Hon. Brent Cotter: Honourable senators, pursuant to rule 5-10(2), I ask that Motion No. 32 be withdrawn.

Hon. Robert Black, Chair of the Standing Senate Committee on Agriculture and Forestry, presented the following report:

Thursday, April 7, 2022

The Standing Senate Committee on Agriculture and Forestry has the honour to present its

FIRST REPORT

Your committee, to which was referred Bill S-222, An Act to amend the Department of Public Works and Government Services Act (use of wood), has, in obedience to the order of reference of December 9, 2021, examined the said bill and now reports the same with the following amendment:

1.Clause 1, page 1: Replace line 10 of the English version with the following:

“ter shall consider any potential reduction in greenhouse”;

and with certain observations, which are appended to this report.

Respectfully submitted,

ROBERT BLACK

Chair

(For text of observations, see today’s Journals of the Senate, p. 455.)

The Hon. the Speaker: Honourable senators, when shall this report be taken into consideration?

(On motion of Senator Black, report placed on the Orders of the Day for consideration at the next sitting of the Senate.)

Senator Gold: Thank you for your question. My understanding of what took place was there was a conversation between the Prime Minister and the leader of the New Democratic Party, as you would expect there to be in the context of the relationship that has developed between them. To the best of my knowledge, that is the appropriate way to characterize what you have characterized otherwise.

Hon. Marc Gold (Government Representative in the Senate): Thank you for your question. I don’t know that the way you characterize it is the case at all, but I certainly will make some inquiries and be happy to report on the status of this particular policy initiative.

Hon. Stan Kutcher: Senator Gold, on a slightly different angle, what measures are Canada taking to prompt our allies in NATO to support Ukraine by providing the heavy weapons and air and naval defence systems that Ukraine needs to counter this illegal and horrific Russian attack?

If Canada can’t do it directly, what are we doing indirectly?

Senator Gold: No.

Senator Plett: Of course, the similarity in those projects is that not one of them is completed. Perhaps, leader, someone in the New Democratic Party should be taking our questions today.

According to the media, they have been briefed on the contents of the budget. As Senator Martin mentioned on Tuesday, the Canada Infrastructure Bank has never attracted private investment, something the Prime Minister claimed it would do. They’ve completed no projects in five years but have spent over $46 million in salaries and other compensations, including $10 million in bonuses.

Leader, if the NDP-Liberal government is intent on going ahead with this scheme, at the very least will you commit to withholding incentive bonuses where there is nothing to show for it, yes or no?

Senator Gold: Thank you for your question. Canada is not afraid to take the actions that it needs to take to support the democratic government and the peoples of Ukraine, and our actions demonstrate that. Each sovereign country must make its own decision as to how and what measures to take, which measures will be effective, which will be performative and which will serve the best interests not only of its own citizens but also of its allies and Canada will continue to act responsibly in that regard.

Hon. Marc Gold (Government Representative in the Senate): Thank you for your question. I do not have information as to the status of that particular bill. I’ll make inquiries and be happy to report back.

Hon. Senators: Question.

Hon. Paula Simons: Honourable senators, I rise today to speak to Bill S-228, An Act to amend the Constitution Act, 1867 (property qualifications of Senators).

I vividly remember the day three years ago when I got that message from Ottawa asking me to provide proof that I was qualified to be a senator, that I owned $4,000 worth of real property.

As it happens, I was on holiday outside the country and I had to scramble to pull together all the necessary documentation to prove I owned my house. I needed to provide a land title certificate from the Alberta Land Titles Office. I needed to provide a property tax assessment from the City of Edmonton. I needed a copy of my mortgage agreement with my bank and a copy of my Alberta driver’s licence to prove that my official legal address matched the address on all those other documents, all to prove that I actually lived in the house that I owned.

I was lucky. I did indeed own the little house where I lived. While my lawyer and I hustled to round up all the necessary documentation as quickly as possible, I wondered, why exactly was a $4,000 property requirement still a thing?

Since I speak to a lot of school groups about the Senate, and they often ask me that same question, I set out to find an answer. Here’s some of what I tell students when they ask me.

To understand the origin of the property qualification, it’s necessary to understand just how tumultuous a time the sixties actually were. I don’t mean the 1960s; I mean the 1860s.

