Budget Implementation Bill, 2017, No. 1—Second ReadingPublished on 14 June 2017 Hansard and Statements by Senator Joseph Day
Hon. Joseph A. Day (Leader of the Senate Liberals):
Honourable colleagues, I’d like to join in the debate at second reading of Bill C-44. First, let me congratulate my colleague, the previous speaker, Senator Marwah, for a fine speech on one aspect of this particular bill. I’d also like to join with Senator Smith in congratulating Senator Mockler, as the new chair of the Finance Committee, for the work that they have done and the work that I know will be done in Finance in relation to this and other finance bills as we wind down this particular period of work in the Senate.
Finally, as a preliminary comment, let me thank the sponsor of the bill, Senator Woo. I have been following his work during the pre-study and watching him learn all about sponsoring bills.
You picked a formidable task with respect to this one, Senator Woo, but I congratulate you on the work that you have done and thank you for the work that you will be doing to help us perform the good work that the Senate is known for.
Honourable senators, we are dealing with Bill C-44, the Budget Implementation Bill, 2017, No. 1, and as I pointed out in the past when I spoke, this is a huge piece of legislation. Look at the title: An Act to implement certain provisions of the budget tabled in Parliament on March 22, 2017 and other measures. So that’s an admission by the government that there are other measures in here that are not part of implementing certain provisions of the budget. The other point to keep in mind is that we in the Senate do not vote on the budget. We vote on the implementation of certain portions of the budget and other matters, and that usually appears in two budget implementation bills each year.
This is the first one and we did a pre-study of this particular bill. There are five different committees that worked on this pre-study. I encourage you to take a look at the report of each of those committees. This is a new process that has developed over the past five, six or ten years where we divide the bill up when it comes here and we do a pre-study.
I think that pre-studies generally fly in the face of the Senate’s role as a chamber of sober second thought. And too often, a pre-study is used by the government of the day to justify pressure on us to rush through our real job of examining the bill when it does arrive here. Well, the bill has arrived here now. We do have some good work that was done by five different committees. Finance is now ready to consider those items in the bill and to consider the overall bill from the point of view of the Senate and the Senate’s role. But we must not let a pre-study lead us towards being just another House of Commons. That is something I’ve always tried to guard against. Now we are looking at the actual legislation. It is a little bit different.
With budget implementation bills, I have been more inclined to agree to pre-studies in order to allow honourable senators the opportunity to thoroughly understand the rather complex subject matter, as was noted yesterday in debate by Senator Lankin. And I agree with her that the bill just arrived here yesterday, but we feel that by virtue of having done the pre-study, we have knowledge and a comfort that we wouldn’t otherwise have.
On May 8, which is when I spoke previously on the pre-study, I also expressed my disappointment that this government has evidently abandoned its election promise to end the practice of omnibus bills. There are four stand-alone bills inside this particular piece of legislation. Any or all of these could easily have been separate pieces of legislation by lifting them out and putting a title on them, but here they are.
Colleagues, there is no question that a 300-page bill to be dealt with at one time is an omnibus bill, and this is a finance omnibus bill that has significant ramifications. Omnibus bills generally are not objectionable if they are within the umbrella of one area of subject matter, but you will see from looking at the various items here that the subject matter varies significantly.
The analogy that occurred to me as I read the bill is that Bill C-44 is like one of those Ukrainian dolls. You open up the first doll and there is another doll inside it, and you open up the second doll and there is another doll, and you keep going and peeling off the onion skins. But while that may be fun in a doll, it is absolutely no way to present legislation for proper study.
Let me quote something said by our government leader here in the Senate recently, albeit in a different context. In replying to a question in this chamber from Senator Maltais about the softwood lumber negotiations and how they are going, he told this chamber that “we should have a good deal, not a fast deal.” That was on June 6. Wise words, and they apply with equal force to how we should approach this legislation. We should make sure it’s a good deal, and not just a fast deal.
