NRGO Committee Meeting

STANDING COMMITTEE ON NATURAL RESOURCES AND GOVERNMENT OPERATIONS

COMITÉ PERMANENT DES RESSOURCES NATURELLES ET DES OPÉRATIONS GOUVERNEMENTALES

EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, December 2, 1999

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[English]

The Chair (Mr. Joseph Volpe (Eglinton—Lawrence, Lib.)): I'll call to order the meeting of the Standing Committee on Natural Resources and Government Operations.

The order of the day is to deal with Bill C-10, an act to amend the Municipal Grants Act. We have with us this morning the Honourable Alfonso Gagliano, Minister of Public Works and Government Services Canada.

Mr. Minister, you're accompanied by some officials as well. I have listed here, from Public Works and Government Services Canada, Mr. Michael Nurse, who is your assistant deputy minister, real property services branch, and Mr. Colin Boutin, acting director, municipal grants, real property services branch. As well, we have Jacques Gauthier, general counsel, from the Department of Justice.

Good morning and welcome. Thank you very much to all three of you gentlemen and the minister.

Mr. Minister, I think you're familiar with the way most committees proceed. This one is not much different. We're hoping you'll make your presentation within about 10 minutes so that members can spend the greater part of the committee asking you, and if need be, your officials, questions in order to shed light on the bill as you see it.

“Shed light” perhaps might have been the inappropriate image for this morning. I gather your department is trying to save on the electrical bill.

Hon. Alfonso L. Gagliano (Minister of Public Works and Government Services Canada, Lib.): Thank you, Mr. Chairman.

First of all, I would like to congratulate your election to the chair of this committee.

[Translation]

As you know, I recognize and appreciate the important work done by this committee, and I welcome your advice.

I particularly welcome your review of Bill C-10, the proposed Payments in Lieu of Taxes Act, which will have an impact on government operations across Canada.

Bill C-10 will directly benefit almost 2,000 communities from coast to coast. It will enshrine the principles of fairness, equity and predictability in the management of federal payments in lieu of taxes, principles which I believe are important to all MPs.

[English]

Before getting into the details of the bill, I would like to congratulate the members of the joint technical committee, made up of representatives of the Federation of Canadian Municipalities, the Treasury Board Secretariat, and my department, for their contribution. I would also like to thank all the municipal representatives, mayors, and councillors who met with me during my consultation tour in 1998. All of them have played a key role in reforming the municipal payments program.

I would like to take a few minutes to review quickly the rationale for this legislation and its key elements. I will then respond to any questions you might have, and my officials will do the same.

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As the committee knows, the Government of Canada enjoys a constitutional exemption from local taxation. Nevertheless, we have a moral obligation as a property owner to help pay the cost of local government. Federal facilities and operations should contribute to the social and economic well-being of a community; they should not be a burden on taxpayers.

[Translation]

In recognition of the valuable direct and indirect services received from municipalities, for the past 50 years, successive federal governments have adopted a policy of paying grants in lieu of property taxes. These payments are now in excess of $375 million annually.

As you can appreciate, these federal payments contribute substantially to local economies, and as such they contribute directly to the well-being of Canadians.

Just imagine the impact on the finances of the region of Ottawa-Carleton or the City of Hull if the Government of Canada reneged on its responsibilities as a property owner and stopped making payments in lieu of taxes.

I think it's fair to say that we all recognize and accept the rationale for these payments and their importance to local communities, That is not an issue for debate today.

What we are here to talk about is how to improve the administration of these payments, taking into account the far- reaching changes that have occurred on the municipal taxation front over the past two decades.

Bill C-10 will bring about positive, constructive and lasting program changes. It will confirm that the federal government respects the standards set for other property owners and values the services it receives from municipal governments.

The intent of Bill C-10 is not to reduce payments to municipalities.

[English]

The intent of Bill C-10 is not to reduce payments to municipalities. Our goal is simply this: to make the process more predictable and to strengthen the foundation of fairness and equity on which the program was built and has operated for the past five decades. As much as possible, we want to make federal payments in lieu of taxes resemble taxes paid by private landowners, while still recognizing the federal government's constitutional exemption from local taxation.

How do we plan to reach these goals? First, Bill C-10 will change the name of the legislation and the program. In future, grants in lieu of taxes will be referred to as payments in lieu of taxes. This implies a more explicit and respectful relationship between the two levels of government and better reflects the fact that the federal government receives valuable service from municipalities.

Bill C-10 also includes a goodwill clause that confirms our commitment to fairness and equity in the administration of federal payments in lieu of taxes.

