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Proceedings of the Standing Joint Committee for the
Scrutiny of Regulations

Issue 7 - Evidence, April 14, 2005

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OTTAWA, Thursday, April 14, 2005

The Standing Joint Committee of the Senate and the House of Commons for the Scrutiny of Regulations met this day at 8:35 a.m. for the review of statutory instruments; and to consider a draft budget.

Senator John G. Bryden (Joint Chairman) in the chair.

[English]

The Joint Chairman (Senator Bryden): I call the meeting to order. In the first part of the meeting today we will hear witness testimony, and in the second part we will proceed according to the usual agenda with our review of other statutory instruments.

SOR/97-144 — BROADCASTING LICENCE FEE REGULATIONS, 1997

Members of the committee will recall that we last discussed this issue on February 17, 2005, at which point the committee decided to ask officials from the Department of Canadian Heritage to appear before the committee. Members received a note from general counsel providing an overview of the issue. We will hear testimony that the committee requested in respect of the examination of certain fees charged in the broadcasting industry to determine whether they are fees or, more properly, taxes.

Appearing today from the Department of Canadian Heritage are Mr. René Bouchard, Director General, Broadcasting Policy and Innovation; Mr. Jeff Richstone, General Counsel, Legal Services; and Mr. Ian Ironside, Manager, Broadcasting Distribution Services. Mr. Bouchard, please proceed.

Mr. René Bouchard, Director General, Broadcasting Policy and Innovation, Department of Canadian Heritage: Thank you, chairman, for inviting us to discuss the issue of Part II licence fees. I shall try to be brief in my comments.

[Translation]

I will provide you with some general information respecting Part II licence fees as set out in Part II and then describe the measures Heritage Canada has taken to follow up on the government's commitment with respect to your Committee's recommendations.

Part II licence fees are set by the Canadian Radio-television and Telecommunications Commission, or CRTC, with the approval of the Treasury Board Secretariat. The role of the Department of Canadian Heritage is tied to the Broadcasting Act. Fees are established pursuant to the Broadcasting Act. Heritage Canada is responsible for broadcasting policy development, as well as for the legislation.

Licence fees were first introduced in 1968 and have evolved over the years.

[English]

Subsequently, the fees have been modified over time, more substantially in 1997 when they were split into two kinds of fees, Part I and Part II. Essentially, the Part I fee is each licensee's share of the CRTC's total costs of regulating broadcasting. The Part II fee is 1.365 per cent of each licensee's gross revenue in excess of the applicable exemption level. The Part II fees are paid by November 30 each year and are based on revenue figures for the year ending the preceding August 31. These same figures are used in the calculation of the licensee's Part I fees that are due by April 1 of the following calendar year.

The Broadcasting Act provides that the CRTC may set fees ``by reference to any criteria that the CRTC deems appropriate,'' including ``by reference to the revenues of the licensees.'' Deposited to the Consolidated Revenue Fund, the fees have three objectives: first, to earn a fair return for the Canadian public for access to or exploitation of a publicly owned or controlled resource; second, to recover Industry Canada's costs associated with the management of the broadcasting spectrum; and third, to represent the privilege of holding a broadcasting licence for commercial benefit.

[Translation]

Part I licence fees totalled $107 million in 2004 and the CRTC expects that fees will increase by $5 million per year over the next few years.

The House of Commons standing committee examined the field of broadcasting and in 2003, tabled a report entitled ``Our Cultural Sovereignty: The Second Century of Canadian Broadcasting.'' I mention this report, because it contained 97 recommendations aimed at ensuring the health of the Canadian broadcasting system and because two of the recommendations had to do with Part II fees.

In essence, the House of Commons standing committee recommended that Heritage Canada and the CRTC examine the motives and fairness of Part II licence fees currently charged to broadcasters and distributors and that these fees be eliminated if deemed discriminatory.

As a second recommendation, the committee called upon the department to formulate a plan to redirect all or a portion of Part II licence fees to the broadcasting system, if ever a decision was made to abolish or reduce Part II licence fees.

[English]

The Standing Joint Committee for the Scrutiny of Regulations concluded with respect to the Part II broadcasting licence fees that the fee regime might prove vulnerable to a legal challenge and that the size of the general revenues that accrue to the government from the imposition of these fees discloses an urgent need for adjustments to the current fee structure.

In its response to the Lincoln report, the government indicated that further study of the Part II fees is warranted and that the Department of Canadian Heritage will examine the issue in a timely manner. Later, in March 2004, the government repeated its commitment to study the issue in its response to the third report of the Standing Joint Committee for the Scrutiny of Regulations.

In December 2003 and February 2004, the Canadian Association of Broadcasters and several of its members and cable television subsidiaries of Quebecor brought actions before Federal Court, trial division. Both argued that Part II fees are a tax, are not a valid part of a regulatory regime and amount to an unconstitutional delegation of the power to levy taxes.

Legally, the government believes the present fee structure is solid and that a Part II fee based on revenue is a good proxy of an approximate market value for the privilege of holding a broadcasting licence.

From a policy perspective, we recognize that there may be alternatives to the status quo. In response to the parliamentary committee requests, the government is studying what those policy alternatives might be. In examining this complex issue, we have taken a number of steps.

Winter 2003-Spring 2004: Heritage began to scope and define the research required, which raised the issue that, while a fee based on revenue is clearly a good proxy for an approximate market value for the privilege of holding a broadcasting licence, the determination of other methodologies is complex because a licence is an intangible asset that is not traded openly in the market.

[Translation]

Moreover, few studies have been done in this area. An internal review of practices in other jurisdictions showed that the approach taken to managing the publicly owned spectrum varies considerably from one jurisdiction to another. A good many countries have begun to adopt a specific approach to setting fees based on a highest bidder approach and prices based on incentives for spectrum access with a view to maximizing value and efficiency, while providing for cultural and non-commercial applications.

Regarding the actual study per that the government pledged to undertake during the spring and summer of 2004, Industry Canada, Treasury Board Secretariat, Finance and Heritage Canada officials met on several occasions to determine the study's parameters.

Given the complexity of the task at hand, an invitation to tender was deemed the appropriate course of action to ensure that the study would take into account all of the components relevant to the broadcasting sector which in turn must be considered when methodologies used to set Part II licence fees are examined.

In the fall of 2004, informal talks were held with economists and industry experts and it was determined that given the complexity of the issue, the government should opt for a multiphase study.

[English]

Early 2005, Canadian Heritage drafted a request for proposals, which was posted on March 14 using the MERX public tendering system. The closing date for bidders is April 14. Canadian Heritage expects the study to be completed by summer 2005.

My colleagues from the Department of Justice will now address the legal aspects of this issue. Thank you.

[Translation]

Mr. Jeff Richstone, General Counsel, Legal Services, Department of Canadian Heritage: My presentation is in English, but I can answer questions in French, if committee member so desire.

[English]

I understand this committee has requested to be informed of the reasons why the government considers that the Part II fees, according to a letter from Mr. Bernier, ``do not meet the criteria for a tax set out by the Supreme Court in the Eurig reference. I believe this request has been made to inform your deliberations on whether the provisions in issue conform to the criteria against which the committee assesses regulations that are set out in your first report dated October 21, 2004.

The criterion that I believe is most relevant to the issue before you with respect to the broadcasting licence fees regulations is criterion number four. That involves review and scrutiny of a statutory instrument where the regulation ``imposes a charge on the public revenues or requires payment to be made to the Crown or to any other authority, or prescribes the amount of any such charge or payment, without express authority having been provided for in the enabling legislation.''

It is that criterion to which I will pay particular attention in the remarks that follow.

In the Eurig case, the Supreme Court found that fees levied in Ontario for the probating of wills did not simply offset the costs of granting probate but were used for the public purpose of defraying the costs of court administration in general.

The Supreme Court referred to the four criteria mentioned in the case law up to then. I will not repeat them here. They are also incorporated in your report no. 73. The court added a fifth criterion, again mentioned in your report, that there must be a nexus between the amount charged and the cost of the service provided in order to conclude that the charge is not a tax. This fifth criterion was crucial to the determination by the majority of the court that the fees were an unconstitutional tax.

There are three good reasons to distinguish the probate levy in Eurig from the Part II fees under the regulations. Eurig considered a fee for a service. This was quite clear from the majority's reasons. This is not the case with the Part II fees. The position of the government is that broadcasting undertakings holding a licence must pay the fees because they are granted the privilege of holding a broadcasting licence and are required to pay licence fees for this privilege. In other words, this is a form of rent to pay the government for the privilege of holding a licence.

Other similar forms of government-charged ``rents'' would be rents for the use of airport space and stumpage fees paid for Crown-owned timber. The committee may consider these charges as analogous to the kind of fees at issue here.

Given the fact that the fees before you should not be viewed as user fees, no relationship of any kind between the Part II fees and government costs is required in law. Indeed, nothing in section 11 of the Broadcasting Act requires that there needs to be a relationship between the amounts collected as fees and government costs of any kind.

