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Proceedings of the Standing Joint Committee on
Scrutiny of Regulations
Issue 11 - Evidence, October 23, 2003
OTTAWA, Thursday, October 23, 2003
The Standing Joint Committee of the Senate and the House of Commons for the Scrutiny of Regulations met this dayat 8:35 a.m. for the review of Statutory Instruments and consideration of a draft report.
Senator Céline Hervieux-Payette (Joint Chairman) in the Chair.
The Joint Chairman (Senator Hervieux-Payette): Good morning.
We will begin with the first item.
SOR/97-144 — BROADCASTING LICENCE FEE REGULATIONS, 1997
Mr. François-R. Bernier, General Counsel to the Committee: Committee members have before them a draft report, prepared as per their request at the last meeting. The draft report concerns Part II broadcasting licence fees, which are prescribed under section 11 of the Broadcasting Act, and reflects the concern that was expressed by members of the joint committee that the imposition of these fees results in the collection of some $80 million over and above the costs incurred for the management of the spectrum. The point has been made that, based on the Supreme Court of Canada decision in Re Eurig Estate, Part II licence fees may constitute a tax.
Mr. Lee: It is a good draft and I think it reflects what I recall as the thrust of our hearings and the members. I have three items that I want to note. First — and this is procedural — I understand that we will adopt this report in public meeting and not in camera because this committee usually stays public when it adopts reports. I am fine with that, if everyone agrees.
Second, in respect of the report, we should request a response from the government on the issue, even though we have not necessarily pointed the arrow in the exact direction that it should take.
Third, counsel has done a good job of outlining this issue and, at one point, comes to the point of saying what some of us truly think, but does not quite say it. I should like the report to say that the statute and its taxing impacts are potentially vulnerable to a challenge from a taxpayer. I would suggest inserting, on page 4 in the middle of the large paragraph after the sentence that ends ``regulating that industry,'' the following: ``Viewed from the perspective of the taxpayer and using the above criteria, this fee regime might prove vulnerable to further scrutiny and challenge.''
We could then continue with counsel's wording such that leaving aside that particular issue the department should take account of, or adjust, the huge bundle of tax revenues from these fees, in view of the fact that they do not coincide with real costs. That is my suggestion, which I will read again later for committee members. Others may want to comment on this, or perhaps counsel may want to comment.
The Joint Chairman (Senator Hervieux-Payette): Could you please repeat your suggested wording, Mr. Lee?
Mr. Lee: Yes. The suggested wording is as follows: ``Viewed from the perspective of the taxpayer and using the above criteria, this fee regime might prove vulnerable to further scrutiny and challenge.''
I would move that suggested wording at the appropriate time, after hearing from colleagues.
The Joint Chairman (Senator Hervieux-Payette): Mr. Bernier is suggesting that if we are to make amendments we do so in camera. When we have finished and approved a final version, we will return to our in public meeting. At this time, it is more a matter of re-working the document.
Mr. Lee: I agree.
The Joint Chairman (Senator Hervieux-Payette): We are in agreement.
The committee continued in camera.
The committee resumed in public.
The Joint Chairman (Senator Hervieux-Payette): Mr. Abbott, do you have a comment?
Mr. Abbott: I was hoping to make some brief comments about the report and the issues. I have had the privilege of being the vice-chair of the standing committee and the critic for the official opposition of Canadian Heritage for perhaps too long.
In that period of time, I have become aware of the concerns about the Part II fees. It has been interesting to watch the broadcast industry evolve, where the government made some provisions for consolidation within the industry and all sorts of things have occurred. The industry is back to somewhat of an equilibrium and perhaps even in a small profit position as an industry overall.
However, this issue of the Part II fees has been an ongoing concern. There has been a very strong movement, of which we are all aware, on the part of the CAB to get the situation corrected.
The minister two years ago at the CAB convention here in Ottawa went out of her way to make what I took to be a commitment that these Part II fees would be rolled back. I hope it is not inappropriate because it is prior to the report being tabled, but there is documentation to show that there has been an overpayment — in other words, a form of taxation — in excess of $80 million.