[Translation]

Substantive changes in the legislation include a commitment by the federal government to endeavour to meet the payment schedules put in place locally. When payments are unreasonably delayed, the Minister of Public Works and Government Services will be empowered to authorize payment of a supplementary amount to the municipality to compensate for the delay.

Bill C-10 also addresses the issue of dispute resolution, which has been of concern to municipal officials for some time now. An advisory panel will be established in law to serve as an avenue for challenging federal payments in lieu of taxes. I intend to consult the Federation of Canadian Municipalities and provincial assessment authorities on the panel's make-up, to ensure that its members are viewed as credible and objective by the municipalities.

Under the current regime, municipal governments often have little recourse when a tenant defaults on taxes. Henceforth, the Minister has a new discretionary power that will allow payments in lieu of taxes to be made when a municipality has made all reasonable efforts to collect from the tenant.

Bill C-10 will expand the definition of federal property to include such structures as employee parking lots, outdoor swimming pools, golf courses and certain other facilities that are currently excluded for no logical reason. This will put the federal government on a more level playing field with taxable property owners.

[English]

The government will also work with assessment authorities to attempt to finalize federal property values prior to the close of the assessment role. This will reduce the number of disputes and improve predictability for municipalities when they set their tax rates.

As well, the proposed legislation will remove existing limitations on payments in lieu of taxes to first nation governments, which are increasingly using property tax in an effort to become more financially independent.

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I want to assure the committee that these amendments are fully in keeping with a recommendation of the joint technical committee established in 1995 to review the municipal grants program. They take into account the advice of a panel of experts I appointed in June 1998 to consider issues surrounding the payment of grants in lieu of taxes.

[Translation]

Most importantly, these changes reflect the views of municipal officials on the best possible structure for payments in lieu of taxes. I know this because I spent a good deal of time last year meeting with these officials in a series of roundtable discussions. I believe this exercise has resulted not only in a stronger package of reforms, but also in a new sense of partnership between the Government of Canada and municipalities.

At every venue, I encountered a genuine will to improve the program, and I received positive and constructive recommendations.

Whenever possible, we have incorporated those recommendations in Bill C-10, keeping in mind the need to balance the overall interests of Canadian taxpayers with the needs of local communities. We must also remember that many government assets are provided for the public good or for the particular benefit of local communities, and therefore deserve special consideration when calculating payments in lieu of taxes.

The legislative and regulatory regime that will be put in place by Bill C-10 will provide a reasonable and realistic framework for decision-making well into the new millennium. At the same time, I have endeavoured to address concerns that may fall outside the scope of the legislation.

[English]

For example, Mr. Chair, I believe there is a need to continue the dialogue on payments in lieu of taxes with various stakeholders. To facilitate this dialogue, I will establish a municipal payments program advisory council. This council will give advice on administrative and policy issues related to the management of the program.

We are also taking steps to reduce the number of disputes over the valuation of federal properties, particularly those types of properties that have no counterpart in the private sector, such as penitentiaries, airports, defence establishments, and national parks.

My department has recently engaged the national professional appraisal associations to draft best practices for valuating these types of properties. We will share these recommendations with other stakeholders in an effort to develop a consensus on how to estimate the value of these properties in ways that are fair and consistent across Canada.

[Translation]

In closing, let me underline the importance of payments in lieu of taxes to municipalities. They provide direct support to the various communities. They represent one way for the federal government to fulfill its obligations as a responsible property owner and as a partner with municipalities in maintaining the quality of life Canadians enjoy.

However, the program can be improved, and it must be improved.

I believe Bill C-10 achieves this goal, and it does so without significantly increasing the program's costs. The committee's endorsement of this legislation would be a welcome and appreciated gesture of solidarity with municipalities across Canada.

Thank you, Mr. Chairman.

[English]

Now I am ready to take questions.

The Chair: Thank you, Mr. Minister.

[Translation]

The first name on my list of people who have asked to be recognized is Mr. Schmidt.

[English]

Mr. Werner Schmidt (Kelowna, Ref.): Thank you very much, Mr. Chairman.

Thank you, Mr. Minister, and the panel of experts you have with you. It's really good to see you. I also want to congratulate you and the department for the move you have made with regard to Bill C-10, to payments in lieu of taxes. I think it is a move in the right direction, and there are some very good provisions within the bill that I think we can support.

However, there are some details on which I would like to question you, if I might. The first of these has to do with the composition of the advisory panel in case of disputes that might arise between the taxing authority and the federal government directly—I suppose that's your office. So I would like to ask you, in regard to the experts that will be on this advisory panel, does this include the appraisal institute, and if it does, why would they not be mentioned specifically in the composition of the panel?

