Hon. Mobina S. B. Jaffer moved the adoption of the report.

She said: Honourable senators, I am rising to speak today on what was said during the Standing Senate Committee on Legal and Constitutional Affairs study of Motion No. 14 regarding the taxation of the Canadian Pacific Railway in Saskatchewan.

Due to time constraints, the committee was not able to prepare a detailed report of our study, and I believe it is important that you all hear a bit of what was said by each witness we heard from. My purpose is also that this may not be the only time we will be studying this issue. We may have the same issue come from the Government of Alberta and the Government of Manitoba.

With that said, during the week of March 21, the committee undertook a study of Motion No. 14. This motion is related to the proposed constitutional amendment to The Saskatchewan Act. To date, this motion has received unanimous support in the Legislative Assembly of Saskatchewan and in the other place.

On March 23, the committee held two meetings over the course of eight hours, during which it heard from 12 witnesses with varying perspectives on this matter.

During the first meeting, the following people attended: Honourable Gordon Wyant, Louise Baird, Daniel Bourgeois, Michelle Lang, Warren Newman, Nancy Othmer, Merrilee Rasmussen and Michael Vandergrift.

Mr. Vandergrift is the Deputy Minister of Intergovernmental Affairs, Privy Council Office. He reminded the committee that the potential for a bilateral constitutional amendment, while rare, is certainly not unprecedented. Indeed, he said:

Saskatchewan’s request is that the houses of Parliament pass parallel resolutions authorizing the repeal of section 24 of the Saskatchewan Act in accordance with the section 43 amendment procedure in the Constitution Act, 1982. Should another provincial legislative assembly adopt a resolution for a bilateral constitutional amendment of a similar nature, be it Alberta, Manitoba or any other province, the Government of Canada would study and consider the proposed amendment as we did in this case. While this proposal for a bilateral constitutional amendment is a rare occurrence, it’s not unprecedented. The bilateral amendment procedure has in fact resulted in seven constitutional amendments since 1982, each of which amended provisions of the Constitution of Canada that applied to a single province.

The next witness was Nancy Othmer, Assistant Deputy Minister, Public Law and Legislative Services at Canada’s Department of Justice. Ms. Othmer provided us with a detailed reminder of the procedure under any constitutional amendment as well as two standout historic examples of constitutional amendment proposals. She said:

. . . there are five amending procedures. Two of them have been widely publicized, the general procedure and the unanimous consent procedure. The general procedure, under section 38 of the Constitution Act, 1982 requires the authorization of both this house and the House of Commons and at least 7 of the 10 provincial legislative assemblies representing 50% of the provincial population. Only one constitutional amendment has been made under this 7/50 procedure, and that was in 1983, to strengthen the rights of Indigenous peoples under section 35 of the Constitution Act, 1982.

The unanimous consent procedure is set out in section 41, and it applies to a limited number of subjects. It requires the approval of 2 federal houses as well as all 10 provincial assemblies. Both the Meech Lake and the Charlottetown Accord packages were constitutional proposals subjected to this stringent standard.

The next witness we heard from was the Honourable Gordon Wyant, MLA and Minister of Justice and Attorney General for the Government of Saskatchewan. I want to say that Minister Wyant was an exceptional witness. I found the minister to be very welcoming of the committee’s questions and equally forthright in his responses.

Minister Wyant eloquently articulated the position of the Saskatchewan government:

Section 24 . . . restricts the taxation powers of the people of Saskatchewan and gives a strong competitive advantage to one of Canada’s most successful and profitable businesses, Canadian Pacific Railway.

In our view, section 24 is bad tax policy. It would mean that one business corporation is a free rider, entitled to take the benefits of all the services and infrastructure that Saskatchewan provides but which is not required to contribute its fair share in taxes.

Tax fairness means that every resident and business corporation pay their fair share . . . .

But Minister Wyant indicated that CPR says it doesn’t have to pay its fair share, and he went on to say that:

In our opinion, that’s a slap in the face to the residents and the people of Saskatchewan, who do pay their fair share.

We then heard from Merrilee Rasmussen, a lawyer. Ms. Rasmussen outlined her own professional experience with Motion No. 14. She recalled:

 . . . my involvement with the proposal . . . began in the early 1990s . . . in Saskatchewan’s Intergovernmental Affairs department. . . . We prepared at that time a proposed resolution, but it was not taken up by the government of the day. I would speculate the reason for that is because, as Minister Wyant has pointed out, there was no practical concern with the issue of CPR taxation, because the CPR had paid taxes since Saskatchewan became a province in 1905.