I want to report to the committee that, while the issue of whether the fees should be charged has been settled, they should not be charged if they are a form of taxation. That is my interpretation. On the other side of the coin, I can report that there has been a great deal of goodwill on the part of the broadcast industry to talk about taking either all or certainly a significant portion of the fees that would no longer be payable and direct them to a kind of production fund. We are aware of the Canadian Television Fund, the CTF, which the government chose to roll back by $25 million this year. We are also aware that the budget of the CBC which was to receive a boost of $50 million in the middle of its production year received only $40 million. There is much turmoil at the hands of the current Liberal government in respect of the financing available to production.
My party happens to have a different perspective from some people in the broadcast industry, and certainly different from many of the members, if not most, of the Standing Committee on Canadian Heritage. Nonetheless, we do recognize, that should there be support for the creation of Canadian content the decisions must be long term, or sustainable, and that this would give the broadcasters and creators of broadcast an opportunity to make some sound financial decisions.
In that context, I do not think I am out of place in reporting that the CAB and others in the industry have indicated that they would be prepared to see all, or a substantial portion, of these fees used in the production of Canadian content.
Although it is a totally separate issue of black and white, right and wrong, I should hope that the minister or someone in the government would begin, if we no longer collect the $80 million, a separate, related process such that at the same time there would be discussion about how this will work.
It is my objective, as the official opposition critic for Canadian Heritage, to see this brought to a conclusion as quickly as possible and to create as much public awareness of this as possible, so that we can put pressure on the minister and on the ministry to resolve this issue. To that extent, I am pleased with the report, with the work of the committee, with Mr. Cullen's bill that is currently before the Senate, and that we do seem to be going in the right direction.
However, the right direction within government is often akin to watching molasses trying to make it out of a can in January; it is exceptionally slow, although we may feel encouraged now and again when we see ``a little bit more amber.'' Nonetheless, it keeps crawling along. Decisions have to be made within the broadcast industry in respect of their budget for next fall. This will probably occur in the middle of the federal election.
I do not know how this could happen before November 7 or how this could happen on the watch of the current Prime Minister. I cannot imagine that the Prime Minister elect will have any sense of urgency about this. We should do whatever we can, as parliamentarians, to drive this to a conclusion as quickly as possible.
My colleague just mentioned that if the other candidate for the Liberals became the Prime Minister, this issue would probably be solved.
The Joint Chairman (Senator Hervieux-Payette): I agree with you totally. As an aside, we just heard that Hydro- Québec was asked to collect another $600 million through a rate hike. We are not the only culprits and perhaps other legislative bodies would have to correct this as well. We could begin a movement to ensure that things are done correctly. When a fee is raised for a specific purpose to run a certain organization, we have the same problem on the question of the organization that deals with the clinical trial. They are charging probably two to three times what it costs to run the organization. The CRTC was targeted in this, but I do not think they have much to do with it. Officials from Treasury Board appeared before the committee; they are the ones that truly manage the whole question. We could send the signal that parliamentarians would feel more comfortable in respect of accounting for tax revenues. A tax is a tax and should fall under the Income Tax Act.
The next item on the agenda is the progress on this. Mr. Rousseau, please proceed.
SOR/89-330 — LAUZON DRY DOCKS REGULATIONS, 1989
SOR/89-331 — SELKIRK MARINE RAILWAY DRY DOCK REGULATIONS 1989
SOR/88-332 — ESQUIMALT GRAVING DOCK REGULATIONS, 1989
SOR/95-462 — ESQUIMALT GRAVING DOCK REGULATIONS, 1989, AMENDMENT
Mr. Jacques Rousseau (Counsel): Madam Joint Chairman, in its letter, the department said it was pleased to inform us that in the very near future, it would be asking the Governor in Council to consider a number of changes to the regulations with a view to rectifying the problems identified.
In turn, I am pleased to inform the committee that this has in fact happened. While preparing for this meeting, committee counsel observed that the action promised had recently been taken, as the committee will note for itself when it examines at an upcoming meeting the amending regulations.
The Joint Chairman (Senator Hervieux-Payette): We will go to the next item on the agenda.
