CPR, despite its historical tax exemption, has been paying taxes to the province of Saskatchewan. To have the constitutional amendment proclaimed by the Governor General, we would need a motion in both the House of Commons and the Senate. We look forward to its speedy passage in the House. I understand that senators are already alive to the issue in light of the motion put on notice by Senator Brent Cotter. I would like to encourage the Senate to take this issue up with alacrity. It is important to the people of Saskatchewan that this issue be resolved. Our Government is proud to have worked with the Province of Saskatchewan to advance this motion and looks forward to the proclamation of the constitutional amendment.

Honourable colleagues, allow me to provide some context. A resolution authorizing the proposed amendment has already been adopted by the Legislative Assembly of Saskatchewan. If the resolution is then authorized by the Senate, the amendment will repeal a provision of the Saskatchewan Act, which was passed by Parliament in 1905 but is now an integral part of the Constitution of Canada. The government is proud to support this constitutional amendment that seeks to ensure fairness in Saskatchewan’s tax system.

As honourable senators know, this amendment uses the bilateral constitutional amendment procedure as set out in section 43 of the Constitutional Act, 1982. It states that an amendment to the Constitution of Canada, in relation to a provision that applies to one or more but not all provinces, may be made by a proclamation issued by the Governor General where authorized by resolutions of the Senate and the House and of the legislative assembly of each province to which the amendment applies. The provision that would be amended, section 24 of the Saskatchewan Act, only applies to Saskatchewan; and the legislative assembly of the province to which the amendment applies, the Legislative Assembly of Saskatchewan, has authorized the amendment, as has the House of Commons. It is now up to us to determine whether to adopt resolutions authorizing the same amendment that is the repeal of section 24.

The bilateral constitutional amendment procedure has previously produced seven constitutional amendments. Four of them concerned Newfoundland and Labrador, one changing the name of the province to include Labrador in 2001 and three changing the denominational schools provision of the Terms of Union in 1987, 1997 and 1998. One was made at the request of Quebec to remove their application so as to favour the organization of school boards along linguistic lines, this in 1997. One was made at the request of New Brunswick in 1993 and added section 16.1 to the Canadian Charter of Rights and Freedoms, and thus recognized in the constitution the equality of the English and French linguist communities in that province. Lastly, one was made at the behest of Prince Edward Island in 1993 to remove the requirement in the Terms of Union for Canada to maintain a ferry service, thereby facilitating the substitution and construction of Confederation Bridge to the mainland.

The amendment would repeal, retroactive to August 29, 1966, section 24 of the Saskatchewan Act, the enactment that created the Province of Saskatchewan. This section of the law purports to subject Saskatchewan’s constitutional powers to clause 16 of an agreement dating back to 1880 between the Government of Canada and the founders of the Canadian Pacific Railway. This clause exempted the CPR from certain federal, provincial and municipal taxes indefinitely.

Despite the tax exemption, in 1966 CP agreed to pay the applicable taxes. More recently, CP took legal action against all the governments concerned to reassert its historic tax exemption.

Saskatchewan’s concerns regarding section 24 are threefold. First, Saskatchewan is of the view that it would be inconsistent with the province’s position as an equal partner in Confederation if the provision restricted Saskatchewan’s taxation powers relative to those of the other provinces of Canada.

Second, Saskatchewan believes that it would be unfair to other businesses operating in the province, including small businesses, if a major corporation were exempt from certain provincial taxes, providing that corporation a significant competitive advantage over those other businesses to the detriment of farmers, consumers and producers in the province.

Third, Saskatchewan asserts that it would be unfair to the residents of Saskatchewan if a major corporation were exempt from certain provincial taxes, casting an additional tax burden onto the people of Saskatchewan.

Back in 1880, this tax exemption for a single large corporation may very well have been appropriate as it was intended to recognize and encourage CPR’s investments in the construction of the trans-Canadian rail network in the late 19th century. As such, it was just one of the incentives that Canada offered to CPR to build Canada’s first cross-country railway in fulfillment of a promise made to British Columbia for joining Confederation.

The government is of the opinion that Saskatchewan should be able to impose taxes within its provincial boundaries as it deems appropriate. The government agrees with its Saskatchewan counterpart that other taxpayers in the province should not bear a heavier tax burden as a result of a single large corporation benefiting from an exceptional exemption from provincial taxation. The government also agrees that there should be a level playing field between all businesses operating in Saskatchewan’s transportation industry.

As we all know, the completion of this railway was fundamental to the birth of our nation and the subsequent rapid growth and development of our economy. The “Last Spike” uniting east and west is an iconic representation of our national heritage and unity. Thank you, colleagues, and I urge speedy adoption of this resolution.

Senator Griffin, did you wish to enter debate or ask a question?

I wish to ask a question, Your Honour.

Senator Gold, would you take a question?

Of course.

