Senator Cotter: Yes. I will do my best.

Senator Cotter: I will ask and let someone say “no.”

Hon. Brent Cotter: Honourable senators, let me begin by apologizing if some of what I have to say is repetitive and redundant of the two previous speakers. Colleagues, this is a rare moment for us. It’s a rare opportunity for this chamber to consider an amendment to the Constitution of Canada. There have only been seven of such bilateral constitutional amendments considered by Parliament, as Senator Gold outlined yesterday. I rise to speak in support of the motion. Indeed, you may have observed that I introduced the identical motion on December 17 of last year in this chamber.

The motion before us is supported by each of the five senators from Saskatchewan as well as all of the members of Parliament from Saskatchewan who voted yesterday in favour of the motion in the other place. I hope it will be supported by each and every one of us here.

The motion before us is a small constitutional amendment, but an important one to my province as you have heard. In late November, it was adopted unanimously by the Legislative Assembly of Saskatchewan. It addresses a long-standing inequity that was put in place by the Government of Canada to facilitate the building of the intercontinental railway from Central Canada to the Pacific coast decades and decades ago.

Here is the story, and why it is now a matter of significant concern for the people of Saskatchewan.

One part of the bargain to build the railway to British Columbia was part of a deal to bring British Columbia into Confederation in 1871. This commitment, this promise to build the transcontinental railway, was to be built within 10 years. This coincided with at least two other of Canada’s larger interests as a nation.

First, a critical building block in the building of a country from the east to the West Coast, Canada’s national dream, nation building. We all know this story.

Second, the establishment of a secure Canadian presence in the west, in the face of an aggressive American presence. It will be recalled that the United States at that time had recently acquired Alaska only years before, and a porous U.S.-Canada border across the Prairies was routinely ignored by American hunters and traders in those days.

Indeed, historians have shown that the actual route of the transcontinental railway was strategic in the sense that it was built along the more southerly line, closer to the U.S.-Canada border, than less difficult but more northerly routes through the mountains.

The railway was completed in 1885, as Senator Gold has noted. It’s an amazing achievement. The pounding of that Last Spike in the mountains of British Columbia is captured in an iconic photograph. The pounding of that Last Spike is pounded into the memories of nearly every Canadian child and has been eulogized by Gordon Lightfoot.

The story that brings us to this constitutional amendment is the story of the bargain struck to build the railway, and its curious and lingering consequences to this day for the provinces of Saskatchewan, Alberta and Manitoba.

After two failed attempts to get the railway built, and with the 10-year deadline approaching, in 1880 the Government of Canada turned to a consortium of investors — who ultimately became the Canadian Pacific Railway — and entered into an agreement to have the railway built. This was a daunting undertaking. Based on my reading, the consortium had the Government of Canada somewhat over a barrel given the timetable they faced.

It’s therefore not surprising that the Government of Canada, for all of these reasons, provided significant incentives to the CPR to build the railway. The most significant of those were three: $25 million in cash, as Senator Arnot noted; 25 million acres of land across the Prairies near the rail line, that land to be selected by the CPR; and, thirdly, tax concessions. It is the tax concessions that are the focus of the constitutional amendment before us today.

I would like to take a moment to reflect on the other two incentives. First, the $25 million. In 1881, a very young country, Canada, had limited fiscal capacity. So $25 million, even then, was a lot of money. You might ask what is $25 million worth today? Using the CPI from 1880 to today, that $25 million would be worth a little over $68 billion.

Second, the land concessions. Now, the CPR acquired large tracts of land in some of Canada’s most important Prairie cities: Calgary, Regina, Moose Jaw, Brandon, Medicine Hat, to name a few. Even ignoring the value of the urban land the CPR selected, and imagining that it took only good, rural land — good, rural farmland — by a conservative estimate, 25 million acres of good farmland today would be worth roughly $50 billion.

The tax concession was also generous. It is a wide range of exemptions from federal, provincial and municipal taxes — how wide, and for how long, we have been hearing and I’ll speak a bit more about that in a moment.

The exemptions were set out in clause 16 of the CPR-Canada agreement, the clause about which Senator Dalphond asked. They were incorporated into legislation that launched the venture in 1881 and created the CPR as well; and, furthermore, as Ottawa had the power to do, in creating the Province of Saskatchewan in 1905, it unilaterally embedded the exemption from provincial taxes into The Saskatchewan Act, in a way, part of the commitment set out in clause 16 of the agreement, required the exemption to apply to any provinces created thereafter, and that meant that, in 1905, it came to apply to Saskatchewan. The federal government implanted that provision in the constitutional document — The Saskatchewan Act — that created the Province of Saskatchewan.