There is a second reason to distinguish Eurig — that is, that the case concerned a levy by a provincial government acting under its powers under section 92(2) of the Constitution Act, 1867. As the committee may know, much of the litigation that has occurred concerning the characterization of an impugned charge as a permissible levy on the one hand, or fee or an impermissible tax on the other, relates to the constitutional restriction on provincial taxing powers; they are restricted to direct taxation only.

However, at the federal level, no such restriction exists. Parliament enjoys a power under section 91(3) of the Constitution Act, 1867, to enact legislation in relation to ``the raising of money by any mode or system of taxation.''

Finally, the Eurig decision does not represent the most current case law in this area. The courts have revisited Eurig since it was handed down, and this can be seen from later decisions.

In other words, the question whether one can characterize a particular government charge as a fee or levy, on the one hand, or as a tax, on the other, should not be resolved by reference exclusively to the Eurig criteria. These criteria have been held to be relevant to user or service fees as mentioned above.

However, if the charge in question is regulatory in nature, different considerations apply. User or service fees are a subset of a broader category known in constitutional law as regulatory charges. The courts have routinely distinguished between taxes and regulatory charges. For a charge to be characterized as regulatory in nature, the courts have held that it must be part of, or necessarily incidental to, a regulatory scheme.

There are several factors to consider in order to identify such a scheme. Four such factors have been referred to by the courts as indicative of a regulatory scheme: first, a complete and detailed code of regulation; second, a specific regulatory purpose that seeks to affect behaviour; third, actual or properly estimated costs of the regulation; and fourth, a relationship between the regulation and the person being regulated, whereby the person being regulated either causes the need for the regulation or benefits from the regulation. The courts have stated that these factors represent only a list to begin consideration of the identification of a regulatory scheme; that these factors are not exhaustive; and that all factors do not have to be present in order to identify the existence of a regulatory scheme.

The issue is whether section 11 of the Broadcasting Act falls within a broader regulatory scheme and, if so, whether Part II of the Broadcasting Licensing Fees Regulations, 1997, can also be said to fall within this scheme. The factors set out in the case law would provide useful indicators for this exercise.

It certainly can be argued that the 1997 regulations form an integral part of a long history of complex and balanced series of regulatory measures designed to assist in implementing the broadcasting policy enunciated in the Broadcasting Act and that they are within the statutory powers and objects of the CRTC. The committee should be aware that the courts have held that this third category of charges exists in constitutional law — regulatory charges — and the broadcasting licence fees can be viewed as falling within this broader category.

I should mention as well that there have been a few recent decisions concerning this third category of charges, so the case law is evolving. For example, the Federal Court of Appeal recently held that levies under the private copying regime in the Copyright Act were regulatory charges and not taxes. In another case in 2003, the Superior Court of Quebec held that employment insurance premiums were regulatory charges and not taxes, even though it was clear from the evidence that the premiums were not related to the costs of regulating the scheme but were part of a broader regulatory charge. Therefore, for the above reasons, Eurig is not relevant to any assessment of the Part II fees.

In conclusion, the Part II fees constitute a valid exercise of the CRTC's powers under section 11 of the Broadcasting Act to provide for fees to be calculated by reference to any criteria that the commission deems appropriate, including by reference to the revenue of the licensees. This is taken from the wording of the section, which is quite clear in this respect. Furthermore, the Part II fees are imposed by reference to the revenues of licensees and thus fall squarely within the CRTC's express fee-making power. The fees may be viewed as payment for the privilege of holding a broadcasting licence, which is a form of economic rent. It is therefore clear, having regard for the fourth criterion that the committee applies in its assessment of the regulations, that the Part II fees are imposed with the express authority in the enabling legislation.

As the committee is aware, the Part II fees under the Broadcasting Act are currently the subject of litigation before the Federal Court. Two actions have been brought against the government, by the Canadian Association of Broadcasters and by broadcasting organizations. Recently, the two cases have been consolidated by the Federal Court on consent. On April 28, 2005, the Federal Court will hear a motion by the Attorney General of Canada to determine two questions of law, pursuant to rule 220(1)(a) of the Federal Court Rules. The basis of the motion is ``to avoid further costs and delays for all parties, to assist the plaintiffs in a possible early resolution of this matter and to conserve scarce resources.''

The two questions proposed by the Attorney General are as follows: Does section 11 of the Broadcasting Act constitute an ineffective delegation of Parliament's taxation authority if the fees imposed thereunder are considered to be a tax; and, is Part II of the Broadcasting Licensing Fee Regulations, 1997, ultra vires section 11 of the Broadcasting Act if the fees imposed thereunder are considered to be a tax?

I understand that the plaintiffs in these two actions will be filing their response to the Attorney General's motion tomorrow. If the Federal Court grants the Attorney General's motion, the case can proceed to a determination of these two questions of law fairly rapidly. Out of respect for the judicial process and solicitor-client privilege, I am not in a position to debate the legal merits of the Attorney General of Canada's position in the litigation; that will be for the Federal Court to determine. Clearly, I do this out of respect for the role of the court and that of the Attorney General under the Department of Justice Act.

At the same time, out of respect for the committee, I have tried in my remarks to assist the committee in its deliberations to determine the validity of the regulations.

The Joint Chairman (Senator Bryden): I should like to ask you, Mr. Richstone, about the two motions that you mentioned.

Mr. Richstone: There is one motion, and there are two questions of law on whether the delegation is effective, assuming that the fees are deemed a tax. The first question, relevant to section 11 of the Broadcasting Act, the Constitution Act, 1867, and the fees generally, is whether there is an effective delegation from one to the other to the other in harmony with the Constitution. The second question is whether there is a proper fit between Part II of the broadcasting licence fee regulations and section 11 of the Broadcasting Act. Of course, there is the assumption, for the purposes of that motion and for the purposes of further discussion, that the fees are deemed a tax.

The Joint Chairman (Senator Bryden): The ruling on those questions will be helpful to this committee's deliberations.

[Translation]

Senator Hervieux-Payette: Does the $107 million, and the additional $5 million per year, cover all of the CRTC's expenses in the telecommunications and television sectors?

Mr. Bouchard: Part I fees cover the CRTC's broadcasting expenses. Part II fees cover costs associated with the use of the spectrum, the costs associated with the CRTC being granted a broadcasting operating licence as well as related expenses incurred by Industry Canada for the actual managing of the spectrum.

Senator Hervieux-Payette: Does this represent only a portion of the CRTC's budget?

Mr. Bouchard: Yes, $26 million, or the portion that represents Part I fees.

Senator Hervieux-Payette: Of the $107 million?

Mr. Bouchard: No, excluding the $107 million, Part I fees total $26 million and are paid by the broadcasting companies, that is by the broadcasters or distribution undertakings. Part II fees are paid by the same business concerns and these total $107 million. These fees are collected for reasons other than those related to Part I fees.

Senator Hervieux-Payette: Is the $26 million in fees split two ways, that is between your department and —

Mr. Bouchard: No, the $26 million represents the CRTC's broadcasting fees.

Senator Hervieux-Payette: You have come up with a very original argument by claiming that this is a lease, not a fee. You maintain that your methodology is very complex and that you will review your approach.

I have here the latest report released in March of 2005 on intelligent regulations. A portion of these regulations address the situation within your department, but this particular aspect does not appear to have been covered. The government's philosophy with respect to the imposition of fees or leasing charges reflects the belief that we are operating in a market economy, that regulations are vital to protecting the public interest, that they entail substantial economic costs and that ultimately, businesses and taxpayers must absorb these costs.

When the industry challenges these fees, the reason is not because it stands to make a smaller profit, but rather because ultimately, the consumer will be left to pick up the tab. Our job is to inform consumers of the cost of operating these agencies and to let them know who is ultimately left to pick up the tab. We pay for telephone service, for telecommunications and broadcasting services and finally, we cover the CRTC's operating costs. Basically, the industry and my colleagues are arguing that the cost is being shifted to the consumer and that revenues do not serve any creative purposes and are not being used for some other purpose that might benefit consumers.

You argue that because this is a kind of lease, just about anything goes. In the United States, rights to the spectrum were put out to tender and in essence were granted to the highest bidder.

Would you care to compare the situation here in Canada with that in the United States? In the United States, people bid outrageous amounts for spectrum rights. It seems, however, that the outcome was not all that successful because virtually no one was able to cover the bids.

How do you go about setting licence fees here in Canada? You do not appear to have much competition in this field. What criteria do you use?

The same situation applies to airport fees. What is your reference point to the regular market? At least airports have commercial space that can serve as a reference point. What is your reference point?

Mr. Bouchard: In the case of Part I fees, our reference point is the CRTC's operating costs. Part I licence fees will be set on the basis of the costs associated with operating the regulatory body which regulates this sector for the benefit of the parties involved.