Let me begin with the positive. Colleagues will recall that I and others have expressed concerns about a number of the provisions in Bill C-44 as originally tabled relating to the Parliamentary Budget Officer. I’m happy to see that the issues raised here about the Parliamentary Budget Officer appear to have been addressed by the government. This is a positive outcome of the pre-study, which is the Senate performing a non-traditional role but with a good outcome.
However, those are the only amendments that were made to this bill in the other place. Colleagues, I am afraid many problems still remain with respect to Bill C-44, some of which do not seem even to have been raised in the debate in the other place.
Again, this is understandable given the length and especially breadth of this particular bill. There has been significant concern expressed about Division 18 of Part 4 of the bill, which would enact the proposed new law to be called the “Canada Infrastructure Bank Act.” You’ve heard a number of comments in relation to that.
We have a notice of motion from Senator Pratte, which is on the order paper, to split Bill C-44 so that proper consideration can be given to that particular initiative. We also heard from Senator Tkachuk and Senator Massicotte regarding their concerns with the proposed infrastructure bank.
Accordingly, I do not propose, with the time I have available to me, to focus now on that division of the bill, except to say that our Banking, Trade and Commerce Committee’s report on its pre-study of this division laid out a number of serious issues that need to be addressed. I dare say there are more in that particular division, as there are in other parts of this bill, that require serious consideration.
The same Banking Committee report also raised concerns about another new law that would be enacted from this omnibus bill, namely, the “Invest in Canada Act.” There are a number of provisions in that proposed statute that I find surprising and worrying. I believe they could potentially cause problems later on. That’s what we are always looking for when we review this legislation — the unintended consequences and potential problems down the line.
But in my remarks today at second reading, I want to focus on only three aspects of this bill. We are at the principle stage, at second reading — what are the principles of the bill? Let me talk about three different areas that maybe haven’t been given the airing that they should have received before they go to committee. I’m hoping the National Finance Committee will look into those as they study this bill.
There is a common thread joining these various aspects and, honourable senators, it’s not a pretty one: It is the quiet — one might say stealthy — removal of parliamentary oversight of government that keeps recurring in different ways in this legislation. That’s what I want to focus on for the balance of my remarks, because I believe we’ve got to be vigilant of that at all times to protect the role of the Senate and the role of parliamentarians. If they in the other place are not prepared to stand up for that, then we owe it to them to bring these points to their attention.
The first is found in Part 3 of the bill: the proposed new excise taxes being imposed on beer, wine and spirits. Bill C-44 proposes to increase the excise duty rates on these products by 2 per cent. But while the industry and others aren’t happy with that increase, that is not what most of them are upset about, nor is that the truly serious problem with this proposal.
The real issue of concern, colleagues, is the quiet addition in the bill of a so-called “escalator clause.” Under this clause, the excise tax rates will be raised each year automatically — every year — tied to the Consumer Price Index, beginning on April 1, 2018: April Fool’s Day. It is appropriate that this would take place on April Fool’s Day, because if we agree to this, we will have been hoodwinked into agreeing to give up one of our fundamental obligations as parliamentarians; namely, our duty to assess and review taxes before they are imposed. Under the new escalator clause, there would no longer be any need for the government of the day to come before Parliament to justify each new tax increase. Taxes would increase automatically each year.
When our committee asked the government officials to provide the rationale for the new escalator clause, the written response was that alcohol excise duty rates have not been adjusted for several decades and their “effectiveness has eroded over time.”
I would suspect the “effectiveness” of the taxes is how much is raised. Those are the words of the government official, not mine.
Colleagues, that is certainly a rationale for the government coming forward in a budget bill and asking to increase the applicable excise tax rate, but I fail to see how it is a rationale for allowing future rate hikes without parliamentary scrutiny or approval.
When the officials were asked for precedents for such an extraordinary provision, they pointed to the tax brackets for personal income taxes, which rise automatically with inflation. But, colleagues, that indexation works to taxpayers’ advantage. If a tax bracket goes up because of inflation, we pay less tax. That is nothing like the automatic excise tax increase.
That is a cautionary tale, colleagues. If we agree to this new scheme, I’m concerned that it will in turn be used as a precedent for other escalator clauses in the future. Where will this end?