SOR/92-620 — CORRECTIONS AND CONDITIONAL RELEASE REGULATIONS
SOR/96-108 — CORRECTIONS AND CONDITIONAL RELEASE REGULATIONS, AMENDMENT
Mr. Bernier: The initial reply from the department included a number of undertakings to amend the regulations and, in some cases, the Corrections and Conditional Release Act. Some outstanding points as well as requests for clarification were then conveyed to the department with a request for a reply by the end of October. The department replied in September that a meeting would take place with representatives of Correctional Services Canada and the National Parole Board to discuss the outstanding issues. Ms. Jauvin also explains that providing a detailed and comprehensive response is complicated by the nature of the portfolio of the Solicitor General and by the fact thatBill C-40 may still be subject to amendments that will in turn require that previously given replies be revisited or reassessed. The bill, as I understand, is still at first reading and has not moved.
In any event, Ms. Jauvin assures the committee that efforts will be made to achieve a consensus on a detailed and comprehensive response in the near future.
Mr. White: Unfortunately, this file will drag on. There is no chance that Bill C-40 will pass three readings before the anticipated prorogation of the House.
Perhaps we should wait to see what happens in the next couple of weeks but assuming the House does prorogue, there would be hope for the bill. We could write again now and ask if and they would be willing to do something about the issue immediately, instead of waiting for a future bill to be sponsored in the House.
Mr. Bernier: Mr. White, I did not read into their reply that they would wait for Bill C-40 to move. That was more by way of an explanation, I believe. That is the way in which I understood their reply.
Mr. White: My impression was that they were waiting to see what happened before they reached a conclusion on any action to be taken.
Mr. Bernier: The last sentence is that ``we...a consensus on a detailed and comprehensive response in the near future.'' Clearly, they cannot anticipate that the bill will be dealt with in the near future.
Although Ms. Jauvin was explaining that not knowing what amendments might be made to Bill C-40 was causing them difficulty in preparing the response, they would nevertheless work on providing a response. That is my reading.
Mr. White: What would be the harm, then, if the House does prorogue in a couple of weeks, in writing them to ask that, in light of the changed circumstances, Bill C-40 has disappeared. We could ask if it makes her job easier to respond.
The Joint Chairman (Senator Hervieux-Payette): It is reasonable. We have to deal with the last sentence: ``Notwithstanding the above, we will seek to reach a consensus on a detailed and comprehensive response in the near future.''
Mr. White: It indicates to them that we are watching the file. The disappearance of Bill C-40 is not a reason to delay things.
The Joint Chairman (Senator Hervieux-Payette): Do you agree?
Mr. Wappel: I agree. I would suggest adding this: ``If Bill C-40 proceeds, please indicate which amendments to the bill your department is prepared to support.'' Presumably, if there were amendments to the bill dealing with the issues we have dealt with, it would be nice if we could hear that the government is agreeing to certain amendments. Am I making myself clear?
The Joint Chairman (Senator Hervieux-Payette): No.
Mr. Wappel: The implication that I read into the letter was that the government would be willing to consider amendments to Bill C-40 that would deal with the objections that the committee has had. That is why they are bringing up that it is before the House and that it might be subject to amendment. A bill is always subject to amendment, but if the department is not in favour of those amendments, the amendments are not likely to pass the committee.
I am reading between the lines that they might be willing to consider amendments to Bill C-40. I want to put their feet to the fire and ask them this: If the bill comes and there are amendments, which ones will you as a department be prepared to support? If the House prorogues, will you deal with this expeditiously?
Mr. Bernier: In the previous correspondence, the department indicated that some of the issues that we raised would be resolved by the bill that is now before committee.
Ms. Jauvin is saying that those replies were given and the department told us correctly that this lack of authority will be covered when Bill C-40 is passed. She is saying that this bill could be amended. We do not know.
If it is amended, it could be that our previous reply, in which we said that we were now putting in a provision to give authority, would no longer stand.
Mr. Wappel: I see. Are you saying that Bill C-40 as it is currently drafted would meet our objections?
Mr. Bernier: It would meet a number of the objections that were made initially.
Mr. Wappel: What about the others?
Mr. Bernier: Some were outstanding, which we pursued. With respect to the others, amendments to the regulations were promised, as opposed to dealing with them through the bill.