Part II fees will be set on the basis of three criteria: use of the frequency spectrum, which is publicly owned; the costs incurred by Industry Canada for managing this publicly-owned good; and the benefits that accrue to broadcasting companies when they are issued a broadcasting licence by the CRTC. In exchange for reaping the benefits associated with operating a radio, television or cable broadcasting operation, they must pay fees ties to the revenues generated as a result of operating this licence. That is the link.

If we examine this link from a mathematical standpoint, we see that Part II fees are set according to a formula established by the CRTC and approved by Treasury Board. The fees amount to 1.365 per cent of the revenues generated by these broadcasting or distribution undertakings.

You mentioned the fact that a different approach was taken in the United States where a bidding process is used to set licence fees. When we studied this issue, we looked at the approach taken in four or five countries, including the United States, New Zealand, Australia and Ireland. In recent years, the trend has been to set fees following a bidding process, with the option going to the highest bidder. This approach has, however, caused some fallout. The amounts bid have been exorbitant. Our study will look at whether fees are higher than those levied here in Canada, using our own equation as a reference point. What we have observed is that in certain countries, fees are such that it is becoming increasingly difficult for undertakings to maintain their operations. Profitability is subsequently compromised.

We are not certain that this is a better system than the one we have here in Canada. We are confident that our approach is legal, firstly, because it is based on the provisions of the Broadcasting Act and secondly, because it is a sound method for assessing the value of a public good for which these undertakings pay these fees. Are there other approaches that could be taken? That is what we are currently examining. I am certain that there are other methodologies, but are they as good? Of that, I am not so certain.

Senator Hervieux-Payette: Will the invitation to tender for a consultant to reexamine this matter take this factor into account? Will the sector be consulted on the formula review?

Mr. Bouchard: We expect the consultant ultimately selected to consult with all stakeholders and to consider all of the approaches taken in other countries. That person will do a further analysis to get a fair assessment of the methodologies employed elsewhere and to ascertain how relevant they are to the Canadian market. However, we must not dismiss out of hand the methodology currently used because it is a good way to determine the value associated with securing a broadcasting licence from the CRTC.

[English]

Ms. Wasylycia-Leis: Let me just raise a question right now on the whole issue of putting out tenders for a study in this area. I am a new member of this committee, but I pick up a frustration that this is a matter that has been before this committee and has been a concern for a number of years. My sense is that there has been an attempt to get answers from officials for quite a long time.

We are hearing that, as of today, tenders are going out for a study. I guess the question is: Why has it taken so long? Why have there not been answers to this committee before now? Is it just coincidence that today is the day that a study is ready for tender?

Mr. Bouchard: It is purely coincidence, quite frankly. I think we were quite honest in our desire to get to the bottom of this issue and provide the committee with the pursuit of our analysis and assessment. I want you to be reassured that there have not been any tactics to delay anything in that regard.

If there has been some mistakes made in the past, it is to underestimate the complexity of looking at the different methodologies that can be used to determine the value of the fees, and the value of the benefit of holding a broadcasting licence. I think it has to do with the fact that Part II licence fees are paid by different companies. They are paid by radio broadcasters; they are paid by television broadcasters; they are paid by cable distributors; they are paid by direct-to-home satellite provider; they are paid by specialty television services.

All of these services have different kinds of businesses. All of these services have different kinds of licences provided by the CRTC. In a nutshell, they have different types of costs and they have different types of benefits emerging from the broadcasting sector.

If you are a radio entrepreneur, a radio broadcaster, you will benefit in certain ways from the fact that you live in a regulated environment. You will have some benefits out of that. Not everyone can operate a radio station in Gatineau starting tomorrow if they want to do that. They will have to go through a process, and the CRTC may or may not license that entrepreneur, may not issue a radio licence to that entrepreneur. There are some benefits out of that because you are in a regulated environment; it is not a free market environment. At the same time, there are costs. There are some CRTC regulations that impose some costs to the radio broadcaster.

When you look at the number of companies that are paying broadcast fees, they have different kinds of environments. When you look at each of them, you realize that there are a number of things that need to be taken into account. That is why when I said that if there has been a mistake made and if there has been some delay in responding to this, it has to do with the fact that we may have underestimated the complexity of assessing that.

I would add also that it is not an issue that is being dealt with exclusively by Canadian Heritage. We do that in collaboration with our partners, the Treasury Board, the Department of Finance and the Privy Council Office, as well as the CRTC. Over the last few months, there have been changes of employees in all of these departments, and the people that were responsible for that file have changed in all departments, except our department.

It is not a tactic to delay the work. It is not a tactic not to get the answer. We are trying to be as responsible as possible, looking at the complexity of the issue and addressing it in the best possible manner, so that when we will provide you with a response regarding your recommendations and our findings on the validity of Part II fees you will be satisfied with the proceeds of our work.

Ms. Wasylycia-Leis: One more question: We are here today asking many of the same questions that were asked on May 29, 2003. You may feel that you have answered these questions and we are not getting it. From our perspective, I think it could be that your answers have been less than clear, or that an element of clarity is missing, so that we continue to ask the same questions.

I go back, for example, to the transcript and see a question from my colleague, Mr. Wappel, who said to Ms. Diane Rheaume that you are basically a collection agency for Industry Canada and for the general pot on Part II fees, correct? It has nothing to do with CRTC; and Ms. Rheaume simply said no. I think, in essence, we are back here asking the same question, and looking for a clear answer. I know you have attempted to answer some of that, but I get a sense that we are still looking for explanations and for understanding.

Mr. Bouchard: I think it is important to note — and I am going back to the explanation I gave a minute ago to Senator Hervieux-Payette. The fees are set for three purposes, as I said: for the use of the spectrum; for the cost incurred by Industry Canada to manage that spectrum; and for the benefit of holding a broadcasting licence as a public good. Use of the spectrum, use of the broadcast licence, the benefit of holding a broadcast licence — those are two public goods. When I look at the $107 million, we can tie that amount of money to the use, as Mr. Richstone indicated, the rent of the public good.

I give it to you that part of the fees are collected to cover the cost of Industry Canada, and the formula used is developed by the CRTC and approved by the Treasury Board. In that regard, there is a link between the formula, the fee collected, and the cost incurred by part of the government, Industry Canada, to administer the spectrum.

Mr. Wappel: I want to say, first, Mr. Richstone, I really appreciate your presentation. I thought it was excellent, to the point, succinct and persuasive.

My view is that if Eurig is definitive, I do not think the fifth criteria is met; but I hear what you say about provincial jurisdiction, direct taxation, indirect taxation.

I also recognize that there is a difference between whether or not someone has the authority to collect rent, on the one hand, and how much rent they collect, on the other hand. Generally, once we establish that the authority to collect the rent is there, I do not think it is this committee's business what the rent is. I could be wrong but that is just my view.

My concern is do you have the authority to collect the rent? It is clear, based on the passage Ms. Wasylycia-Leis quoted from your last appearance here, that there is no correlation between the rent and the cost. Part I fees cover the costs of the CRTC and $10 million covers the cost of managing the spectrum, and the rest just goes into the general pot.

It is interesting that you mentioned the employment regulations, because we see the same thing here, where more is collected than is paid out and the rest goes into the consolidated revenue.

Rather than getting two departments on your back, and appearing here twice and who knows how many times before the Committee on Canadian Heritage, would it not have been simpler to amend section 11 to say that the authority includes the authority in the public good to charge a fee for the three criteria that you mentioned? Simply set it out in the legislation, clear and simple, and there could have been no possible argument as to whether or not the money had to be paid.

I think the problem here is that it is called a fee. When you see it as a fee, under all of the things that have happened in the last decade or so, you look to see whether the fee covers the costs. If you are collecting more than the costs, then it looks like a tax. That is where the problem is.

Again, it is a rhetorical question because section 11 has not been amended. You said, Mr. Richstone, that in order to save people money in the court case, and to save the valuable resources of the court, you will bring two legal questions. Good on you; and Mr. Chairman, I agree with you that the answers to those questions will be very helpful. However, you could have saved the Canadian taxpayers a lot of money, you could have saved the court its time and money, you could have saved the people who use the system a lot of money, if you had simply amended section 11, and be done with it. No response is required to that. It is just my view that if the object here were to try to save people the effort, then that would have been a very simple way of doing it.

Mr. Bouchard, I hear you on the complexity of determining what is a fair rent, but I do not think that is relevant to us. If you have the authority to charge rent, it is for someone else to decide whether it is fair or not; because it is rent and not a fee, and rent is a tax in another form.

From my perspective, it would be a good idea for the committee to see what happens with respect to the two questions that the Federal Court has been asked to answer. It will be interesting to see if they come down on the side of Mr. Richstone arguments. If they do, I presume there will be an appeal.

The Joint Chairman (Senator Bryden): Mr. Richstone, presumably the thought went through someone's mind that this could simply be amended. You probably have a valid reason for not putting the proper authorization in the statute that would have made these cases unnecessary. Is there an answer to that? I should also like to know whether the motion before the court is a public document. Would it be possible for you to provide the Clerk of the Committee with a copy of that motion, when you have the opportunity?