Witnesses before our Standing Senate Committee on National Finance described the serious impact that this proposal will have on their industry. It will seriously damage their ability to create jobs and spur economic growth. No one in the industry was consulted about the proposal, and they were shocked to hear government officials testify that no economic modelling or forecasting had been done to evaluate these proposals, because in the words of the government officials, “the effect was considered too small to have an impact.”
We heard from the beer industry, in particular, talking about sales having gone down, but there has been an increase in the Consumer Price Index. So if this bill is passed, the price of beer will be going up — the price of their product goes up — even though their sales are on the decline, because there is no opportunity for parliamentarians to look at this and say, “This would be inappropriate.”
Jan Westcott, the President and CEO of Spirits Canada, told our committee:
This omission [of economic modelling or forecasting] demonstrates, in our view, either incompetence or negligence and provides ample reason on its own to reject the automatic escalator measure.
That’s an industry representative.
No consultation. No economic modelling or forecasting. Whatever happened to the promise of evidence-based decision making?
The fact is that an escalator clause represents an abdication of our responsibility to insist that the government of the day, of whatever political stripe, comes before Parliament to justify any and every tax increase it wishes to impose on Canadians.
And that is not the only escalator clause buried deep within this bill. Let me refer you to another part of the bill that concerns me. At the very end of Bill C-44, beginning at page 277 is an innocuous-sounding proposed new law. Yes, it is another one of the standalone laws that would be enacted by one vote for this omnibus bill, and it’s called the proposed Modernization of Service Fees Act.
Now, you may ask, who could take issue with a law that is going to modernize service fees? Well, colleagues, my fear is that instead of modernizing service fees, this proposed law would actually represent a giant step backwards. There is a history here that several of us in this chamber will be aware of. Let me explain.
Roy Cullen was a Liberal member of the other place from 1996 to 2008. In 2002, he introduced a private member’s bill called the User Fees Act, and on March 31, 2004 it finally became law. The intent of the bill, in Mr. Cullen’s words, was:
. . . to bring greater transparency and accountability and parliamentary oversight to federal government departments and agencies when they attempt to recover costs through user fees.
His bill contained provisions carefully designed to ensure that user fees would not be imposed or expanded without meaningful consultation with affected stakeholders and client groups. And it provided clear provisions to ensure true, effective parliamentary oversight of any proposed user fees.
When the bill passed the other place and came here for consideration, I was involved in its study as a member of the Finance Committee, and I well remember the challenges it faced. Senator Ringuette was the sponsor of the bill in this chamber, and I am sure she remembers the challenges we went through. When our former colleague Senator Lowell Murray spoke in this chamber on March 11, 2004, in relation to this legislation, he said:
. . . although senior officials sometimes talk about user fees as if they were an executive prerogative, the imposition of these fees is an authority delegated by Parliament. They bring in some $4 billion annually, and they are of sufficient scope and impact that Mr. Cullen’s heroic effort to bring them within the ambit of parliamentary oversight and control is understandable and commendable.
The final version of Roy Cullen’s bill on user fees was not what many of us would have wanted. The original bill gave Parliament a veto power over user fees. This was changed at the urging of the government to a parliamentary resolution approving, rejecting or amending the proposed fee increase. Unlike the original veto, this resolution would be of no legal effect; as the Treasury Board officials stated at the time, a parliamentary resolution is just an expression of parliament’s opinion. The government is not obliged to act upon it. Senator Murray spoke at the time of his temptation to stand tough on the veto for that reason, but then decided that it was better to have the watered-down oversight than to lose the bill altogether. That’s often a compromise we make in this place, and that is what happened in that particular piece of legislation.
So we passed the bill. It was called the User Fees Act, and it became law. Until now. Buried at page 287, literally the last page of this omnibus bill before the schedules, is a short clause, 456, which reads as follows:
The User Fees Act, chapter 6 of the Statutes of Canada, 2004, is repealed.
And meanwhile the law that would replace it, while touted as “shifting the burden off middle-class taxpayers,” in fact appears primarily aimed at weakening the transparency and consultations that had been carefully crafted in that bill of 2004.