We then heard from Warren Newman, Senior General Counsel, Public Law at Canada’s Department of Justice. In Mr. Newman’s opinion:

 . . . we’re talking about an amendment to the Constitution of Canada. You heard earlier from fellow witnesses about the amendments in Newfoundland in relation to the denominational schools. There were three of those amendments. One of those amendments was made in 1997, and it was, again, a variation on the term — term 17 — relating to denominational schools, and litigation arose under that amendment. The province turned around and put forward another amendment to abolish the guarantees altogether in 1998, and that constitutional amendment went through both the House of Assembly of the province and the federal legislative houses. There was subsequent litigation on the basis of that, which I have alluded to, as well. The court upheld the validity of the amendment.

Daniel Bourgeois is a Senior General Counsel, Tax Law, at Canada’s Department of Justice. Mr. Bourgeois shared with the committee his opinion on the relationship between the ongoing court matters and this motion:

This constitutional amendment procedure, which seeks to repeal section 24 of the Saskatchewan Act, will have no impact on the federal litigation or on the contractual obligation that is there, so no, this process will have no impact on the arguments raised in the Federal Court litigation.

Witness Louise Baird, Assistant Deputy Minister, Intergovernmental Affairs in the Privy Council Office, and Michelle Lang, Chief of Staff for the Honourable Gordon Wyant, Minister of Justice and Attorney General for the Government of Saskatchewan were instrumental in their support of Minister Wyant, and we are appreciative for their appearance.

(1600)

Over the course of our second meeting, we heard from James Clements, Dwight Newman, Benoît Pelletier and Patrick Taillon. James Clements is the Senior Vice-President, and is responsible for strategic planning and technology transformation at Canadian Pacific. Mr. Clements encouraged the committee to consider the historical context of the commitments entered into by Canadian Pacific and the federal government. In his words:

. . . the Parliament of Canada passed the 1881 CPR Act. That legislation provided for both a series of incentives to assist in getting the railway financed and built and a series of obligations on CP, including building the railway and, uniquely at the time, the obligation to operate it forever.

One of those incentives was an exemption to allow part of CP’s operations to be forever free from taxation, known as Clause 16.

Honourable senators, the following witnesses were experts in constitutional law. The first constitutional law expert we heard from was Benoît Pelletier, a professor at the University of Ottawa. I would like to share with all of you one of Mr. Pelletier’s responses to my question regarding whether, if this motion passed, it would affect the ongoing lawsuits. Specifically, would the lawsuits which are seeking reimbursement of taxes previously paid still be able to proceed and not be considered interfered with? Mr. Pelletier’s response was meaningful, clear and exemplary of his expertise. In his own words:

. . . that question of retroactivity is not a simple question. In this case, we talk about taxation, which is a subject that is not highly sensitive for most people. But let’s assume that we are talking, however, about human rights. Let’s assume that we talked about a situation where the constituent decided to deprive someone retroactively of his or her human rights. That question of retroactivity is not something that could be simply solved. It’s a question of legitimacy, not of legality or constitutionality. I make a difference between both. In this case, there is a question of legitimacy and fairness. However, I came to the conclusion that on the constitutional aspect of the question, the motion is valid and the amendment would be valid if passed by the Senate, the House of Commons and the legislature of Saskatchewan.

Next, the committee heard from Dwight Newman, Professor of Law and Canada Research Chair in Indigenous Rights in Constitutional and International Law at the University of Saskatchewan. Mr. Newman shared his expertise of constitutional law with the committee. In Mr. Newman’s opinion:

There has been overwhelming democratic support within Saskatchewan for the constitutional amendment before you.

The amendment at issue is, in many ways, a simple adaptation of constitutional text to respond to modern circumstances with a correction and clarification of that text quite consistent, in many ways, with patterns of use of this amending formula.

[Translation]

The last witness we heard from at the first meeting was Patrick Taillon, a professor and co-director of the Centre for Constitutional and Administrative Law Studies at Laval University.

Mr. Taillon shared his opinion on the motion and said:

 . . . the Saskatchewan resolution is very important. It provides a better understanding of why sometimes we succeed on the constitutional front and sometimes we fail. Like other amendments made through the bilateral procedure under section 43 of the Constitution Act, 1982 . . . .

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