Mr. Richstone: I would answer the second question first. Prior to appearing today, I hesitated to table the motion before the committee because it is drafted in English only and I know that the committee has a rule stating that documents are to be tabled in both official languages. The cost and the time to check with the litigators whether to ensure that the translation does not betray any kind of lapse that could, in some way, prejudice the litigation were so great that I thought I would not be able to do it. I do not know what the committee's rules are in respect of court documents that are in one language only and whether the committee makes exceptions in such cases. I will speak to the clerk later to determine possible arrangements for that.

The Joint Chairman (Senator Bryden): The usual situation is such that, when a citizen appears before the committee, the individual may present in either official language. Someone else may know further to that, because all of you are part of government services and governed by the same rules. However, it would be useful to have the document on the motion. If you need a little time to obtain the translation, that would be fine.

Mr. Richstone: I will speak with the clerk. In respect of your first question, I am from the Department of Justice Canada, Legal Services, and it is not up to Justice to suggest amendments to the Broadcasting Act. As Mr. Bouchard mentioned, the Broadcasting Act is under the authority of the Minister of Canadian Heritage, who might wish to address one part of that question.

As Mr. Bouchard alluded to, the proceedings were taken in December 2003 and February 2004. Clearly, Mr. Chairman, you have to appreciate that once a court case is in play, if there were amendments to that impugned section, they could have repercussions on a court case, for which there are not only declarations of invalidity being sought but also a request or an order to the court for restitution of all monies paid, which would amount to several million dollars. If the government had moved on such an amendment, certainly there could have been legal implications into which the courts could have read a kind of admission. That may have been part of the reason that an amendment was not forthcoming.

As well, it is not a simple matter to amend legislation, as committee members are aware. Certainly, during the relevant years under discussion today, there have been many changes of government; and it was not a simple matter.

Mr. Lee: I thank the witnesses for their testimony today, for their most helpful submissions.

Mr. Bouchard: If I may, I will add to Mr. Richstone's last comment. The Broadcasting Act is a substantive piece of legislation. While we were conducting that work on the Part II licence fees, we were responding, as well, to the report of the House of Commons Standing Committee on Canadian Heritage, which had 97 recommendations on the state of the broadcasting system. Some recommendations contained in that report spoke to the government changing the Broadcasting Act. We have let the second government's response be known just recently, on April 4, if I recall.

The Part II fee section is one of a number of issues that we have to deal with. The recommendation put forward by one of the committee members is certainly appreciated. However, if we were to open the act, there would be a great deal of pressure to review all aspects of it.

Mr. Lee: Throughout the discussion this morning, I have shifted my perspective on this a little. I want to ask some questions to determine whether it would be helpful for the record to explain this in a different way. We have all read the regulation and it seems to be straightforward. Probably, the regulation is not at fault in this issue. I would suggest that it may be the statutory provision that is at fault. It has been described here and, when you think about it, you realize that it is bizarre that Parliament would say that a public servant can charge a fee and use any criteria that the public servant chooses to use. I believe that the wording is, ``any criteria the commission deems appropriate.'' The size of someone's shoe, for example, could be used as a criterion. We parliamentarians enacted this and so it has to be easy under that enactment to develop any criteria you might deem appropriate to charge what we first called a ``fee.'' Most observers are saying that this is not a fee, and if you use the Eurig test, it certainly would not stand as a fee. Committee members would not accept that you could charge a user fee that far outstripped the costs. The committee is heading in the direction of saying that the CRTC cannot levy that charge because it is not a fee because it is looking like a tax.

The parliamentary authorization for this is not shaped like a tax authorization, and the bill was not passed as a tax bill. It did not have a ways and means motion, I presume. Rather, it was passed as a fee structure and not as a tax structure. I suggest that if we are taking aim at the source of the problem, it is in section 11 of the Broadcasting Act.

Having said that, it is quite possible that section 11 is too faulty, from the point of view of the committee, and we might want to force the removal of the regulation. Certainly, we do not have any authority to force the withdrawal of section 11 of the act because that is outside the mandate of the committee. The courts could find section 11 ultra vires. Currently, that matter is before the courts. I would ask Mr. Richstone and Mr. Bouchard if they have any comment on what I have just said.

Mr. Richstone: Thank you, Mr. Lee. Certainly, the burden of my remarks this morning is that section 11(2) is ample enough to allow the CRTC to charge a fee based on any criteria that it deems appropriate. That is quite clear from the tenor of my presentation to the committee. I agree with you, Mr. Lee, in that, if there is fault, it lies in section 11, although I will not concede that there is fault. That question will be addressed by the Federal Court. If the court grants the motion at the end of the month, that will happen rapidly, it would seem.

Mr. Lee: I will rearticulate a piece of what I said. As a legislator, I do not like in any way the concept of Parliament delegating to an agency of government the right to charge a fee, whatever it likes, using whatever criteria it likes whenever it likes. I would not accept that. I do not accept that, but that is what the statute says, in essence. I am looking to nuke this tax because I do not like the basis on which it is set up.

The question is: Are we able, as a committee, to remove the manifestation of the problem, that is, the regulation, when the regulation appears to be within the bounds of the statute and when it is really the statute that is at fault? I have not concluded that that is a question that counsel might be able to help us deal with. I will stop there.

Mr. Hanger: I will direct my questions to a more fundamental level here in reference to the explicit authority the CRTC has not only to make regulations, but also to set the fees. If the CRTC has that much authority, I see there is a substantial reaction by industry against this fee schedule; am I correct in reading some former transcripts and some of the history on this issue?

Mr. Bouchard: Yes, you are correct, especially with a certain number of members.

Mr. Hanger: And specifically directed at Part II?

Mr. Bouchard: Definitely.

Mr. Hanger: That does not appear to have gone away. It does appear to have posed a substantial problem to those in the industry. What kind of dialogue is taking place between the CRTC and the industry?

Mr. Bouchard: In setting the fee, the CRTC has to consult with the stakeholders; the CRTC has to consult with the people who will be affected by the fee. There is an ongoing consultation. I am not trying to let you believe that everybody is happy. I am just saying that as part of the process, the CRTC has to consult with the stakeholders prior to setting the fees.

There has been an element of the broadcasting system that some of the stakeholders have been more critical of than others, particularly the ones that have brought the government to court on this issue. Other parts have not been as critical as the broadcaster. That is all I can say at this point.

However, we have an ongoing relationship with those stakeholders on a number of issues, including this one. Of course, when you are brought to court, it changes the dynamic of the relationship you can have on an issue. Nevertheless, we have an ongoing relationship on a series of matters with the Association of Canadian Broadcasters.

Mr. Hanger: Am I correct that the industry, especially those objecting to this fee schedule, are not so much objecting to the level of the fee as to its —

Mr. Anders: Validity.

Mr. Hanger: I think it is objecting to its validity; but it is not objecting so much about how stringent it may be, but to where it is directed. They feel that there are other valid areas where this money could be used to better their circumstance.

Mr. Bouchard: I cannot speak on their behalf. Certainly, in the discussions we had with them, they criticized the fact that the fee is tied to the growth of revenues, that you have a formula that is 1.365 per cent tied to the revenues. The fact that the revenues of the industry are growing means that the fee is growing as well.

Some say that if the revenue of the industry is growing, it makes it a healthy industry — so the value of the rent of the public good should be increased as well. They tend to believe — and they make the point to us — that it is arbitrary. They feel that because their revenue is going up, the cost of Part II fees are going up as well and that it should not be that way. That is the nature of the discussions we have had with them.

Mr. Hanger: Why could not the fee be eliminated?

Mr. Bouchard: Fundamentally, there is a rationale for the fee from where we stand. There is the use of a public good — and the fact that they are renting and have the possibility of using that public good. In our view, there are some benefits of holding a licence and there are some costs attached to it.

When some parties look at the amount of the licence fees, they will look at it and say, ``We are paying this and we are paying for other obligations that are developed by the CRTC and the licensing process.'' However, we also take a look at some of the benefits that they get from holding a licence. In other words, they may tell you, ``We are paying for the licence fee and also for the development of Canadian content to put on the airwaves as a result of CRTC regulations.'' I am using this only as an example here. At the same time, the government is providing them with some funding to ensure there will be Canadian content on the air.

I use this strictly as an example because there is no direct link between Part II fees and the funding program. I am using this to illustrate that, in their view, they have many costs attached to holding the licence. We are not denying that there are some costs attached to holding a licence, but we are also cognizant of the fact that there are some benefits of holding it, and monetary benefits.

Without judging and saying how much is it and how much should it be, we look at it, take a step back and say that the formula being used by the CRTC, which is a percentage of the revenue, is a good proxy of determining the value of holding a licence, the cost linked to using the spectrum and the costs of managing the spectrum.

When you called us to look at this issue in your last report, we are saying that there may be other ways to look at it, other methodologies to look at that. Let us look at what is feasible and what has been done in other countries to determine that. That does not mean that we are not confident with the current approach that we have.