It was a decade of seismic shifts in political power, a decade that saw the Russian Empire free its serfs and the United States abolish slavery. It was a decade when Mexico threw off its French imperial occupiers and executed its French emperor, Maximilian I; a decade when Spain deposed its Queen Isabella in its Glorious Revolution; a decade where Italy became a free and united nation, thanks to the revolutionary leadership of Giuseppe Garibaldi.

Of course, 1867 was the year Karl Marx published Das Kapital. It was the year of the Fenian Uprising in Ireland. And it was the year the government of Prime Minister Benjamin Disraeli signed the second Reform Act, which enfranchised a million new British voters, including thousands of urban working men, effectively doubling the number of British men who had the right to vote.

It was against that backdrop that the British North America Act was written and that Canada became a country, which is essential to understanding why we have a Senate in the first place and why one of the key qualifications to be a senator was that you owned a significant amount of land.

Now, $4,000 isn’t a lot of money now, but back then it was roughly the equivalent of owning a $1 million worth of property.

In a time of social upheaval and worldwide worker revolts, in a time when elites were rightly nervous about their futures, it’s no wonder the architects of Canada’s Confederation were keen to set up a form of government that would protect the interests of the landed and the wealthy.

Canada, after all, could have had a unicameral system of government, as our provinces do, with only a single House of Commons. Instead, the powers that be opted for a bicameral system, with an upper chamber modelled on the British House of Lords, which safeguarded the rights of the hereditary landed gentry. Except, of course, the four Canadian colonies that made up that embryo Canada didn’t have dukes or barons or earls. We had no hereditary nobility here at all except a few odd remittance men.

Since we couldn’t have a House of Lords, it was decided we should have a Senate, an upper body named for the Senate of ancient Rome.

Who would our senators be? Well, the Latin root for “Senate” is “senex,” meaning old man, so our senators would be older men.

Senators in ancient Rome were appointed, not elected. They were also supposed to be men of outstanding character, imbued with Roman civil virtues. They were meant to be men of gravitas, dignitas, humanitas.

In the days of the Roman Republic, they also had to be rich or at least independently wealthy since Roman senators served unpaid. It was the first Roman Emperor Augustus who added a property qualification. Augustus decreed that no man could sit in the Senate unless he owned property worth 1,200,000 sesterces.

It’s probably foolish to try to translate that into contemporary currency, but some who have tried, nonetheless, translate 1 million sesterces into roughly $1 million, though I’d take that with a grain of salt — a fitting expression, since the words “salary” and “salt” come from the same Latin root.

To return to 1867, it’s fair to say that the original architects of our bicameral Parliament expressly intended our Senate to mirror its Roman namesake, to the extent that appointed Canadian senators would represent the interests of the wealthy and the landed. Sure enough, when the first 72 senators were called to sit in Canada’s first Parliament, they were a collection of wealthy seigneurs and shipping barons, bankers and gentlemen farmers, men of wealth and property. To judge by their photos, you might well assume that ownership of an enormous pair of side whiskers or a giant moustache was also a requirement for the job — a more ornate collection Victorian facial fuzz you could never hope to see.

My friends, it is not 1867 anymore. Victoria isn’t on the throne and neither is the Emperor Augustus. Our Constitution is a living tree, capable of growth and expansion within its natural limits. It is in a continuous process of evolution.

That’s what Lord Sankey, the British Lord Chancellor, wrote in 1929 when he ruled, in the Persons Case, that Canadian women were entitled to sit in the Canadian Senate. It was a radical change to the qualification rules, and it was five formidable, flawed, unyielding Alberta women — Henrietta Muir Edwards, Louise McKinney, Irene Parlby, Nellie McClung and Emily Murphy — who fought that fight and forever changed the make-up of the Senate.

The first woman, Cairine Wilson, was appointed to our Senate in 1930. While it took a long time, we are now at effective gender parity in this chamber.

Yes, there is indeed a precedent to change the qualifications to sit in the Senate. In 2022, it is anachronistic — bordering on offensive — to think of this chamber as a defender of the rights of rich property owners.

Senator Patterson has already done an excellent job of outlining the ways the property ownership provisions discriminate against the residents of Nunavut, where much land is held in common, and against people who live on First Nation reserves or in Métis settlements.

In 2022, when anyone can apply to be a senator, it should surely be unconscionable to have a system designed to discriminate against Indigenous peoples in this way.

It’s not only First Nations, Métis and Inuit Canadians who may be precluded from applying to be senators under the current rules. Given the stratospheric property prices in Vancouver and Toronto, property ownership in some of Canada’s largest cities may soon be out of the reach of a generation. If we become a society where even the most accomplished urbanites are primarily renters, not owners, we could disqualify all kinds of talented Canadians from Senate service.