Mr. Wappel: I see. Thank you.
The Joint Chairman (Senator Hervieux-Payette): We will proceed with the understanding that we send a letter relating to Bill C-40.
Hon. Members: Agreed.
SOR/96-470 — EMPLOYMENT EQUITY REGULATIONS
Mr. Bernier: In this case, we asked for confirmation that the proposed amendments to the regulations will include the amendment to section 19(2). The issue involved the removal of unnecessary wording, so it is really not an earth- shattering point.
However, neither the reply of June 17, 2002, nor that of April 23, 2003, answers the question directly. The latter of these two replies refers generally to the development of ``a comprehensive strategy that will deal with modernizing the regulations'' as well as to the establishment of a ``critical path.'' They could not provide specific dates regarding regulatory amendments.
In between the strategy and the critical path — and I am sure consultants will pay some of their bills with that — it apparently will be a while before time is found to deal with something as concrete as amending the regulations.
Be that as it may, we will write again to request a reply to the specific question that was asked.
The Joint Chairman (Senator Hervieux-Payette): We can ask that that proceed. If we have the precise date, we will deal with it.
Mr. Bernier: We are finding a critical path to deal with precise dates.
The Joint Chairman (Senator Hervieux-Payette): I am impressed, especially with respect to this matter.
Mr. Lee: I wanted to put on the record that I found the wording quite bureaucratic and excessively polite snow.
The Joint Chairman (Senator Hervieux-Payette): I thought it was exotic.
Mr. Lee: Exotic is closer. She is doing a good job of dancing. Counsel and the chair have the right focus. Thank you.
The Joint Chairman (Senator Hervieux-Payette): We want a precise rather than an exotic answer.
SOR/91-499 — CANADIAN INTERNATIONAL TRADE TRIBUNAL RULES
SOR/2000-139 — RULES AMENDING THE CANADIAN INTERNATIONAL TRADE TRIBUNAL RULES
(For text of document, see Appendix p. 11A:1 )
Mr. Bernier: The Canadian International Trade Tribunal rules have replaced the import tribunal rules and also took action on quite a few concerns raised in relation to those earlier rules, most notably by putting in place procedures regarding both the form and service of subpoenas and other documents.
The new rules have given rise to a number of concerns and inquiries, which are set out in Mr. Rousseau's letter of January 10. In regard to the issues raised initems 8 to 11, 13, 14 and 19 of Mr. Rousseau's letter, amendments have been promised by the department. Respecting the points raised in items 2, 3, 5, 6, 12 and 16, counsel would suggest that the replies can be treated satisfactory.
On point 1, a commitment should be obtained that the necessary drafting correction will be made when the regulations are next amended.
On point 4, section 25.2 provides for the sending of a notice of hearing to known parties. Mr. Rousseau queried the apparent distinction being made between known parties and unknown parties. The rely was that the unknown parties are persons who may decide to intervene — for example, as an intervenor on the appeal.
The explanation really makes little sense to me. Persons are either parties to the proceeding or they are not. Section 25.2 should simply refer to the sending of a written notice to parties, as it would clearly be impossible in any event to send a notice to unknown parties. We think this point should be pursued.
On point 7, I believe Mr. Rousseau's point is simply not being understood by the department. It is suggested that we write again. On point 15, which concerns section 73.1(1), the reply is not satisfactory. The word ``notamment'' in legislation is used as the equivalent of ``includes.'' The English version exhaustively states the information to be set out in a notice of inquiry in this case. The French version, as it now stands, provides that the information set out in the notice shall include the stated information. The two provisions are discrepant, and this issue should be pursued by the department.
Point number 17 concerns section 101. Mr. Rousseau had pointed out that this section largely duplicates the requirements already expressed in section 30.13(2) of the act. Those matters having already been dealt with directly by Parliament, it is obviously beyond the authority of the regulation maker, in this case the Canadian International Trade Tribunal, to make regulations on the same subject matter and to the same effect.
The reply to that comment was to say that to amend the rule at this point would cause confusion for stakeholders.
I regret to say that that is no reply at all. By that reasoning, you would never amend any regulation, as confusion would ensue for the citizen. This is a point that we think should be pursued.