Mr. Anders: I think I weighed in along with Mr. Lee on this. Where will the committee go from here in terms of addressing this? I certainly feel as though there has been a crossing of the line with regard to whether CRTC has the ability to do this, and I do not sense that we have much movement on their part. The question is: Where do we go from here? I would ask counsel where we can take this.

The Joint Chairman (Senator Bryden): I would suggest, if you have no objection, Mr. Anders, that we can let the witnesses go and then we could discuss as a committee where we go. There was some significant information that came in just before you were able to join us, and I think it would be helpful for us to have a discussion. As well, there is some information coming forward from the witnesses that will be helpful.

Did any of the witnesses have anything to add? If not, on behalf of the committee, I wish to thank you. I believe it has been helpful for us. Our clerk will be in touch to obtain copies of the motions.

We can now move to the other part of our agenda, which is not extensive agenda. With the testimony from witnesses fresh in our minds and in answer to Mr. Anders' point, what are the recommendations for action? I would ask counsel, who have been taking notes, to address this. I sense that significant progress has been made and that perhaps there is a process for consideration by the committee, although we will not take a decision today.

Mr. François-R. Bernier, General Counsel to the Committee: If I may answer to your question indirectly, Mr. Anders, I refer members back to the third report, report no. 73, of the committee. It is important to note that the only issue on which the committee has taken a firm position is that these fees are a tax within the context of Eurig. At no point did the committee decide that the imposition of that tax was not authorized by section 11 of the Broadcasting Act. That issue was left open in the background.

Therefore, in respect of the issue on which the committee did take a firm position — that this is a tax — I agree with the joint chairman that there has been some progress to the point where the Crown is willing to ask the court to deem the fee a tax and then proceed to answer the following two questions: Is the imposition of that tax constitutional? Does it fit within the scope of section 11 of the statute, assuming that statute to be a constitutional delegation of taxing authority? There has been progress. Once we know whether the court will agree to answer those questions, that will move us considerably closer to finalizing this file.

Mr. Lee: I thank Mr. Bernier for that good articulation of the committee's progress. There has been a movement of the yardsticks in respect of a firming up of the department's position, thanks in large measure to the litigation before the court, and to the work of the committee.

I wish to put on the record for future reference that I am most uncomfortable with the format of this so-called tax. I was having a discussion with Mr. Macklin and Senator Hervieux-Payette. We have not addressed the issue of whether it was properly handled and implemented by Parliament — but we may not have the authority to address that. If Parliament makes a mistake in a statute, do we have the authority to second-guess Parliament? I do not think we have that, although we can comment on it.

It seems that if this is a tax, it is actually a delegation of the amount of the tax, not to the Governor-in-Council but to an agency operating relatively independently of government. That agency can charge whatever it wants on any basis as a tax. This is godawful. Parliamentarians would never accept that. I do not know when this statute came into effect — but I might have been in the House and I might have voted on it.

Mr. Bernier: It was in 1991.

Mr. Lee: I was in the House. I would like to think that I voted against it, although I do not remember because it was 14 years ago.

Mr. Macklin said that the witnesses said that Treasury Board approves the process and the amount involved. My response to that is that the law does not require Treasury Board to do any of that — it is simply what the government does. There is no bad faith in this — it is simply the process that government uses, in that Treasury Board has a role in the setting of these numbers. The law delegates this taxing authority to the CRTC, and in law they can pass a regulation whenever they want — or I believe they can do that. Let us leave that as a sidebar issue. I believe they can simply implement a tax, using any criteria they choose, by adopting their own regulation.

Mr. Bernier: For the record, Mr. Lee, the approval of Treasury Board is a formal requirement. Section 11(1)(a) of the Broadcasting Act provides for the making of a schedule of fees with the approval of Treasury Board.

Mr. Lee: That confirms some Treasury Board policing. That is in the statute.

Mr. Bernier: Yes.

Mr. Lee: I am still uncomfortable with the way this currently stands. Procedurally, we might want to hold our fire. We could discuss it later, but I am not ready to move any particular course of action right now.

The Joint Chairman (Senator Bryden): I believe we will know within a reasonably short period of time whether the court will accept these motions. I see in the record that it is a couple of weeks —

The Joint Clerk (Mr. Michaud): Two weeks.

The Joint Chairman (Senator Bryden): In normal circumstances, we would not have a regular meeting; in any case, we will have the answer in two weeks. My suggestion would be that we digest this, and wait the two weeks to see whether the court will accept these motions. We will have copies of these motions by that time. Having worked at this for three or four years, two weeks to get a better understanding and see where it is going would be my suggestion.

Senator Hervieux-Payette: Perhaps to add to this, we may not have the final result, but they asked some experts to review this. We will see what kind of recommendations they come up with. That may clear up the whole thing.

If industry, the government and all the departments and players involved are sitting around the table and come to an understanding that this is how it should be established, and the formula is being revised and everybody is happy with it and it conforms with the law, we will have fulfilled our mandate.

The date is not too far away. They are supposed to award the contract this week, or very shortly, as they said at the beginning. There are two sides to the motion — one is the legal side, the other is the practical side. If the practical side of the formula now is more in conformity with the reality of the industry, then everybody, and consumers, too, have a word to say. When we are talking about dollars, the industry is not losing money. They will just charge it back to the consumer. As far as I am concerned, if the consumers are happy, industry is happy and the government is happy, I will probably be happy also.

Mr. Anders: Something I want to toss out for consideration here is that one of the criteria that we are able to evaluate these things on is the Charter. I wonder whether there is a freedom of speech issue to be dealt with in regard to this.

One of the restrictions that can be imposed under freedom of speech is the notion of whether it is reasonable. Based on some of the readings here, industry's idea of a reasonable restriction on freedom of speech might be that this tax is levied but that it is applied in a way that furthers the industry. One of their objections to it is that it is a tax that is applied and they do not feel the way it is used is conducive to their benefit. I see a question there, anyhow.

Senator Moore: Was this motion that is going before the Federal Court on April 28 initiated by these people or by the industry?

Mr. Lee: Joint.

Senator Moore: Again, there is frustration around the time it has taken to move this thing along, but I agree that we are not in a position to make a decision today. We should see what comes of that. I remember when Mr. Abbott was here and Mr. Lee was pushing to get some action on this. Hopefully, that work encouraged the industry to become involved in this legal issue. We did not hear much from them. It was being carried by the members of the committee. To date, we have not received what we were hoping for. I guess we are getting closer, and maybe the industry can feel some comfort in that we have been arguing their case.

On April 28, will the Federal Court decide whether it will hear the motion, or will it hear the motion?

The Joint Chairman (Senator Bryden): It was my understanding that the decision would be made to hear the motion.

Senator Moore: Whether or not to hear it. We still do not know if it will be considered by the court.

The Joint Chairman (Senator Bryden): We will have made one step, and we will have copies of the motion.

Senator Moore: I know. I was not clear on whether they would decide to accept the motion and consider it, or whether they will actually sit down and hear the representations and make a decision.

Mr. Bernier: If I remember the testimony correctly, and Mr. Richstone can correct if I am wrong, I think that is a proposal by the Crown, and they will now have to hear from the broadcasters as to whether they are willing to have this motion put forth and answer it on that basis.

The concern there might be, and I do not know the statute well enough, that these are really hypothetical questions that are being asked. The court is being asked to say, ``Assume this is a tax and answer these questions.'' Will the court accept to engage in answering hypothetical answering of hypothetical legal questions or not? We do not know. I suppose if all the parties are in agreement, it would help the court to do so.

Senator Moore: If they do not, it comes back to us to make a final decision.

The Joint Chairman (Senator Bryden): I hope we have a consensus to go as far as April 28 and see what happens then. We must look at how we can proceed. We have a narrow area in which to proceed. There is still a possibility for us to proceed as to whether the authority has been properly delegated to the CRTC, if we need to use that.

Is that acceptable?

Hon. Members: Agreed.

The Joint Chairman (Senator Bryden): Let us look at the balance of our agenda.

SOR/92-191 — QUEBEC HARBOUR DUES BY-LAW, AMENDMENT

SOR/94-768 — Harbour Dues Tariff By-law, amendment

Mr. Bernier: The note before the committee discusses legal issues surrounding two practices in relation to the approval of regulations under the Canada Ports Corporation Act. One of these involved the granting of Governor-in- Council approval for a regulation made by a local port corporation before the regulation was made by that local port corporation.

The second practice questioned by the committee involved approval being granted to the making of any number of future regulations, subject only to certain conditions being respected by the regulation-making authority.

As mentioned in the note, the committee had very serious reservations as to the legality of these practices, as well as a number of practical difficulties that were noted. Despite the Department of Justice's defence of these practices, considerable doubt remains; however, the files were put on what — for lack of a better term — I will call ``semi-active status,'' until it could be ascertained whether the practices in question would be used as a precedent under many other acts of Parliament, or whether their use was confined to the exercise of powers under the Canada Ports Corporation Act.