Our National Finance Committee received a submission from a former senior federal government official Andrew Griffin. He said that the proposed new Service Fees Act, replacing the User Fees Act of 2004, now:
. . . allows departments and agencies to increase fees with minimal transparency and consultation.
He wrote that:
. . . while the User Fees Act consultation process and justification requirements may have been too onerous, the Service Fees Act goes too far by removing all meaningful transparency and consultations.
I will not go into detail here, colleagues, but the 2004 law set out detailed provisions designed to provide stakeholders with information about proposed new user fees, user fee increases or extensions. Government officials had to clearly explain how user fees were being calculated; they had to identify the cost and revenue elements of the user fee and also establish standards that would be comparable to those established in other countries that have appropriate comparisons so that we could look at those other countries to determine whether this a reasonable user fee.
That’s all gone, honourable senators.
And the already watered-down parliamentary resolution concerning user fees, the parliamentary resolution that replaced the veto? It is totally gone, now.
Colleagues, I understand that the government may have felt constrained by the requirements of the 2004 Act. Michael Welsh, another former senior federal government official, was quoted in the media recently, saying:
Treasury Board was against the User Fees Act when it was proposed. . .
It’s the long memory of the civil servant. Now the government appears to have taken advantage of this omnibus bill to repeal a law that officials never wanted in the first place. Perhaps they hoped we wouldn’t notice.
And colleagues, that is not all. The new proposed Service Fees Act would — you guessed it — include an escalator clause on user fees, each year.
The Shipping Federation of Canada recently wrote to our National Finance Committee about these provisions. They said this new escalator clause could have a
. . . potentially detrimental impact on the competitive position of users in the medium to long term.
They also pointed out the particular problems for user groups, such as their industry, that are subject to fees from multiple government departments. Now, all of those are going to have escalator clauses. You can imagine the difficulty this is going to cause. These groups will be faced with, in their words:
. . . the compounding effect of multiple fees that increase on an annual basis over a significant period of time.
Before I leave this section on user fees, I want to remind everyone that the government is asking us to authorize the establishment of the Canada infrastructure bank. I mentioned that earlier, and we’ve had other speeches on that. That would be tasked with the funding of large infrastructure projects, with costs to be recouped in part through — yes, you guessed it — user fees. I don’t know whether any of those user fees would have fallen within the 2004 Act, but, if so, this is surely not the time to reduce transparency and consultations about user fees.
If we want Canadians to support this new approach to infrastructure projects, then surely we need to be more open, not less.
Colleagues, I am very troubled to see that the transparency, consultations and parliamentary oversight that were hard-won 13 years ago in a private member’s bill would now be quietly and quickly set aside, as if they had never existed.
This leads me directly to the last element of the bill that I want to address today. But I have saved what I believe is the most serious and, frankly, the most disturbing issue, for the last.
One of the foundational powers of Parliament — and it’s a fundamental power of Parliament, colleagues — is the power of the purse, the absolute requirement that there is no taxation without representation; that is, without Parliament’s consent.
This principle was enshrined in the Magna Carta, signed by King John at Runnymede on June 15, 1215. And since at least the Glorious Revolution of 1688 of which Senator Cools is very familiar, it has been established that this consent by Parliament also applies to all borrowing of money by the executive.
In Canada, this meant that the government would come to Parliament when it wanted to borrow money and ask for that authority. For a long time, this was done as part of the supply and estimates process. That made sense at the time, as the purpose of the borrowing was debated at the same time as the authority was being sought to spend the money.
However, parliamentarians felt they needed more time to debate the borrowing itself, so in 1975 the borrowing authority was broken out of the supply process and set out in its own dedicated statute.
In fact, in 1975 the Speaker in the other place ordered a borrowing clause struck from a supply bill related to Supplementary Estimates on the grounds that, under the House of Commons rules, then established, its inclusion in a supply bill virtually precluded discussion of the borrowing provisions.
