Hon. Brent Cotter: Honourable senators, I wish to speak briefly in support of motion 14, which will adopt a resolution to amend The Saskatchewan Act.

The Legal and Constitutional Affairs Committee heard and reported that the proposed constitutional amendment is legal, including its retroactive aspect, and has recommended its adoption.

My remarks will focus on two process points and two points on the policy dimensions of the issue, which I will call the equities process.

First, our process. I want to thank Senator Tannas for his determination in seeing this motion referred to the Standing Senate Committee on Legal and Constitutional Affairs for consideration. As others have said, the Senate appears to have taken this important question more seriously than others, and this does honour to this chamber.

We learned a good deal about the motion from the parties significantly affected by it, giving them a hearing in a sense, and from experts. All of us from the committee came away better informed, more able to advise the Senate as a whole and more able to make the best possible decision with respect to this motion.

Thank you, Senator Tannas.

A second process point related to the substance of the issue itself. A multi-province approach to this historical anomaly, as Senator Simons suggested two days ago in her very fine speech, is or would be good policy but not an immediate option for a couple of reasons.

First, as Senator Dalphond has noted, this is a bilateral constitutional amendment, a Canada one-province amendment, and any motion and resolution therefore needs to be province specific. They have to be individual motions.

Second, the one before us is specific to Saskatchewan. Even if we would like to form a common front on this issue, despite efforts, none has been developed, and we have little choice but to deal with the amendment before us.

With respect to the equities, in one aspect of this, I hope to answer Senator Quinn’s concerns and, quite frankly, some of Senator Dalphond’s suggestions.

The first point is legal. CP gave up its provincial tax exemption in 1905. By that time, CP was doing just fine, thank you very much, and its initial investors, according to Pierre Berton and others, had become immensely wealthy and quite distinguished as a result of the transcontinental railway.

CP has paid provincial taxes uninterrupted for over a century. As Senator Arnot noted, it was lauded as a good corporate citizen by then Minister Pickersgill for additionally giving up the municipal tax exemption in the other place in 1966, having already given up the provincial tax exemption.

I want to suggest to you that any other understanding of provincial taxes is not plausible. How likely is it, for example, that Tommy Douglas, a provincial-rights premier and notoriously careful about his government’s finances, would only have lobbied Ottawa, as he did, for an end to CP’s municipal tax exemption if, at the same time, CP was still claiming an exemption for provincial taxes? Not a chance.

CP abandoned this provincial tax exemption long ago. Let me just say, as a matter of contract law — which you have just heard Senator Dalphond speaking to — if this was just a contract, the fact that CP abandoned its tax exemption would be today held against it. In any other context than constitutional law, legal doctrines of estoppel would prohibit CP from now coming forward and claiming this exemption.

The concept of estoppel, simply put, is that you are estopped from asserting a right that you have abandoned, which CP did, and that someone else has relied upon, which the Province of Saskatchewan has done. Unfortunately, estoppel is recognized everywhere except with respect to constitutional rights. With the CP tax exemption, long abandoned, embedded in the Constitution, CP has been able to get around this estoppel problem and raised, a century later, something that in any other context it could not do.

As Senator Dalphond has noted, the Supreme Court of Canada decision in Kingstreet enabled taxpayers to go after present and back taxes that are found to be ultra vires. CP combined these fortuitous developments to reassert its long-abandoned exception from provincial taxes and now seeks to pocket in its claim up to $340 million from the Government of Saskatchewan, but essentially from the taxpayers of Saskatchewan.

Perhaps it is what corporations, or at least the Canadian Pacific and Kansas City Southern Railway, think they should be doing on behalf of their shareholders, but it is unprincipled. If the idea of making the constitutional amendment retroactive sticks in your craw, this corporate manœuvre should stick in your craw even more — we have the authority to prevent it from happening.

My second policy or equities point is this: Only Saskatchewan, Alberta and Manitoba are exposed to this vulnerability. No one, for example, exempted the headquarters of CP from tax — wherever it might have been — in 1881. This has exposed these three provinces, since 1905 and 1881 respectively, to a vulnerability that is unacceptable in principle.

If nothing turned on it, we might have just left this to be a curious relic of Canada’s peculiar constitutional history, as, in fact, we have done since 1905, but something does turn on it. When a company revives this relic of history to try to assert a claim it has long since abandoned, this is nothing less than an attempt to exploit an unintended loophole to avoid paying taxes that, like other taxpayers, it has actually been paying for a very long time. What turns on it is a financial risk to three provinces that should never have been imposed on them in the first place.

Senator Dalphond argues that it’s a small financial risk. As a matter of principle, that’s irrelevant. The basis on which he makes that argument is an interpretation by a trial judge in another case that has no binding effect at all on Saskatchewan or the people of Saskatchewan.

In public finance terms, what turns on this is a potential burden of hundreds of millions of taxpayer dollars, a responsibility they should never have been asked to shoulder in the first place.

Your vote on this issue is significant, in part on the basis of what you will be saying to the people of Saskatchewan and what you will be saying about tax fairness to three provinces that Ottawa burdened unfairly over a century ago.

If you are inclined to vote against this motion because of its retroactivity, I ask to you keep in mind these two things: first, the unfairness of this burden from the get-go; and second, the opportunism pursued by CP in this venture. Thank you. Hiy hiy.