As it turns out, looking at this in hindsight after a few years, these uses of the approval authority were apparently confined to that one statute, a statute that is no longer in force. In these circumstances, the note suggests that the preferred approach might be to consider that these regulatory techniques have fallen into disuse and for the committee to close these two files.

The Joint Chairman (Senator Bryden): Agreed?

Hon. Members: Agreed.

NOTE ON VARIOUS RULES OF ORIGIN REGULATIONS MADE UNDER TRADE AGREEMENTS

(SOR/97-340, SOR/2004-298, SOR/95-382, SOR/2000-86, SOR/2005-8, SOR/2003-24, SOR/2002-27, SOR/97-63 and SOR/22002-395)

Mr. Bernier: Counsel would like to suggest to the committee that, for the reasons mentioned in the note before members, the committee adopt, in relation to these various rules of origin, an approach similar to the approach taken in relation to instruments made under the Income Tax Act.

I have a copy of the various rules of origin referred to. As members can see, a detailed review of these highly technical rules of international trade would require considerable resources. The question has to be asked whether the likely benefits of such a review are commensurate with the effort expended. If the committee were in agreement with the approach outlined in the note, we would proceed to remind interested trade organizations of the committee's existence and its mandate and that they can draw any problem with those rules to the attention of the committee at any time.

The Joint Chairman (Senator Bryden): I want to comment, based on the note, in the case of the income tax regulations, where substantive problems exist they are likely to be identified by those affected at an early stage — with your initiative, to say, ``We are here; bring it to our attention,'' then we would concur in that. Otherwise, we will have to fund a group to review these kinds of details.

Are there any questions? Are members agreed?

Hon. Members: Agreed.

SOR/88-58 — AIR TRANSPORTATION REGULATIONS

Mr. Peter Bernhardt, Counsel to the Committee: There are three outstanding matters in this file, two of which are points of drafting and one that concerns a provision that prohibits air carriers engaged in international charter operations from carrying into Canada any person who is not in possession of a passport or other valid travel document. In 1989, the Canadian Transportation Agency agreed that a provision designed to prevent unauthorized persons from entering Canada fell outside the scope of the National Transportation Act, which has been replaced by the Canada Transportation Act. The agency agreed to revoke the provision, but this has yet to be done.

After numerous delays, the committee was advised by the agency in August 2002 that draft regulations had been prepared. Since then, this draft has been the subject of discussions between the agency and the Department of Transport, apparently with no end in sight. Perhaps at this time the joint chairman would wish to write to the Minister of Transport to ask for his cooperation in ensuring that, at least, this ultra vires provision is removed without further delay.

Recently, a reply was received from the minister on another file dealing with the same regulations. The minister indicated that discussions on unresolved issues remained ongoing. This is probably the same set of amendments we are dealing with here. It may well be that we would receive an identical response from the minister. Rather than wait for an identical response, as an alternative the committee could conclude that it has been more than patient and could proceed to consider what other options might be available.

Senator Hervieux-Payette: I agree with the last one. The committee is being laughed at. This could carry on for years because this ministry does that regularly; it is part of the culture of the department.

The Joint Chairman (Senator Bryden): What action do you recommend?

Senator Moore: I would suggest a letter from the joint chair to the minister.

The Joint Chairman (Senator Bryden): I agree.

Senator Hervieux-Payette: In the letter, ask that a response be provided within 30 days. We must set a time frame.

Mr. Bernier: Should disallowance be mentioned in that letter?

Senator Hervieux-Payette: Yes.

The Joint Chairman (Senator Bryden): We will send the usual letter and expect a response within 30 days.

Mr. Bernier: To date, the department has had 16 years to respond.

The Joint Chairman (Senator Bryden): Is 30 days a good time frame?

Senator Hervieux-Payette: We will recommend 30 days to remove it. If that is not done, then we will remove it.

The Joint Chairman (Senator Bryden): We will commence disallowance.

Mr. Bernhardt: As a footnote, I could add that this regulation was not subject to disallowance under the old procedure but is subject to it under the new procedure.

The Joint Chairman (Senator Bryden): It could be interesting to include that in the letter. Until now, we did not have that leverage.

Mr. Lee: Thank you. For the record, I want to state that this regulation may be an integral part of the security infrastructure for the transportation industry or it may not be. There may be other provisions that can accomplish the same goal. I do not know whether we are informed on that subject yet. However, from our point of view, the regulation deals with the liberty of the subject and our current thinking is that it is ultra vires. I wanted the record to show that in matters of this nature the committee is usually fairly robust in consideration of the prospect of a disallowance. The lack of timely response by the authorities in dealing with this would not leave us much wiggle room in terms of disposition. I am in agreement with members that the committee's correspondence should show that this is an end-game scenario.

Mr. Bernier: If I have it straight, the letter to the minister would indicate that unless the agreed-to ultra vires provision is removed within 30 days, the committee will proceed to consider the possibility of initiating disallowance. Is that correct?

The Joint Chairman (Senator Bryden): That is correct. Are members agreed?

Hon. Members: Agreed.

Mr. Anders: Mr. Chairman, I want to ensure that I understand how to implement this. From what counsel said, am I to understand that this is in respect of whether someone can enter Canada if they do not have proper documentation and the ability of Transport Canada to intervene in such cases? I want to have a better sense of that.

Mr. Bernhardt: I assume, although I have not gone through either the Aeronautics Act or the Immigration Act, that there is a proper authority somewhere. I would assume that it is the Immigration Act, which deals with passports and visas. The difficulty is that in 1988 the National Transportation Agency enacted this under the National Transportation Act. In 1989, they agreed with this committee that there was no authority under that act to do this. I very much doubt that there is not a place under which they can include this properly today. I would be astounded if there were not an appropriate place under the Immigration Act for this kind of provision. However, it is not their responsibility to do that under this statute.

Mr. Anders: The National Transportation Agency has been wanting the ability to proceed to restricting access to Canada by air transport when people do not have documentation. Is that right?

Mr. Bernhardt: Yes, since this was put in in 1988.

Mr. Anders: I would put to the committee that if the agency is desperate to find a place for this they likely may have difficulty finding another place. They may be forcing this, in some respects, of their own accord. If the agency is restricting the entry of people without proper documentation, I would say that that is to be commended. I would be loath to pull their authority to do that for the sake of national security and interests. It is unfortunate that they may not find some other toehold for this authority, but, if they need a toehold, a toehold they need.

The Joint Chairman (Senator Bryden): We cannot give them that. The situation is such that the agency is attempting to do something for which it has no authority. If it wants to continue, then it must obtain the proper authority. It is likely the case that one of the reasons is the larger situation at play surrounding the border security packages that are being developed. There is nothing to prevent them taking away the provision that brings the agency to take illegal actions. It has no authority to inhibit the movement of citizens of Canada in the way that it has been doing. Simply, there is no authority for that.

Mr. Anders: I want to follow up on that. We are assuming, or hoping, perhaps, that this exists under Citizenship and Immigration or some other department. However, what if this is a case where in terms of someone actually saying, ``No you cannot get on this plane, you cannot travel'' et cetera? Maybe their desperation, their Catch-22, is that they do not have officials involved with Citizenship and Immigration or some other department there to do it, that all they have to fall back on is their own self-creation here in national transportation.

The Joint Chairman (Senator Bryden): They are not a self-creation, unfortunately for them. I will ask counsel to reply to this, but I do not think we are better off to have a department such as this giving itself power that the Parliament of Canada has not given it. That is the issue here.

If it does not exist somewhere else, let us have an emergency meeting of someone and give someone the right to do what you are saying, Mr. Anders.

Mr. Anders: I would hope the minister that has just been duly appointed with regard to this, Anne McLellan, is aware of this. I do not want to see us develop a loophole.

Mr. Bernier: If I may, Mr. Anders — and I do not know if this will assuage your concern — keep in mind that it is not as though the agency has been desperate. If they were desperate to retain this regulation, and if there were crucial public policy reasons to retain it, it is a safe bet that they would not have accepted, as far as 16 years ago, that the regulation is illegal. As in other cases, they would be arguing that it is perfectly legal, in spite of whatever the evidence might be.

I think they readily accepted that they did not have the authority. At no point in the subsequent correspondence has it ever been suggested that somehow this illegal regulation should stay in place because of major public policy concerns.

If it serves to help the member, Mr. Chairman, perhaps the letter to the Minister of Transport could be copied to Ms. McLellan. In this way, she would be aware.

The Joint Chairman (Senator Bryden): Is that agreed? I certainly have no objection to such a letter.

Hon. Members: Agreed.

SOR/88-66 — CONTROLLED PRODUCTS REGULATIONS

Mr. Bernhardt: Mr. Chairman, the committee is awaiting promised amendments to the Hazardous Products Act to resolve remaining concerns on this file. These amendments are to be part of the department's legislative renewal initiative.

This initiative has been ongoing for several years now. Perhaps at this time the joint chairmen would wish to write to the minister, to ask when it is expected that the new legislation will be tabled.