After that, every year the government would have to come to Parliament and request, in a borrowing authority bill, the authority to borrow a stated amount of money for that year.
In 2001, this process was enshrined in the Financial Administration Act, which stated:
43 (1) Notwithstanding any statement in any other Act of Parliament to the effect that this Act or any portion or provision of it does not apply, no money shall be borrowed by or on behalf of Her Majesty in right of Canada except as provided by or under
(a) this Act;
(b) Any other Act of Parliament that expressly authorizes the borrowing of money; or . . . .
Or under other legislation.
In other words, colleagues, if the government wanted to borrow money, it needed to pass a bill in Parliament, and Parliament had to debate and consider it.
Now, of course, there is no need to borrow money unless there is a deficit. If you are in surplus, then you have money to spend.
Colleagues will recall that the government’s finances were in surplus beginning in and around 1997, but this changed in 2007-08. And in 2007, buried in an omnibus budget bill was an amendment to the Financial Administration Act that added a short clause. The heading was “Power to borrow,” and the clause read as follows:
43.1 The Governor in Council may authorize the Minister to borrow money on behalf of Her Majesty in right of Canada.
And that’s the end of it.
The Governor in Council — cabinet — may authorize the minister who wants money to spend, to borrow money on behalf of Her Majesty in Right of Canada. No coming to Parliament. It just wiped out all the tradition since the Battle of Runnymede.
This was revolutionary, colleagues. It was like a blank cheque. Cabinet would authorize government borrowing with no need for Parliament to consent. Parliamentarians should have been in an uproar, but no one even noticed this short clause because it had been buried in a large omnibus budget bill.
If that weren’t enough, that omnibus bill included highly controversial provisions concerning the Atlantic Accord and the equalization program that took a lot of our attention.
The attention of parliamentarians in both the House of Commons and the Senate were on those sections and no one noticed this little two-line clause. But by failing to notice this clause, and letting it pass into law, Parliament gave up its responsibility of oversight over government borrowing. This clause allowed the government to simply decide, in Cabinet, whether and how much money to borrow, and there was no longer any need to bring that decision to Parliament for approval.
That happened in June 2007. As colleagues know, in fact, as are witnessing now, there can be a lot of pressure to get bills passed quickly and expeditiously in June. It wasn’t until after the passage of this omnibus budget bill that several of us noticed this provision and started asking questions.
There were four of us who did this: Senator Tommy Banks, Senator Wilfred Moore, Senator Lowell Murray and myself. We quickly realized what had happened and the enormous implications of this provision.
Senator Murray introduced a private member’s bill to repeal section 43.1 and restore Parliament’s oversight over government borrowing. He reintroduced his bill several times, and then upon his retirement from the Senate, Senator Moore took up the cause. These bills all died on the Order Paper. We never got that rectified.
Happily, the Liberal Party heard our voices, and their platform for the last election included the following promise: We will “. . . require the government to receive Parliament’s approval on borrowing plans.”
As you can imagine, we were very pleased to see that. To be safe, Senator Moore re-tabled his private member’s bill to remove 43.1; that was Bill S-204. And then we saw last year’s Budget Implementation Act, 2016, No. 1, which included the critical amendment to the Financial Administration Act by providing, in clause 182, the following welcome words:
Section 43.1 of the Financial Administration Act is repealed.
How quickly it came in and how quickly it can go out, with just one line.
On May 3, 2016, while that budget bill was still being studied in the other place, the Minister of Finance, Bill Morneau, came to the Senate for Question Period. Senator Moore asked him to confirm that the government’s bill did what his private member’s bill sought to do, namely to repeal section 43.1 and restore the requirement of the government to obtain the approval of Parliament to borrow money.
Minister Morneau began by thanking Senator Moore and saying that the inclusion of the provision in his government’s budget to repeal section 43.1 was because of the efforts of the four of us here in the Senate, and he named each of us. He confirmed that the clause did what Senator Moore’s private member’s bill was trying to do.
The budget bill passed and received Royal Assent, and we were all very pleased.
On September 27, 2016, Senator Moore stood in this chamber and removed his bill from the Order Paper because of what happened.