Let me quote the words of a truly great senator from Edmonton, the delightful Tommy Banks, of blessed memory. This is from a speech he gave to the Senate on this issue in January 2009. Banks joked that:

There was perhaps an apocryphal story that one senator‑to‑be sought to qualify by having bought a cemetery plot, which was seen to be not entirely in order.

Then he added:

There have been instances in the past in which persons considering appointment to the Senate have actually bought the garage of someone else. That is a fact.

This is a preposterous requirement. It is antediluvian and it has no place in the requirements for being named to this place in the 21st century. . . .

To which I say, hear, hear.

[Translation]

That said, it will not be simple to get Senator Patterson’s amendment adopted. Yes, the Supreme Court ruled in 2014 that such an amendment could be made unilaterally by the federal Parliament without the agreement of the provinces.

However, I should point out that Quebec is in a unique situation. It’s the only province in which senators are assigned to a specific division of the province and are required to own property in that division. According to the Supreme Court’s reasoning, we can’t really do this if the Government of Quebec hasn’t agreed.

I don’t see any real reason why Quebec would oppose this, given that these sections are so archaic that they don’t even include the northern half of the province. I, of course, can’t speak for Quebec, but until Quebec is consulted and agrees, I think it will be hard for us to move forward.

[English]

That said, I want to thank Senator Patterson for continuing the work of my Edmonton predecessor, Senator Banks. It is time to find a way to extinguish a property requirement, which could certainly be seen as classist if not racist, and to ensure that no otherwise qualified candidate is prevented from applying for a position in the Senate simply because they aren’t “landed.”

And if we are worried that we are breaking with tradition and disrespecting our history, well, let me quote the words of another Roman Emperor, the Emperor Claudius.

In AD 48, Claudius shocked the Roman Senate by deciding to appoint senators from Gaul, what is today the territory we call France. Many senators were appalled at the idea of appointing these French barbarians from the provinces into the Senate of Rome.

According to the Annals of Tacitus, the Emperor had this response to these Roman hidebound folks, said the emperor:

Everything, senators, which we now credit as ancient and established, was once new: plebeian magistrates followed patricians; magistrates from Latium followed plebeians; magistrates from all the other races of Italy after the Latins. This thing, too, will become the custom, and what today we defend by means of precedents will be a precedent itself.

Honourable senators, if our namesake institution could adapt to the times and allow into the Senate new and worthy members who didn’t meet the old-fashioned qualifications, well, I think we should be able to do the same.

When in Rome, as they say, do as the Romans.

Thank you, hiy hiy and gratias.

Hon. Pierre J. Dalphond: Colleagues, I rise today to express my reservations about the motion before us. These concerns are based on the testimony heard over four hours at the Standing Senate Committee on Legal and Constitutional Affairs and a review of the legal proceedings initiated in Saskatchewan, debates in the legislature of that province and in the House of Commons, relevant laws, and the 313-page ruling that the Federal Court of Canada handed down on September 29 in Canadian Pacific Railway Company v. Canada.

I will begin by giving an overview of the context and then explaining my reservations.

[English]

In 1880, unable to deliver on the promise to B.C. to be linked to the rest of Canada by a railway, the federal government signed a contract with a group of entrepreneurs, who would become the founders of the Canadian Pacific Railway Company.

In consideration for constructing the railway and operating it in perpetuity, the contract provided, among other things, for the grant of $25 million to the company; the transfer of 25 million acres of what was considered Crown land to be sold to settlers brought to the West by the company; and a tax exemption in perpetuity in connection with certain property.

Commenting on the contract, Justice Nesbitt of the Supreme Court of Canada wrote, in 1905, in Canadian Pacific Ry. Co. v. James Bay Ry. Co.:

. . . the undertaking was thought to be so hazardous that exceptional privileges were deemed necessary to induce the contractors to enter upon the undertaking . . .

Today, we are dealing with the tax exemption found at clause 16 of the contract, which reads as follows:

The Canadian Pacific Railway, and all stations and station grounds, work shops, buildings, yards and other property, rolling stock and appurtenances required and used for the construction and working thereof, and the capital stock of the Company shall be forever free from taxation by the Dominion, or by any Province hereafter to be established or by any Municipal Corporation therein . . .