The Joint Chairman (Senator Bryden): What sort of time limits? How long have we been working on this one?

Mr. Bernhardt: Since 1986.

The Joint Chairman (Senator Bryden): How far up the chain are we?

Mr. Bernhardt: I apologize, 1990. There were a number of promised amendments to the regulations, and those have all been done. The department eventually said that it would amend the act to fix these problems. That got caught up in this legislative renewal initiative, which I guess will lead to the new Canada Health Protection Act, which is a major rewrite of all the legislation in that field. That is what the committee is waiting for at this time.

We do not really have a time frame on that right now, so I guess the recommendation is perhaps that we could ask the minister to give us some sort of time frame on where this is going.

Mr. Bernier: It has not appeared in the last two years anyway.

The Joint Chairman (Senator Bryden): We have been dealing with the director general. I am a little concerned — the point is that this is just another letter from the joint chairs, and departments start to get snowed by these things. They should realize that, when it has got to the committee writing through their chairs to get something done, it means that we are close to our last straw, let us get some action or else we go.

In this instance, you have been dealing with, I take it, the top bureaucrat that deals with this stuff.

Mr. Bernier: She is the designated instruments officer.

The Joint Chairman (Senator Bryden): I suggest we do that — that the chairs would write.

Mr. Bernhardt: Because we were dealing with a bill itself, rather than with amendments to the regulations, it might be more appropriate, as an indication that the committee is ratcheting up the intensity simply because it is a bill.

The Joint Chairman (Senator Bryden): Agreed?

Senator Moore: A letter from the joint chairs to the minister?

Mr. Bernhardt: Yes.

SOR/85-686 — PEST CONTROL PRODUCTS REGULATIONS, AMENDMENT

Mr. Bernhardt: Mr. Chairman, the new regulations have been pre-published. In its most recent letter, Health Canada indicates that they are expecting they will actually be made by mid-summer. This seems to be satisfactory for now, and the progress can be monitored in the usual fashion.

The Joint Chairman (Senator Bryden): Agreed?

Hon. Members: Agreed.

SI/2002-19 — ORDER TERMINATING THE ASSIGNMENT OF THE HONOURABLE RONALD J. DUHAMEL AND ASSIGNING THE HONOURABLE STEPHEN OWEN TO ASSIST THE MINISTER OF WESTERN ECONOMIC DIVERSIFICATION AND THE MINISTER OF INDIAN AFFAIRS AND NORTHERN DEVELOPMENT

SI/2002-20 — ORDER TERMINATING THE ASSIGNMENT OF THE HONOURABLE REY PAGTAKHAN AND ASSIGNING THE HONOURABLE DAVID KILGOUR TO ASSIST THE MINISTER OF FOREIGN AFFAIRS

SI/2002-21 — ORDER TERMINATING THE ASSIGNMENT OF THE HONOURABLE MARTIN CAUCHON AND ASSIGNING THE HONOURABLE CLAUDE DROUIN TO ASSIST THE MINISTER OF INDUSTRY

SI/2002-22 — ORDER TERMINATING THE ASSIGNMENTS OF THE HONOURABLE DAVID KILGOUR AND THE HONOURABLE RONALD J. DUHAMEL AND ASSIGNING THE HONOURABLE DENIS PARADIS TO ASSIST THE MINISTER OF FOREIGN AFFAIRS

SI/2002-23 — ORDER TERMINATING THE ASSIGNMENT OF THE HONOURABLE HEDY FRY AND ASSIGNING THE HONOURABLE CLAUDETTE BRADSHAW TO ASSIST THE MINISTER OF CANADIAN HERITAGE

SI/2002-24 — ORDER AMENDING THE PRIVACY ACT HEADS OF GOVERNMENT INSTITUTIONS DESIGNATION ORDER

SI/2002-25 — ORDER AMENDING THE ACCESS TO INFORMATION ACT HEADS OF GOVERNMENT INSTITUTIONS DESIGNATION ORDER

SI/2002-26 — ORDER DESIGNATING THE OFFICE OF INFRASTRUCTURE AND CROWN CORPORATIONS OF CANADA AS A DEPARTMENT AND THE EXECUTIVE DIRECTOR AND DEPUTY HEAD AS THE DEPUTY HEAD FOR PURPOSES OF THE ACT

SI/2002-27 — ORDER TRANSFERRING FROM THE PRESIDENT OF THE TREASURY BOARD TO THE MINISTER OF STATE, DEPUTY MINISTER AND MINISTER OF INFRASTRUCTURE AND CROWN CORPORATIONS THE CONTROL AND SUPERVISION OF THE OFFICE OF INFRASTRUCTURE AND CROWN CORPORATIONS OF CANADA

SI/2002-28 — ORDER TERMINATING THE ASSIGNMENT OF THE HONOURABLE GILBERT NORMAND AND ASSIGNING THE HONOURABLE MAURIZIO BEVILACQUA TO ASSIST THE MINISTER OF INDUSTRY

SI/2002-29 — ORDER TERMINATING THE ASSIGNMENT OF THE HONOURABLE JAMES PETERSON AND ASSIGNING THE HONOURABLE JOHN MCCALLUM TO ASSIST THE MINISTER OF FINANCE

SI/2002-30 — ORDER TERMINATING THE ASSIGNMENT OF THE HONOURABLE DENIS CODERRE AND ASSIGNING THE HONOURABLE PAUL DEVILLERS TO ASSIST THE MINISTER OF CANADIAN HERITAGE AND THE LEADER OF THE GOVERNMENT IN THE HOUSE OF COMMONS

SI/2002-31 — ORDER DESIGNATING THE MINISTER OF STATE, DEPUTY PRIME MINISTER AND MINISTER OF INFRASTRUCTURE AND CROWN CORPORATIONS AS APPROPRIATE MINISTER FOR THE CANADA LANDS COMPANY LIMITED

SI/2002-32 — ORDER TRANSFERRING FROM THE MINISTER OF PUBLIC WORKS AND GOVERNMENT SERVICES TO THE MINISTER OF STATE, DEPUTY PRIME MINISTER AND MINISTER OF INFRASTRUCTURE AND CROWN CORPORATIONS THE CONTROL AND SUPERVISION OF THE ROYAL CANADIAN MINT AND THE POWERS, DUTIES AND FUNCTIONS UNDER THE ROYAL CANADIAN MINT ACT

SI/2002-33 — ORDER TERMINATING THE ASSIGNMENT OF THE HONOURABLE ROBERT G. THIBEAULT AND ASSIGNING THE HONOURABLE GERRY BYRNE TO ASSIST THE MINISTER FOR THE ATLANTIC CANADA OPPORTUNITIES AGENCY

SI/2002-35 — ORDER DESIGNATING THE MINISTER OF STATE, DEPUTY PRIME MINISTER AND MINISTER OF INFRASTRUCTURE AND CROWN CORPORATIONS AS APPROPRIATE MINISTER FOR PURPOSES OF THE CANADA MORTGAGE AND HOUSING CORPORATION ACT AND AS APPROPRIATE MINISTER WITH RESPECT TO THE CANADA MORTGAGE AND HOUSING CORPORATION FOR PURPOSES OF THE FINANCIAL ADMINISTRATION ACT

SI/2002-36 — ORDER DESIGNATING THE MINISTER OF STATE AND LEADER OF THE GOVERNMENT IN THE HOUSE OF COMMONS AS MINISTER FOR PURPOSES OF THE CANADIAN WHEAT BOARD ACT AND AS APPROPRIATE MINISTER FOR THE CANADIAN WHEAT BOARD FOR PURPOSES OF THE FINANCIAL ADMINISTRATION ACT

SI/2002-37 — ORDER DESIGNATING THE MINISTER OF STATE AND LEADER OF THE GOVERNMENT IN THE HOUSE OF COMMONS AS MINISTER FOR PURPOSES OF THAT ACT

SI/2002-38 — ORDER DESIGNATING THE MINISTER OF STATE AND LEADER OF THE GOVERNMENT IN THE HOUSE OF COMMONS AS MINISTER FOR PURPOSES OF THAT ACT

SI/2002-39 — ORDER DESIGNATING THE MINISTER OF STATE AND LEADER OF THE GOVERNMENT IN THE HOUSE OF COMMONS AS MINISTER FOR PURPOSES OF THE PARLIAMENT OF CANADA ACT

SI/2002-41 — ORDER DECLINING TO SET ASIDE OR TO REFER BACK TO THE CRTC DECISION CRTC 2001-678

SI/2002-42 — PROCLAMATION CONCERNING HER MAJESTY QUEEN ELIZABETH II GOLDEN JUBILEE

SI/2002-43 — ORDER REPEALING ORDER IN COUNCIL P.C. 1998-338 OF MARCH 12, 1998

SI/2002-44 — ORDER AMENDING THE PRIVACY ACT HEADS OF GOVERNMENT INSTITUTIONS DESIGNATION ORDER

SI/2002-45 — ORDER AMENDING THE ACCESS TO INFORMATION ACT HEADS OF GOVERNMENT INSTITUTIONS DESIGNATION ORDER

SI/2002-47 — ORDER DESIGNATING THE MINISTER OF STATE, DEPUTY PRIME MINISTER AND MINISTER OF INFRASTRUCTURE AND CROWN CORPORATIONS AS MINISTER FOR PURPOSES OF THAT ACT