Mr. Alfonso Gagliano: This is a very inclusive committee, and I didn't want to mention any names in the legislation because I don't want to exclude anybody. You appoint the engineers, but there are other professions that might be interested—lawyers, notaries. I don't want to be specific, but you cannot have an advisory committee on this matter without definitely having the Ordre des évaluateurs agréés du Québec. Definitely they are part and parcel...they are the profession, they are the authority, but I think others also ought to be considered as being part of this advisory committee. If we really want it, the minister can get the necessary advice you need to be fair to everybody.

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Mr. Werner Schmidt: Okay, I'm going to need just a further clarification of it. Is that the advisory panel you're setting up? I was actually referring my remarks to the dispute resolution group.

Mr. Alfonso Gagliano: On the dispute resolution group, I think we have to...I'll still continue consulting, definitely. They have to be very professionally representative. We will have to think of the province. We have different properties in different provinces and so on.

Again, I think the same principle with the advisory or...I don't want to be exclusive. Once you put some people on the list, other groups will come forward—for example, the bar—and ask why they are not on the list. What I want to say is that in both dispute mechanisms or the advisory panel, I think the minister has to go out and make sure everybody, all the stakeholders, have to be involved in both the dispute group and the committee.

Mr. Werner Schmidt: This is a further question but on a different subject altogether. I think the technical advisory committee did some excellent work. They worked on it for a long time, and I really liked their recommendations very much. There's one recommendation, however, that's not included in the amendments to the bill. That's the recommendation that three crown corporations that are also for-profit corporations—namely the mint, Canada Post Corporation, and Canada Mortgage and Housing Corporation—should be included in schedule 4. Schedule 4 is made up of crown corporations that are in fact there for profit, and they do pay. The Business Development Bank of Canada is a specific example. I was just wondering what the rationale was as to why these three corporations were not included when it was recommended that they in fact be included in schedule 4.

Mr. Alfonso Gagliano: I'll ask my official to give you an answer.

Mr. Colin Boutin (Acting Director, Municipal Grants, Real Property Services Branch, Department of Public Works and Government Services): Thank you very much for the question.

Under the joint technical committee findings and recommendations in 1997, all the parties concerned—the FCM, Treasury Board, and Public Works and Government Services Canada—recognized that we had to scrutinize those crown corporations that were in schedule 3 in order to determine that if they were 100% profit-based, they would be looked at and put into schedule 4, where they would be subject to a business tax like other businesses. The joint technical committee members also agreed that we had to look at the mandate of each of these organizations and study them to make sure we understood what portion of their mandate was profit-oriented and what portion was government-oriented.

In the case of Canada Post, we agreed we would further study this crown corporation, as well as the Royal Canadian Mint and CMHC amongst others, to determine what portion of these organizations were based for profit and what portion were government-mandated. We could then determine to what extent a business tax would apply and to what assets the business tax would apply in the various jurisdictions across Canada. We did not ignore this. We are still studying this issue.

In my last meeting with the FCM, this same issue came up. We have committed that we will continue to make this a priority and continue to study which of these crown corporations should be in schedule 4, as well as what parts of these crown corporations and which assets should be subject to a business tax.

The Chair: There is a quorum call coming up. We're not going to move, but we may be interrupted for a vote at any time during our proceedings. We'll advise members when a vote is called, but I'm just going to proceed as we go along.

Mr. Schmidt, do you have one last question, or do you want to come back in the next round?

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Mr. Werner Schmidt: I just wanted to clarify this one point here, and that has to do with the timeframe you set for yourselves to complete this study and discussion of the crown corporations for profit, specifically the three we mentioned.

Mr. Colin Boutin: We have not set a definite timeframe, except to assure it will be a priority in the coming year for us to look at these crown corporations. We had originally started to look at them when the joint technical committee made its recommendations. We saw what a complex issue it was and decided that other issues coming up with the reform of business tax issues in Ontario were also clouding it. We therefore determined that we would take this issue up again in the near future. Our timetable on this is to have this completed within the next year.

Mr. Werner Schmidt: Thank you very much, Mr. Chairman.

[Translation]

The Chair: Mr. St-Julien.

Mr. Guy St-Julien (Abitibi—James Bay—Nunavik, Lib.): We're pleased to have you here, Mr. Gagliano. Under your leadership, the consultations held by you and your department in 1998 with municipal officials throughout Canada and Quebec on the subject on payments in lieu of taxes were well received.

Will municipal officials and other interested parties continue to have their say in the development of this program?

Mr. Alfonso Gagliano: I believe so. Early on in the process initiated in 1995, we consulted with members of the Joint Technical Committee, which was made up of representatives of the Federation of Canadian Municipalities, the Treasury Board Secretariat and my department. Municipal representatives were also represented very early on in the process because they too are affected by how this program will be implemented on a day-to-day basis in each municipality.