(1520)

In other words, the agreed upon exemption in connection with certain property was to include federal and municipal taxes as well as provincial taxes should provinces be established.

In 1905, Parliament created the province of Saskatchewan from what was once more considered federal Crown land. Mindful of the government obligation to continue the tax exemption, Parliament included, at section 24 of the Saskatchewan Act, a restriction preventing the use of provincial taxation powers in a way that infringes clause 16 of the contract.

It is not disputed that, since 1905, the company has paid all the provincial taxes imposed from time to time by Saskatchewan, and until 2008, the company did not argue that portions of these taxes could be related to property covered by the tax exemption found in the contract.

However, the company changed its position further to an important 2007 judgment by the Supreme Court of Canada in Kingstreet Investments Ltd. In that decision, the court concluded that amounts paid pursuant to a tax later found unconstitutional may be reclaimed without statutory time limits. In other words, a government can never benefit from collecting an unconstitutional tax.

Being of the view that the tax exemption included in the 1880 contract enjoys constitutional protection, thus making ultra vires any tax collected contrary to it, the company initiated legal proceedings to recover certain amounts paid to Revenue Canada and to Saskatchewan, Alberta and Manitoba. In the Court of Queen’s Bench for Saskatchewan, the company stated that if it were to prevail, it could be entitled to a refund as of December 31, 2020, of about $341 million. This estimate breaks down as follows: fuel taxes $248 million, sales taxes $49 million, income taxes $14 million and corporation capital tax $4 million.

The purpose of the constitutional amendment before us is clear: to remove from Saskatchewan’s internal constitution the obligation to honour the tax exemption found at clause 16 of the contract, retroactive to 1966.

I will now express my concerns. My first concern, which I share with Senator Simons and Senator Tannas, is that the motion would repeal Saskatchewan’s obligation back to 1966. Before the committee, the constitutional experts concurred that the Legislative Assembly of Saskatchewan, the House of Commons and the Senate have the authority together to amend section 24 of the Saskatchewan Act by resorting to section 43 of the Constitution Act, 1982, called the bilateral amendment procedure.

They also agreed that this authority should include the ability to make an amendment that applies retroactively, adding that the motion, if adopted, will be the first constitutional amendment with retroactive effect, the first in Canadian history.

However, these experts, especially Professor Benoît Pelletier, to whom Senator Tannas just referred, expressed concerns about how the retroactive application of a constitutional amendment may impact taxpayers’ settled expectations, as well as legal principles such as vested rights, including private rights, and finally, the integrity of the rule of law.

My second concern is that the Saskatchewan government has designed this constitutional amendment to affect the outcome of ongoing litigation before that province’s court. I share the concerns of Senator Quinn. Essentially, Saskatchewan seeks to extinguish the company’s right to argue that it is entitled, pursuant to section 24 of the Saskatchewan Act, to claim a refund in connection with some taxes.

Today, we are asked to adopt this motion without further delay because the trial in Saskatchewan is set to resume soon. I am disheartened to see a province using the constitutional amendment process to interfere with the outcome in a pending legal proceeding.

My third concern is the lack of need for a constitutional amendment.

Colleagues, you may not be aware of it, but the scope of the tax exemption was the subject of the recent Federal Court judgment I referred to at the beginning of my speech. This judgment rejected the company’s arguments that it was entitled to a refund of some federal taxes. In fact, the judge adopted the federal government’s arguments and concluded that the tax exemption, as drafted, was not intended by the parties to cover income tax, fuel tax and what is often called carbon tax.

The judge concluded that the exemption could apply only to the federal tax on capital stock of the company, a tax repealed in 2006 and refunded by the Canada Revenue Agency to the company before the Federal Court trial, rendering that point moot.

Of course, if the scope of the exemption does not include federal income tax or federal fuel tax, it cannot include Saskatchewan income tax or fuel tax. Moreover, it cannot logically include Saskatchewan sales tax, because excise taxes are exempted. In fact, the exemption could only apply to Saskatchewan’s capital tax on large corporations, a tax reduced to zero in Saskatchewan in 2008.

In other words, if the interpretation of the contract made by the Federal Court is adopted by the Saskatchewan courts, the amount at stake is not $341 million, but a mere $4 million.

Some will reply that this judgment has been appealed by the company and is now pending before the Federal Court of Appeal, and thus not final. This is true. But why not wait for that decision and possibly that of the Supreme Court of Canada before resorting to the ultimate tool, a retroactive constitutional amendment?