SI/2002-48 — ORDER TRANSFERRING THE OFFICE OF INFRASTRUCTURE AND CROWN CORPORATIONS OF CANADA THE CONTROL AND SUPERVISION OF THE CORPORATE IMPLEMENTATION GROUP

SI/2002-49 — ORDER DESIGNATING THE MINISTER OF CANADIAN HERITAGE AS MINISTER FOR PURPOSES OF THAT ACT

SI/2002-50 — ORDER DESIGNATING THE MINISTER OF CANADIAN HERITAGE AS MINISTER FOR PURPOSES OF THAT ACT

SI/2002-51 — ORDER AMENDING THE PRIVACY ACT HEADS OF GOVERNMENT INSTITUTIONS DESIGNATION ORDER

SI/2002-52 — ORDER AMENDING THE ACCESS TO INFORMATION ACT HEADS OF GOVERNMENT INSTITUTIONS DESIGNATION ORDER

SI/2002-53 — ORDER AMENDING THE ORDER DESIGNATING THE OFFICE OF INFRASTRUCTURE AND CROWN CORPORATIONS OF CANADA AS A DEPARTMENT AND THE EXECUTIVE DIRECTOR AND DEPUTY HEAD AS THE DEPUTY HEAD FOR THE PURPOSES OF THAT ACT

SI/2002-54 — ORDER REFERRING BACK TO THE CRTC DECISION CRTC 2001-757

SI/2002-55 — ORDER AMENDING THE ACCESS TO INFORMATION ACT HEADS OF GOVERNMENT INSTITUTIONS DESIGNATION ORDER

SI/2002-56 — ORDER AMENDING THE PRIVACY ACT HEADS OF GOVERNMENT INSTITUTIONS DESIGNATION ORDER

SI/2002-58 — ORDER DESIGNATING THE MINISTER OF NATURAL RESOURCES AS MINISTER FOR PURPOSES OF THAT ACT

SI/2002-60 — REMISSION ORDER CONCERNING INTEREST ACCRUING ON CERTAIN UNEMPLOYMENT INSURANCE OVERPAYMENTS

SI/2002-61 — GROSS REVENUE INSURANCE PROGRAM ACCOUNT FOR THE PROVINCE OF ALBERTA REMISSION ORDER

SI/2002-62 — GROSS REVENUE INSURANCE PLAN ACCOUNT FOR THE PROVINCE OF MANITOBA REMISSION ORDER

SI/2002-63 — ORDER FIXING APRIL 1, 2002 AS THE DATE OF THE COMING INTO FORCE OF THE CANADIAN AIR TRANSPORT SECURITY AUTHORITY ACT AND SECTION 3 OF THE BUDGET IMPLEMENTATION ACT, 2001

SI/2002-64 — PROCLAMATION REQUESTING THAT THE PEOPLE OF CANADA SET ASIDE APRIL 9, 2002, AS THE DAY ON WHICH THEY HONOUR THE MEMORY OF OUR DEARLY BELOVED MOTHER, HER LATE MAJESTY QUEEN ELIZABETH THE QUEEN MOTHER, WHO PASSED AWAY ON MARCH 30, 2002

SI/2002-65 — NATIONAL PARKS OF CANADA LAND RENTS REMISSION ORDER, NO. 3

SI/2002-66 — REMISSION ORDER CONCERNING CERTAIN EMPLOYMENT INSURANCE CLAIMANTS

SI/2002-122 — ORDER FIXING SEPTEMBER 30, 2002 AS THE DATE OF THE COMING INTO FORCE OF CERTAIN SECTIONS OF THE ACT

SI/2003-1 — WILLARD THORNE REMISSION ORDER

SI/2003-3 — ORDER FIXING JANUARY 1, 2003 AS THE DATE OF THE COMING INTO FORCE OF THE ACT

SI/2003-4 — PROCLAMATION GIVING NOTICE THAT THE AGREEMENT ON SOCIAL SECURITY BETWEEN CANADA AND AUSTRALIA COMES INTO FORCE ON JANUARY 1, 2003

SI/2003-5 — PROCLAMATION GIVING NOTICE THAT THE AGREEMENT ON SOCIAL SECURITY BETWEEN CANADA AND THE CZECH REPUBLIC COMES INTO FORCE ON JANUARY 1, 2003

SI/2003-6 — PROCLAMATION GIVING NOTICE THAT THE AGREEMENT ON SOCIAL SECURITY BETWEEN CANADA AND THE SLOVAK REPUBLIC COMES INTO FORCE ON JANUARY 1, 2003

SI/2003-22 — CANADIAN HERITAGE GARDEN FOUNDATION REMISSION ORDER

SI/2003-30 — MERRIL MCEVOY-HALSTON REMISSION ORDER

SI/2003-31 — CERTAIN MUNICIPALITIES REMISSION ORDER

SI/2003-32 — ORDER DECLINING TO SET ASIDE OR TO REFER BACK TO THE CRTC DECISION CRTC 2002-377

SI/2003-33 — LA CAISSE DES MUTUELLISTES, ÉPARGNE ET CRÉDIT REMISSION ORDER

SI/2003-36 — ORDER RESPECTING THE WITHDRAWAL FROM DISPOSAL OF CERTAIN SUBSURFACE LANDS IN THE NORTHWEST TERRITORIES

SI/2003-37 — NATHALIE GOYETTE REMISSION ORDER

SI/2003-39 — ORDER TRANSFERRING TO THE ROYAL CANADIAN MOUNTED POLICE THE CONTROL AND SUPERVISION OF THE NATIONAL WEAPONS ENFORCEMENT SUPPORT TEAM (NWEST)

SI/2003-42 — PROCLAMATION GIVING NOTICE THAT THE AGREEMENT ON SOCIAL SECURITY BETWEEN CANADA AND SWEDEN COMES INTO FORCE ON APRIL 1, 2003

SI/2003-44 — ORDER FIXING MARCH 21, 2003, AS THE DATE OF THE COMING INTO FORCE OF THE ACT

SI/2003-45 — ORDER FIXING APRIL 1, 2003 AS THE DATE OF THE COMING INTO FORCE OF CERTAIN SECTIONS OF THE ACT

SI/2003-46 — ORDER AMENDING THE CANADIAN SECURITY INTELLIGENCE SERVICE ACT DEPUTY HEADS OF THE PUBLIC SERVICE OF CANADA ORDER

SI/2003-47 — ORDER FIXING THE DATES OF THE COMING INTO FORCE OF CERTAIN SECTIONS OF THE ACT

SI/2003-48 — ORDER FIXING APRIL 1, 2003 AS THE DATE OF THE COMING INTO FORCE OF CERTAIN PROVISIONS OF THE ACT

SI/2003-54 — ORDER AMENDING THE ACCESS TO INFORMATION ACT HEADS OF GOVERNMENT INSTITUTIONS DESIGNATION ORDER

SI/2003-55 — ORDER AMENDING THE PRIVACY ACT HEADS OF GOVERNMENT INSTITUTIONS DESIGNATION ORDER

SI/2003-56 — ORDER AMENDING THE ACCESS TO INFORMATION ACT HEADS OF GOVERNMENT INSTITUTIONS DESIGNATION ORDER

SI/2003-57 — ORDER AMENDING THE PRIVACY ACT HEADS OF GOVERNMENT INSTITUTIONS DESIGNATION ORDER

SI/2003-58 — CANADA GAZETTE PUBLICATION ORDER

SI/2003-93 — ORDER AUTHORIZING THE MINISTER OF THE ENVIRONMENT TO EXERCISE, WITH THE CONCURRENCE OF THE MINISTER OF NATIONAL DEFENCE, THE ADMINISTRATION OF CERTAIN PUBLIC LANDS

Mr. Bernier: Mr. Chairman, 69 instruments were reviewed and found to conform to all the committee's scrutiny criteria.

The Joint Chairman (Senator Bryden): Thank you. Is there any other business to come before the committee?

We had scheduled tentatively to meet on Tuesday, because Minister Alcock was prepared to come to this room and spend an hour and a half on the smart regulations response from the government. Perhaps other priorities have taken the minister. In any event, it is not unusual for a minister to have to reallocate his time.

That meeting will need to be rescheduled. That being the case, will we meet again on this coming Thursday, which depends partially on whether counsel will be prepared to have an agenda.

Mr. Bernier: If members want to go back to meeting on Thursday, that is fine. I would simply give notice that we could probably get the agenda in their offices by late Monday.

The Joint Chairman (Senator Bryden): Unless there is some objection, we will meet next Thursday at the regular time on a regular agenda.

Hon. Members: Agreed.

The committee adjourned.

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