Finally, on point No. 18, relating to section 113, here, again, we have a rule that simply duplicates requirements that are already in the statute, except for one aspect of the rule. To the extent that there is duplication, the duplication should be removed.
The Joint Chairman (Senator Hervieux-Payette): Comments?
Mr. Lee: I agree with the approach counsel has proposed on each of those issues.
Look at the date on the last letter that was received. It was March 7, 2001, two and a half years ago. I am obliquely raising the often-raised concern of members that we are spending an awful lot of calendar years on matters.
I realize that these regulations are not of critical importance. The problems that we have with them are not of huge practical significance. Thank you.
The Joint Chairman (Senator Hervieux-Payette): Is it agreed?
Hon. Members: Agreed.
SOR/200-205 — CLASS II NUCLEAR FACILITIES AND PRESCRIBED EQUIPMENT REGULATIONS
SOR/200-204 — CLASS I NUCLEAR FACILITIES REGULATIONS
(For text of documents, see Appendix, p. 11B:1 )
The Joint Chairman (Senator Hervieux-Payette): Agreed. Next we have SOR/2000-205 and SOR/2000-204.
Mr. Rousseau: Action has been promised on the points mentioned in the letter, with the exception of point number 3 pertaining to SOR/2000-205. Counsel requested a clarification and the commission's reply was deemed satisfactory. The commission's letter dates back to May and it would be a good idea for counsel to check on the progress made on the action promised. Counsel recommends writing again to the department to check on the status of this file.
SOR/2002-170 — REGULATIONS AMENDING CERTAIN REGULATIONS MADE UNDER THE CANADA OIL AND GAS OPERATIONS ACT
SOR/96-115 — CANADA OIL AND GAS PRODUCTION AND CONSERVATIONS REGULATIONS, AMENDMENT
(For text of documents, see Appendix, p. 11C:1 )
Mr. Rousseau: As noted in the comments to the committee, 54 amendments have been made further to the committee's comments with respect to SOR/96-115.
With respect to SOR/2002-170, amendments have been promised in the case of all of the points raised, with the exception of point 6 in the letter of October 21, 2002.
Regarding this last point, which concerns the drafting of the regulations, the department's response is unsatisfactory. Reference is made in some of the regulations' provisions to ``Chief Conservation Officer,'' whereas we made it clear in the definitions at the beginning of the regulations that the reference should be to ``the Chief.'' The department maintains that these regulatory provisions were drafted in such a way as to convey information clearly. As this appears to be the case, it may be preferable to delete this definition and use the expression ``Chief Conservation Officer'' throughout the regulations everywhere such use is warranted. Otherwise, as the department itself acknowledges, the current situation is not legally justifiable. Counsel therefore recommends that another letter be sent to the department explaining why the reply to point 6 is unsatisfactory.
PARKS CANADA MASTER LIST OF FEES — 2003-2004
PARKS CANADA MASTER LIST OF FEES — 2002-2003
PARKS CANADA MASTER LIST OF FEES — 2000-2001
(For text of documents, see Appendix, p. 11D:1)
Mr. Bernier: With the agreement of the committee, council will follow the course of action outlined in the covering note.
I do want to draw attention to the more substantive issue that was raised in item 17 of Mr. Bernhardt's letter of July 15, 2002. This concerns the imposition of a levy based on a percentage of the gross value of alcohol purchased for sale by business under the guise of a licence fee. As Mr. Bernhardt pointed out, that levy is not a fee that is authorized by the statute but a business tax. In their letter of February 3, 2003, the department, after discussions with Treasury Board and the Department of Justice, agreed that this pricing approach, in their words, was ``not appropriate'' — I translated that as ``not legal'' — and undertook to develop a fee for which the amount can be determined at the time the licence is issued, which is properly a fee for the issue of a licence and not a tax.
However, the 2003-04 master list of fees continues to provide for this illegal tax. That raises a concern. The department was aware that this fee was, in the words of Justice, not appropriate, yet it is repeated in an instrument that is issued later. One assumes that this inappropriate fee has been collected even after it was recognized not to be appropriate.