The answer seems to be that the Saskatchewan government prefers to impose an outcome in the provincial courts. However, judicial proceedings will continue at the federal level. Thus, if the Federal Court judgment is confirmed in appeal regarding the scope of the contractual tax exemption, the amendment’s sole impact will be to have prevented a refund of $4 million to the company by Saskatchewan. Is that worth a constitutional amendment, one that is precedent-setting on retroactivity? I believe not.

Unfortunately, the Federal Court judgment was not mentioned in the other place or in the Saskatchewan legislature. Incidentally, in both places, as Senator Harder said, the motion was adopted without any witnesses being called, including experts, of course.

My fourth concern is about another reason advanced by the Saskatchewan government to justify the motion. The preamble of the motion states, “Whereas on August 29, 1966 . . . [the] Company had no objection to constitutional amendments to eliminate the tax exemption . . . .”

Colleagues, that assertion has been rejected by the Federal Court. Based on days of evidence and arguments, the trial judge concluded that in 1966 the company renounced only the exemption in connection with municipal taxes. In other words, the court found that the company did not agree to a constitutional amendment to eliminate the tax exemption in connection with federal and provincial taxes as alleged in the motion. Moreover, that conclusion of the Federal Court is accepted by the federal government that agrees that the contract is still binding, including clause 16.

An assertion to the contrary in the motion is even more surprising when made by the Saskatchewan government, considering that it elected to intervene in Federal Court proceedings. How could it ignore the judgment?

Unfortunately, many speeches in the other place have referred to this rejected assertion to justify supporting the motion, unaware of the Federal Court’s rejection of it. In my view, a government relying on a fact that has been proven false is showing the utmost disregard for the courts of this country and their mission to determine disputed facts.

My fifth and last concern is about the likely consequence of the adoption of the motion to the federal treasury.

Before the committee, the federal Justice Department acknowledged that the contract still binds the federal government and that the scope of the tax exemption clause will not be affected by Saskatchewan’s constitutional amendment.

Thus, if the adoption of the constitutional amendment results in a loss for the company of some provincial tax exemption in Saskatchewan, the company could sue the federal government for breach of contract and seek compensation.

(1530)

Interestingly, no one in the House of Commons mentioned this possibility. In fact, many speakers claimed that the constitutional amendment is necessary to prevent a refund of $341 million to the company. The logic of this argument means, since the contract remains in force, that this substantial amount may accrue to the federal government. Surprisingly, the risk that the federal treasury would be left holding the bag seems to be of no concern to the motion’s supporters.

On the other hand, if the federal government prevails again in appeal, then this unprecedented retroactive constitutional amendment would be proven to have prevented a refund of a mere $4 million by Saskatchewan, most likely to be compensated by the federal government as it did for the federal tax on capital.

In conclusion, colleagues, I will vote no to this motion, which I consider to set a dangerous precedent. I don’t have to decide if some people may argue that it is illegal or an abuse of the constitutional amending process, but I think the legitimacy of the motion has been proven to be non-existent. Thank you.

The Hon. the Speaker: Senator Richards wishes to ask a question. You only have about 1 minute and 10 seconds left, Senator Dalphond. Do you wish to take a question?

Senator Dalphond: Yes.

Hon. David Richards: Senator Dalphond, will this concern other industries across the country? Will this set a precedent that will open up a litigation can of worms?

Hon. Patti LaBoucane-Benson (Acting Legislative Deputy to the Government Representative in the Senate), pursuant to notice of April 6, 2022, moved:

That, when the Senate next adjourns after the adoption of this motion, it do stand adjourned until Tuesday, April 26, 2022, at 2 p.m.

The Hon. the Speaker pro tempore: Honourable senators, when shall this bill be read the third time?

(On motion of Senator Bovey, bill referred to the Standing Senate Committee on Social Affairs, Science and Technology.)

[Translation]

Hon. Pierre J. Dalphond: Thank you very much, Senator Simons, for your very interesting speech and history lesson. You suggested that we wait for the situation in Quebec to be addressed, but maybe what we could do is include a clause at the end of Senator Patterson’s bill stating that the constitutional amendment proposed in the bill would take effect only when Quebec adopts a similar motion for senators from Quebec. This way, we could get the system set up, and as soon as the Government of Quebec says yes, we could make the change.

Hon Senators: Agreed.

(Notice of motion withdrawn.)

(At 6:20 p.m., the Senate was continued until Tuesday, April 26, 2022, at 2 p.m.)