But the story doesn’t end there, colleagues. We only just learned that, since 2016, the government has never declared that provision in force. After taking all of the credit, they have never declared the provision in force. So the provision that we passed last year, repealing 43.1 of the Financial Administration Act, which was the expression of Parliament, was never brought into force.
Section 43.1, the blank cheque that the cabinet could borrow money without any parliamentary approval continues as the law of the land. That is the law today.
So, despite the election promise, despite the clause in last year’s budget bill and despite all of the congratulations that were given, the blank cheque clause is the law of the land. Former parliamentarians have told me that, in their view, what is being done is contemptuous of Parliament and the laws that we pass, if not in the technical, parliamentary sense, then certainly in the ordinary sense that Canadians would understand the term.
To make matters worse, as I read it, Bill C-44 reinforces that cabinet, not Parliament, has full discretion over borrowing. Let me explain.
Bill C-44 would enact a new general borrowing authority act, another stand-alone piece of legislation, called the “Borrowing Authority Act.” That should be good. It should be the government returning to Parliament for authority to borrow money. That’s what we’ve been looking for, but there are many problems with this proposed Borrowing Authority Act contained in this budget bill, Bill C-44.
First, let me draw to your attention to section 3 of the new law. This is at page 67 of Bill C-44. The wording is complicated, but please bear with me, colleagues, because it is extremely important to know what we’re dealing with. Section 3:
The Minister, with the authorization of the Governor in Council under subsection 44(1) of the Financial Administration Act and in accordance with that Act, may borrow money on behalf of Her Majesty in right of Canada, by way of the issue and sale of securities, as defined in section 2 of that Act, or otherwise.
“Or otherwise.” They can borrow money any way they want.
Colleagues, I look forward to asking about this when the Finance Committee has the minister before us. But, as I read this section — and others I have consulted came to the same conclusion — it is the dreaded and objectionable section 43.1 blank cheque wrapped up in other words. Instead of “the Governor-in-Council may authorize the Minister to borrow money,” which was straightforward, undesirable but understandable, and which is what section 43.1 now says, this new section, if it should become law, says:
The Minister, with the authorization of the Governor in Council under subsection 44(1) of the Financial Administration Act and in accordance with that Act, may borrow money . . . .
I, of course, quickly looked up section 44(1) to see if there is some protection for the parliamentary oversight. Section 44(1) of the Financial Administration Act says:
When by this Act or any other Act of Parliament authority is given to raise money by Her Majesty, the Governor in Council may, subject to the Act authorizing the raising of the money, authorize the Minister to borrow the money by any means that the Minister considers appropriate.
That simply says that, when an act of Parliament — and the proposed Borrowing Authority Act that’s tucked away in Bill C-44, would, of course, be an act of Parliament — gives authority to raise money, the Governor-in-Council may, subject to that act, authorize the minister to borrow the money by any means that the minister considers appropriate. In other words, colleagues, it is a tight circle, giving cabinet and the minister all of the authority they need to borrow money, in any amount and any way they consider appropriate and, most notably, without any need for any parliamentary approval. If this passes, don’t expect us to see any future borrowing bills, no matter how much the government needs to borrow. They’ll just go out and do it. Colleagues, if we pass this bill as currently worded, we would be guilty of abdicating our most fundamental responsibility as parliamentarians, namely, to exercise oversight over government finances.
By the way, it’s not surprising that this wasn’t noticed in the other place. Let me read to you the description of this part of the bill from the legislative summary proposed by the government and circulated to all senators. Presumably, a similar document was prepared and circulated to all members of the House of Commons. On page 4 of this summary that was sent to all of us, telling us what was in Bill C-44, it described this part as follows. “Public Debt” is the heading:
Bill C-44 proposes to amend the Borrowing Authority Act to provide parliamentary —
The Hon. the Speaker: I am sorry, Senator Day, but your time has expired. Are you asking for more time?
Senator Day: I wonder if I might have five minutes to conclude this.
The Hon. the Speaker: Five minutes?
Hon. Senators: Agreed.