Thank you, Senator Gold. I have a question that’s related to process rather than to policy related to this constitutional amendment. In the Senate, we often talk about ensuring sober second thought when it comes to reviewing and protecting rights under the charter; and in this case, the motion proposes to remove the constitutional right, for better or for worse, that was given to the Canadian Pacific Railway. As you noted, there was a constitutional debate on the amendments to remove the Prince Edward Island ferry service and replace it with the Confederation Bridge. I don’t think you noted, though, that the debate on this amendment occurred over four sitting days. I’m a little concerned that we might be rushing here. You asked for speedy delivery of the results.

By the way, the other constitutional amendments that you cited, some of those, of course, were referred to committee. So in all of those cases I believe the Senate was sincerely providing sober second thought.

The question I have is: As a matter of procedural fairness, should Canadian Pacific Railway be afforded the opportunity to make its views known in the Senate prior to extinguishing its constitutional right? Even worse, what precedent does this set? Thank you.

Thank you for your question. It’s the position of the Government of Canada that it is appropriate to respond to the initiative of the legislature of Saskatchewan to redress what is now clearly an anomaly and an unfair situation for the people of Saskatchewan. I do hope we deal with this quickly and appropriately. I leave it open to the Senate, as we are masters of our own house, to decide how long the debate shall take and how we ultimately proceed to a final vote.

Senator Dupuis, do you have a question?

I would like to ask the Government Representative a question if that’s okay with him.

Yes.

Senator Gold, you mentioned an amendment that would be retroactive to a specific date in the 1960s.

Can you give us some more details about that retroactivity? You know there are always questions when we want to create retroactive legislation, so I wanted to make sure I understand correctly.

Thank you for the question. I think Senator Cotter will have more to say about that in his speech, but I believe the date was chosen because, on that date, there was an agreement between the Government of Saskatchewan and other governments. In addition, the president of Canadian Pacific at the time knew the railway company was going to start paying tax. The terms of the agreement were a little complicated. Anyway, that’s why this amendment would be retroactive to that date, the date on which Canadian Pacific decided to pay tax to Saskatchewan regardless of the constitutional provision on Saskatchewan.

Senator Gold, that might have been my favourite speech that I’ve heard you deliver in this chamber.

I aim to please.

I’m sure that is because it was all about Saskatchewan, and quite wonderful at that. Thank you to the Government of Canada for bringing this forward in an expeditious way in the Senate so that we can take what has happened in the Legislative Assembly of Saskatchewan and what is, I believe, concurrently happening in the House of Commons as a result of the hard work of my Saskatchewan Conservative caucus colleagues there so we can make this fair for Saskatchewan.

I also wanted to give you the chance, as a former constitutional law professor, to perhaps impart some wisdom on the constitutional aspect of this and tell us if there is anything else that we should know, or you would like us to know, as to why this is a constitutionally sound manner in which to proceed.

Thank you for your questions and your comments. The appropriate way to proceed is to follow the amending formula set out in the Constitution Act, 1982. As I outlined in my speech — and I suspect we’ll hear again from Senator Cotter who is a great constitutional expert in his own right — this is a provision that allows for the Constitution to be amended when it affects one or more but not all of the provinces, unlike constitutional amendments that affect all of the provinces and require a different formula or those that only involve the federal Parliament. That is something that can also be done differently.

Even though the Constitution was only patriated in 1982, this has been used many times. There has never been a question raised, to the best of my knowledge, as to the appropriateness of proceeding this way in cases like this. The government is satisfied that this is the appropriate constitutional way to resolve this issue, which is an issue of fairness for the people of Saskatchewan.

Senator Gold, if I understood you correctly, you said in your speech that, in the Constitution, Canadian Pacific was given an exemption from paying municipal, provincial and federal taxes. Is that correct?

Thank you for the question. That is correct. I was informed that the matter of provincial and municipal taxes has been of great concern to the Province of Saskatchewan for some time.

I understand that the Province of Saskatchewan is concerned about this, but as a Canadian citizen, I am also concerned about the corporate taxes paid to the federal government.

Canadian Pacific has been paying taxes in Saskatchewan, despite the exemption. Can you tell us whether it has been paying corporate taxes at the federal level as well? If not, why?

I do not know how much was paid or the date the payments began. I will try to find out. I invite my other colleagues to talk about that when they rise to speak.

According to the information I have, Canadian Pacific pays taxes to the federal government. However, that is not the issue. We are talking about provincial and municipal taxes. Essentially, it is the municipal taxes that are at issue. That is all the clarification I can provide. I can’t say more. I don’t have the information, the amounts or the details.

May I ask you, Senator Gold, to speak more as a former professor than as the government representative? Alberta and Saskatchewan entered Confederation at the same time under very similar legal frameworks. The railroad, of course, also runs through Alberta. I’m just curious, did this exemption ever exist in Alberta? Does it still exist in Alberta? If it doesn’t exist anymore, at what point, do you know, was it changed in my province?