I would suggest on that point that the chair should write to the minister and request her assurance that until the relevant provision is amended that fee no longer be collected. As well, if it is the inclination of members, we should request that anyone who paid the fee after there was an acknowledgement by government that it was not appropriate be reimbursed, or at least receive the difference between any new fee and what they were made to pay.
The Joint Chairman (Senator Hervieux-Payette): There are a lot of fees in that regulation, but this one is not a fee.
Mr. Bernier: It is not a fee. It is 2 per cent of alcohol purchases of the previous year. That is a business tax.
The Joint Chairman (Senator Hervieux-Payette): Is it agreed? We have fees for every park. These fees are normal and standard practice except that year after year they continue to collect that under the name of a fee, and it is not a fee.
Mr. Lee: We are searching for wording here that signals the consensus of the committee. In this case, we are close to zero tolerance on a fee that has become a tax. It is an illegal tax.
However, I urge counsel to select wording. I am offering words, but there may be other wording that we can use. We need to signal that the situation is not sustainable and that it must be corrected forthwith.
This is the kind of situation where, if we do not have a reasonable response fairly quickly, we would move towards a more effective measure from our end, avoiding the word ``disallowance.'' The tougher the language the better in this case.
The Joint Chairman (Senator Hervieux-Payette): We will check with Mr. Wappel if the language is tough enough.
Mr. Bernier: There is agreement for a letter to the minister?
Mr. White: With the provision that we make it clear that we could disallow it.
Mr. Bernier: When?
The Joint Chairman (Senator Hervieux-Payette): There will still be a Parliament next year, and we will be here. Senator Moore and I will be here.
SOR/96-255 — SPECIAL IMPORT MEASURES REGULATIONS, AMENDMENT
(For text of documents, see Appendix, p. 11E:1 )
Mr. Rousseau: Two points were raised in the letter concerning this instrument. The first has to do with an error in the French version, which was corrected with the adoption of SOR/2002-67. The latter has already been examined by the committee.
The second point concerns the interpretation of section 58 of the regulations. The department has responded in a manner that can be deemed satisfactory, even though it was felt an amendment might have been useful. Committee counsel expressed concern about this provision being given an overly broad interpretation. The department explained how the provision should in fact be interpreted and why the meaning is far narrower than counsel would believe. If the committee has no objections, the matter can be considered closed.
SOR/98-52 — PROOF OF ORIGIN OF IMPORTED GOODS
(For text of documents, see Appendix, p. 11F:1 )
SOR/99-128 — MUTUAL COMPANY (LIFE INSURANCE) CONVERSION REGULATIONS
(For text of documents, see Appendix, p. 11G:1 )
SOR/99-475 — TECHNICAL AMENDMENTS ORDER (CUSTOMS TARIFF) 1999-3
(For text of documents, see Appendix, p. 11H:1 )
SOR/2002-108 — ORDER AMENDING THE SCHEDULE TO THE CUSTOMS TARIFF, 2002-1
SOR/99-309 — TECHNICAL AMENDMENTS ORDER (CUSTOMS TARIFF), 1999-02
(For text of documents, see Appendix, p. 11:1 )
SOR/2000-248 — REGULATIONS AMENDING THE INCOME TAX REGULATIONS
(For text of documents, see Appendix, p. 11J:1 )
SOR/2003-85 — REGULATIONS AMENDING THE INDIAN ESTATES REGULATIONS (MISCELLANEOUS PROGRAM)
(For text of documents, see Appendix, p. 11K:1 )
SOR/2003-129 — REGULATIONS AMENDING THE CANADIAN AVIATION REGULATIONS (PARTS I AND IV)
(For text of documents, see Appendix, p. 11L:1)
Mr. Bernier: If there are no objections, I will review all of the items under the heading ``Action Promised'' and ``Action Taken.''
Under ``Action Promised,'' five regulatory amendments have been promised. In respect of ``Action Taken,'' a total of four amendments have been made as a result of the work of the joint committee. Section 14 of the Indian Estates Regulations was reported to the Houses as being ultra vires the act and has been formally revoked.
Mr. White: Hear, hear!
Mr. Bernier: There is a list of 42 statutory instruments submitted without comment.
The Joint Chairman (Senator Hervieux-Payette): Thank you.
The committee adjourned