We want to establish an advisory panel so that we can discuss without further ado any potential differences and ensure greater transparency in the process. We don't want to wait until a municipality submits a bill before voicing our disagreement. We want assurances that as soon as a municipality has assessed the value of one of our building, we can begin discussions. We want discussions to take place on an ongoing basis, as assessments are updated, to avoid disputes that could drag on for two or three years. We want to be able to settle any problems before we receive a bill, so that when it does come, payment can be rendered immediately.

Mr. Guy St-Julien: Mr. Minister, will we receive, as we have in the past, a breakdown of the payments made to each municipality? As you know, I represent a large riding, the largest in fact in Canada.

Mr. Alfonso Gagliano: Of course. Moreover, all expenditures incurred by our department are reported in the Public Accounts. This information is public and can be disclosed without any problem.

Mr. Guy St-Julien: Thank you for your work.

Thank you, Mr. Chairman.

The Chair: Thank you, Mr. St-Julien.

Mr. Cardin.

Mr. Serge Cardin (Sherbrooke, BQ): I'm pleased to meet you, sir. Although you are a frequent visitor to my riding, I never seem to hear about it until I read it in the newspapers the next day. I'm happy to see you in person today.

Mr. Alfonso Gagliano: I don't get there often enough.

Mr. Serge Cardin: I was a municipal councillor in Sherbrooke for 12 years and I also worked as an accountant. I audited the books of some of communities surrounding Sherbrooke. Often these municipalities were located many kilometers away, that is three quarters of a hour's or an hour's drive away.

In my capacity of CGA, I also served on a committee entrusted with the task of comparing the advantages for municipalities or a rate system versus a property tax based system. We recognized that a rate system was an important element because a tax account based solely on property value does not necessarily correspond to the services delivered by a municipality. It comes down in some respects to a question of how wealth is shared. We concluded that a rate system was fairer for taxpayers.

Did you take this factor into account when you conducted your study? You did talk about equity for taxpayers.

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Let me give you the example of municipalities in the area surrounding Sherbrooke, the larger centre, where I did my audits. Since no federal property or facilities were located in these municipalities, they were not eligible to receive any grants in lieu of taxes from the federal government. However, municipalities with large federal infrastructures did receive rather substantial sums of money, although this may not have been a true reflection of the services received from the government.

All taxpayers, whether residents of Sherbrooke or of Scotstown, a municipality located some distance away from Sherbrooke, contribute financially, through their tax dollars, to the payments in lieu of taxes paid to municipalities with federal facilities. However, they do not receive the same level of services. My clients with tax problems must go to 50 Place de la Cité on Couture Street to consult with Revenue Canada officials and obtain services from them.

Did you take this into consideration when you conducted your study? Do you think it's fair that some taxpayers in municipalities that have no federal facilities and therefore do not receive payments in lieu of taxes must incur additional costs in order to obtain government services?

Mr. Alfonso Gagliano: I've met with and heard representations from many municipal leaders throughout Canada. The debate underway as to whether taxation should be based on property value or on the services received, that is based on a rate system, is also being waged at the municipal level.

I think the incidence of federal taxation on the municipalities is rather marginal. As I said, our payments total more than $375 million a year. It should also be remembered that some provinces are more advanced than others. After making the rounds of the provinces, I came to the conclusion that I couldn't impose a new municipal taxation system on them. The primary aim of reform was to ensure that federal payments resembled as near as possible the taxes paid by private property owners. There has been a tendency to criticize the Canadian government and to accuse it of imposing its will without taking into account the realities faced by municipalities. My objective was to produce legislation that reflected this reality as closely as possible. I will leave the municipalities to carry out their own reforms, in concert with provincial officials.

I recall the mayor of Quebec City pleading with me to introduce new tax rates and, instead of resorting to a residential rate and to a commercial rate, to give some thought to establishing an institutional rate. But again, I hesitate to get into this ongoing debate. I don't believe it's the government's place to wade into a debate on municipal tax reform. Instead, I think that's the responsibility of the provinces.

I stand by my objective, namely to try, while bearing in mind our constitutional obligations, to make federal payments in lieu of taxes resemble as closely as possible the taxes paid by private property owners. I have established certain mechanisms, ever mindful at the same time of the government's constitutional exemption from local taxation. Our contribution is therefore voluntary.

The Chair: Mr. Cardin, you have time for one very brief question.