Senator Day: I’ll start under “Public Debt.” This is the document circulated to all of us, the government explaining to us what they felt was in this particular part of Bill C-44:
Bill C-44 proposes to amend the Borrowing Authority Act to provide Parliamentary approval of Government borrowing to enhance transparency and accountability to Parliament for the Government’s borrowing activities, to effectively fund the Government’s fiscal policies set out in the Budget. The new borrowing approval would provide Parliamentary oversight regarding the Government’s borrowing plans.
First, it is a simple fact that there is no existing “Borrowing Authority Act.” It was in the Financial Administration Act. So to suggest this proposes to amend is incorrect in the first line. You can’t modify or amend something that does not exist. The proposed Borrowing Authority Act is a completely new, stand-alone statute that is in this Bill C-44.
But, more important, as I have explained, far from providing parliamentary approval of government borrowing, it ensures that cabinet has the power to borrow money without any need to come to Parliament. There is no parliamentary oversight.
And, colleagues, there is more.
Under the 2007 budget bill of the previous government, the bill that took away the need for parliamentary approval for government borrowing, there was at least a provision requiring the government to table in Parliament, every year, a report on the minister’s borrowing activities and management of the debt, and a report on the plans for borrowing. We, on the Finance Committee, used to ask to look at that, and members would ask to look at that, as Senator Marshall knows. Bill C-44 changes this. In the proposed new Borrowing Authority Act, the minister is required to report to Parliament not every year, but only once every three years on the amounts the government has borrowed.
So, colleagues, if we pass this bill in its current form, we would be agreeing that cabinet alone has the power to authorize borrowing by the government and, furthermore, that Parliament need not have any information about the government’s borrowing for three years after it took place.
This borrowing authority act does set out the maximum amount for the government’s borrowing of $1.168 trillion before they have to come back and get it changed.
Colleagues, I have never in my years in the Senate seen a borrowing limit over $1 trillion dollars. By the way, that is separate from the money the government may need to address extraordinary circumstances like natural disasters or financial crises. The government may borrow beyond $1.168 trillion, if needed, for such emergencies. That’s a separate section in the Financial Administration Act.
Colleagues, I will conclude my remarks there. Clearly, there is much that needs to be studied in this bill, now that we have finally received the bill. I’ve just talked about three different areas that I want us in the Finance Committee and in this chamber to consider at third reading.
There are many more, colleagues. These ones just had that golden thread woven through them that all related to taking away parliamentary oversight, which I think is so critical.
The more I examine in this omnibus bill, the more questions I have. As I said earlier, the bill contains provisions that quietly — one might say stealthily — remove Parliament’s oversight of government finances and increase the power of the executive — of the cabinet. But of course, now that we know —
The Hon. the Speaker: I am sorry to interrupt, but I must advise that the honourable senator’s time has expired.
Are you asking for more time?
Senator Day: Two more minutes.
An Hon. Senator: Five.
Senator Day: Thank you, Senator Mockler. I said some nice things about you earlier on; I appreciate you returning the favour.
As I said earlier, this bill contains provisions that quietly, stealthily remove Parliament’s oversight of government finances and increase the power of cabinet. Of course, now that we know, we can no longer blame the drafters of the bill and the government. If we pass Bill C-44 in its current form, we are the ones who are knowingly removing parliamentary oversight. Parliamentarians certainly have the procedural and legal authority to abdicate even more of their oversight responsibilities if they want. But I, for one, am profoundly disappointed that this government has decided to ask that we do that here. This is not what I was expecting of this government.
Hon. Yuen Pau Woo: Would the senator accept a question?
Senator Day: I have two minutes.
Senator Woo: I have a lot of questions, but let me start with the last subject you discussed on the borrowing authority of the government.
I’m glad you indicated towards the end of your speech that there is, in fact, a borrowing limit that has been established over the three-year period, and you said that it was $1.16 trillion. You also said — I am not quoting verbatim — that the government has the power to borrow up to that amount over the three-year period.
Senator Day, would you please tell us what is the current stock of debt that the government already has in place and what is the incremental borrowing that they’re seeking authority for?