Thank you for your question. The exemption does currently exist in Alberta in the same terms as we find in The Saskatchewan Act. There is also an exemption in Manitoba in slightly different terms because Manitoba was already a province by the time that the arrangement was made with Canadian Pacific Railway. To date, neither the Province of Manitoba nor the Province of Alberta has approached the Government of Canada with an indication that they want to proceed as Saskatchewan has done.

I’m taken aback that Alberta would not have proceeded in the same direction. That is very interesting and curious information. Thank you very much.

I understand that the constitutional amendment actually targets a commercial entity, Canadian Pacific, not necessarily the parent company, but the company that runs the railway.

Does the parent company or the railway have a position on the proposed constitutional amendment?

Thank you for the question. As I mentioned earlier, the company has been paying taxes for some time now. More recently, it initiated a process to ensure it would no longer have to continue paying taxes. Maybe that’s one reason the Government of Saskatchewan, or the Saskatchewan legislature, decided to proceed with the resolution that was passed last year.

The answer is more interesting than I expected. So the amendment is being proposed at the request of the province that is involved in a court battle with Canadian Pacific to end the litigation.

I’m not sure what stage the dispute is at. I will refer back to my text to be more precise. More recently, Canadian Pacific filed a lawsuit against the relevant governments to reassert its exemption. I don’t have the details of the exact timing of the filing or the steps in this lawsuit.

Senator Gold, my question is about information on whether Canadian Pacific is or is not exempt from federal taxation. Will you undertake to provide us with this detailed information before we proceed with this motion?

Yes, gladly. I apologize for not having that information with me, but I will make inquiries and report back to the chamber with more details. I will be available to answer your questions.

I have another question.

If I properly read the text of the draft, it says that there was some kind of agreement in 1966 between the then president Ian Sinclair of CP and the Government of Canada through the minister of transport Jack Pickersgill. Do we have a copy of that agreement? Is it a written agreement or an oral agreement? If it is a written agreement, could we have a copy of it?

Again, thank you for your question. I actually don’t know whether there is a copy of that agreement, but there was an agreement — at least, I’ve been advised there was an agreement. I will make inquiries as to whether there was. If there is one and it is public, I would be happy to share it.

Thank you.

Senator Gold, you just told us about a lawsuit filed by Canadian Pacific against the governments. Can you specify which governments? Are we talking about the Government of Saskatchewan only? Are we talking about the Government of Saskatchewan and the Government of Canada?

To ensure that I give you the right response, I will add this question to the ones you asked me and I will come back to you with the answers as soon as possible.

I understand the procedure for presenting the motion as a request from the Government of Saskatchewan, following a resolution adopted by its legislative assembly to amend the Constitution as it relates to the Province of Saskatchewan. However, if this is a dispute between Canadian Pacific and a government other than the Government of Saskatchewan, for instance the Government of Canada and the Government of Saskatchewan, this would no longer be part of the same constitutional discussion, because this amendment will have a direct impact not only on the Constitution as it relates to Saskatchewan, but also on federal government operations.

I understand your question. Once again, the objective of this resolution is to eliminate an inequity, or lack of equity, for the Province of Saskatchewan and its taxpayers, because Canadian Pacific has a tax exemption that was granted a long time ago and is no longer warranted, not just in the opinion of the Government of Saskatchewan, but also in the opinion of the Government of Canada.

Senator Gold, would you take another question?

Yes.

Senator Gold, I have listened to the questions and comments of colleagues on all sides in this chamber. I would like to know if you think we should have more time to study the amendments and give sober second thought to an issue that seems complex and on which the constitutional experts in this chamber have raised some aspects that concern me personally.

Thank you for the question. I have a great deal of respect for all members and for the Senate. The government’s position is that it would be appropriate to pass this resolution. However, as I told our colleague, Senator Griffin, it is up to the Senate to decide how much time we wish to take and how we wish to study it. I have already undertaken to return to this chamber with the clarifications requested.

I am certain that this will adequately respond to any concerns, but it will nonetheless be up to us, to you, to decide how quickly you wish to proceed. I want to point out that resolving this situation is important to the Government of Canada and the Government of Saskatchewan, because that will correct this unjustifiable situation.

Thank you, senator. You’re far more intimately involved with the history of this than I would be, considering where I come from. It is true. Thank you for underlining the fact that this has been a matter of some concern for the people and the Government of Saskatchewan, regardless of their political stripe. Indeed, elsewhere in the Prairies it has been a concern.

That it has come to a head is a good thing, at least from the point of view of the Government of Canada, so that it can partner with the Province of Saskatchewan to address this historical inequity.

Honourable senators, it is now 3:00 p.m. and pursuant to order adopted for this sitting for Question Period, we will take a short pause while the minister enters the chamber. I will remind honourable senators that debate on this motion will resume at the next sitting of the Senate.