I mention parenthetically, as you have already heard, that the exact same exemption from provincial taxes is embedded in the constitutional document that created the Province of Alberta, The Alberta Act of 1905, and a series of constitutional documents that expanded the boundaries of the Province of Manitoba in 1881.

The wide-ranging exemption from provincial taxes, which the CPR now argues to include things like sales taxes, taxes on its assets, excise taxes and income taxes, that exemption states the following:

That the CPR shall be free from taxation by the Dominion or by any province hereafter to be established, forever.

Let me repeat that. “Forever.” I don’t quite know how long “forever” is, but it feels like a very long time to me.

Now, there was an agreement reached in the mid-1960s — and Senator Arnot has spoken about it — between the CPR and the Government of Canada to end the taxation. But for reasons unknown, it was never implemented in the form of the removal of the constitutionalized exemption from provincial taxes. Even so, a peace broke out and the CPR apparently continued to pay or began to pay provincial taxes, as well as payments of municipal taxes, or at least grants in lieu of municipal taxes, subsequently.

However, again for reasons largely unknown, in 2008 the CPR concluded that that 1960s agreement only applied to municipal taxes; that is, the CPR took the view that it had only agreed to give up its municipal tax exemption, essentially property taxes for land it owned on or near the main line.

It then launched the four lawsuits we have heard about — one against the Government of Canada, one against Saskatchewan, one against Manitoba and one against Alberta — to get a return of taxes paid and a declaration that would confirm the tax exemption.

The claim against Saskatchewan, which is the main focus of the consequences of this exemption is, as Senator Gold noted, $341 million, plus a declaration of a continuing perpetual exemption from provincial tax. Perpetual.

Now to the present.

In the first case against Canada, and Senator Gold referred to this earlier, the CPR tax exemption was recently found in September of 2021 by the Federal Court of Canada not to have been constitutionalized vis-à-vis the Government of Canada, meaning that Canada could, and did, amend its laws to end most of the CPR tax exemption. That is the state of the law presently.

Though not decided in that case — since it was not a case about Saskatchewan — a plain reading of the situation and the evidence indicates that the 1960s deal was only intended, at least on the written language of the text of the material, to remove only the exemption from municipal taxes.

Second, in relation to provincial taxes, the exemption being embedded in the Saskatchewan Act, and therefore being a constitutional exemption, means that Saskatchewan cannot unilaterally amend its own tax laws to make the CPR subject to provincial taxes. It can only do so through this motion in Saskatchewan and a parallel motion in the two houses of Parliament to remove the exemption.

Where does that leave us today? Essentially this: Grand concessions were made to the CPR to get the intercontinental railway built. All Canadians were part of that bargain and, through taxes or in other ways, contributed to it. Fair enough. But one aspect of that bargain has left three provinces, and only three, with no say in the matter, continuing to pay for the building of that railway some 137 years after the railway itself was completed.

Speaking for myself, I’m not opposed to tax incentives that can be clearly shown to advance the public good. Incentives to advance a national and nation-building railway probably fit in that category, but I offer three countervailing points.

First, the other concessions, cash and land, were pretty darn generous in and of themselves.

Second, surely the tax exemption has long outserved its usefulness and justification. Its best-before date has long passed, and it appears that even the CPR thought so in the 1960s.

Third, as a burden imposed uniquely on Prairie taxpayers for a railway that has always served the country’s regional and national interests, it is profoundly unfair. If nothing is done in this chamber, there is a good chance that the residents of Saskatchewan would be required to unfairly continue to subsidize the CPR forever.

I will go a little bit further, if I may, in my remarks. As may be evident, I have done a bit of work on this. What I have learned is that, although the CPR cases against Alberta and Manitoba are not as far along as the Saskatchewan case — Senator Gold noted that the latter in Saskatchewan is in the final stages — and although the amounts in those other two provinces’ cases vary, the same issue and same unfairness apply to the residents of Alberta and Manitoba.

I would encourage my colleagues in Manitoba and Alberta to examine the question of the CPR tax exemption and its application to their respective provinces and residents.

In my view, this motion is the beginning of an honourable national process to clear away a curious anomaly in the constitutions of our three provinces that, if it was ever appropriate, is certainly no longer so. I would be pleased to assist in such an undertaking.

I urge you to support the motion before you today. Thank you, hiy hiy.

Senator Cotter: I think it is difficult to do the latter. I think it requires a motion and a resolution in the legislature of Alberta. Alberta’s situation is slightly more complicated because, based on my understanding, constitutional amendments relevant to the Province of Alberta require a referendum first. I leave you to imagine the complications.

Notwithstanding that, this is an argument that advances the question of millions and millions of dollars — how many millions for Alberta is still not clear — that the people of Alberta are being asked to pay unfairly. It seems to me that if a referendum costs a little money, it would be well worth it.