Senator Day: Thank you, Senator Woo. I bow to you in terms of those numbers. I did not say that that was over a three-year period. The three-year period is the reporting of what the status is at the end of the three-year period.
Senator Woo: In fact, the stock of debt that’s already in place from previous governments is $967 billion. So the borrowing authority that we’re actually providing to the government is a small fraction of the $1.1 trillion. It is correct for the government to give us the total debt stock and the debt limit because that is the measure of the country’s indebtedness rather than the flow of debt that we’re taking on.
Senator, I will follow on a different question on the escalator tax. I share your concern for the industry and the impacts that will be felt because of a continuing escalator, and I agree this is an issue that we need to watch closely each year as the escalator is announced three, four, five months before it is implemented. But I want to ask you if you can explain to us the difference between an excise tax and an ad valorem tax. An excise tax, as I’m sure you know, is applied on a fixed quantity — a bottle or a bushel or a barrel — whereas an ad valorem tax is applied on the price of that good. We have a GST, which is an ad valorem tax, and it’s applied to the price of the good. When the price of the good goes up, the amount of GST collected goes up as well. Is the GST not an automatic escalator tax?
Senator Day: No, it is a different type of tax. I like the ad valorem GST tax and I wish all of our taxes were like that. The difficulty with the excise tax — we were trying to get rid of all of those manufacturing-type taxes and then you need to have exceptions — is that it puts our industry in a very difficult position to have to work into the cost of the product, at the time of manufacturing it, a manufacturer’s tax — a tax on the manufacturer as well.
I am concerned about the excise tax. As I mentioned in the few words I just gave, we heard from the brewing industry that their sales, probably because of all the other competition, have gone down but still their costs in terms of excise taxes are going to go up automatically. If Parliament had an opportunity to look at this, they would say, “Maybe this year we should not be looking for more revenue from this golden goose.” That’s really the problem.
I’d like to comment on your comment about three years.
The Hon. the Speaker: Your time has again expired. There appear to be other senators who want to ask more questions, but it’s entirely up to you if you want to ask for more time.
Are you asking for more time?
An Hon. Senator: Give him time.
Senator Day: I would be pleased to try and answer the questions.
The Hon. the Speaker: Just this one or are you asking for more time or other senators as well?
Senator Day: I’m in your hands; one question.
The Hon. the Speaker: One question.
Senator Day: By somebody else.
Hon. Michael Duffy: I wonder the Senator Day would agree with me that the major point here is one of accountability and transparency.
There was a time, some of us are old enough to remember, when cabinet ministers actually came to this place and the other place, appeared in Committee of the Whole and answered for their budget or their departmental estimates. I can remember times when ministers were not in favour and there was a motion put to reduce the ministerial salary to a dollar as a sign on the part of the chamber that they weren’t happy with the way the minister was behaving or the answers he or she was providing.
On the ad valorem matter, the first time I ever heard the term was in relation to 18-cents a gallon. Mr. Clark had one idea and he was replaced by Mr. Trudeau, who brought in an ad valorem tax. So it has its own place in our electoral history.
But on accountability, isn’t that really what this exercise is all about?
Senator Day: Thank you, Senator Duffy. I could have spent a lot of time talking about the different issues I see in this 300-page document. I know if you pick up the document and start going through it, you will find a number of issues that have not been mentioned.
I’ve run out of time just talking about three, and I thought it was important for you to have the background on those. But with those three, in terms of borrowing, the excise taxes and the user fees, there is a thread that goes through all of them, and it does deal with promises made and promises not kept, in my view. It’s critically important we understand that. Whether the minister is aware of all these things or these are imposed documents, I don’t know, but we’ve got to look into this, because these are serious.
Senator Woo was happy with three years and a report every three years. I was happy when they had to come to Parliament every time they wanted to borrow, but the fallback position was that we got a report every year. What was wrong with a report every year? Now what we’re getting is a report every three years. Three years is a long time out for something you borrowed — “Oh yeah, I borrowed this money three years ago to do something.”