Mr. Serge Cardin: I agree that this debate should continue at the municipal level. You stated that you were not required to make these payments, but that you were anxious to be a responsible citizen. Do you not think that, to be fair to all taxpayers, you should have seized the opportunity not to pay more for the services you receive then they are actually worth?

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Mr. Alfonso Gagliano: I could have chosen to do that, but as I said, our objective was to bring our system in line with the reality faced by taxpayers. It is not my duty to reform the municipal taxation system in this country which is based on property values. If the municipalities decide one day to overhaul their taxation systems, we would then have to review our legislation accordingly.

I'm recommending to the committee and to Parliament that it adopt an approach more in keeping with today's reality. Will the situation be the same in ten years' time? I can't say. I didn't think it was my job to propose municipal taxation reforms.

Mr. Serge Cardin: Yet, in some areas, you have taken the liberty of making certain changes.

Mr. Alfonso Gagliano: Yes, where we had the authority to do so, but we are always respectful of municipal jurisdictions.

The Chair: Thank you.

Mr. St. Denis.

[English]

Mr. Brent St. Denis (Algoma—Manitoulin, Lib.): Thank you, Mr. Chairman, and thank you for being here with your officials, Mr. Minister.

I'd like to preface my remarks by saying I was a municipal administrator in a relatively small northern Ontario community many years ago. I recall the frustration we had at least once a year with the post office. In this case, it was the post office because it was the only federal building they had in this town. I'm sure things have improved over the years, but I'm sure I would be breathing a sigh of relief if I were still in that job. I think this is a real breath of fresh air for our municipalities, and it will no doubt begin a new era of enhanced mutual respect between the federal government and our local community governments.

The Chair: So you're against this?

Mr. Brent St. Denis: Yeah, right.

On behalf of the communities in my northern Ontario riding of Algoma—Manitoulin, I want to say thank you for taking this initiative, which I know you took in cooperation with municipal leaders across the country.

I have just two short questions, Mr. Chairman.

First, I know you undertook extensive consultations, and I do see reference to an advisory committee in your opening remarks. I'm wondering if you could maybe expand on the ability of stakeholders to continue to have influence on the further development of this program if future issues indeed arise.

Secondly, since the payments are voluntary, I'm pleased that the Government of Canada will be undertaking to pay interest, but what is the rationale for doing that? I'm assuming post offices are still included under the purview of this bill. I'll leave you with that.

The Chair: You know, Mr. St. Denis, you're right. They're short questions. I suspect we'll have some sort of encyclopedic type of a response, but I know the minister will dig deep in his resources of brevity.

Mr. Alphonso Gagliano: Well, I'm going to try to take your instruction, Mr. Chair. I'll say that in the advisory committee, the purpose is that we can continue having input to improve the legislation. There is an evaluation technique, so the reporters will have to always keep in touch with the advisory committee. It's a moving industry, and it's a leading industry out there. The advisory committee will therefore help us to on stay on course as much as possible with the stakeholders. Definitely, we will continue.

On the crown corporation, yes, we're working on that. As soon as possible, if we conclude it during the process of this legislation, we can do some amendments. We're trying to work with the crown corporation to make sure that not only the government, but the other associates to the government, will pay their fair share of taxes. That's the purpose of the legislation.

Mr. Brent St. Denis: Thank you.

Mr. Alfonso Gagliano: Was I short, Chair?

The Chair: That was pretty good. Thanks.

Monsieur Gilles Bernier.

Mr. Gilles Bernier (Tobique—Mactaquac, PC): Thank you, Mr. Chairman, and welcome, Mr. Minister and your representatives. What you're saying is true. We don't see you often enough in committee, but every time you come it's always nice to see you.

In discussions I have had with the representatives of the Federation of Canadian Municipalities since the bill was introduced, they have consistently told us they were not pleased with the speed with which this bill was being rushed through the House, although they were happy about being involved in the consultations over the last two years.

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They claim they did not receive any notice when the bill came out, and they did not get a copy of the bill or any briefing material. As you very well know, it's nice to consult with members on what is a very technical bill.

I'm sure, Mr. Minister, your office also received some of these complaints, so my question is very simple. I understand the Federation of Canadian Municipalities did endorse this type of consultation, but what was the rush to get it through the House so quickly?

Mr. Alfonso Gagliano: There was no rush. I saw the president of the Federation of Canadian Municipalities last night, and he was telling me he hoped this bill would become legislation as soon as possible.

We consulted at all stages with the federation, but you must understand, when the time came to draft the actual bill, if I had shown the bill in its final draft to the federation I probably would have been called out for not respecting parliamentary rules.

As for the contents of the bill as drafted, I know there were discussions. I know they would like to have seen the bill before it was tabled in the House. But I've been a parliamentarian for 15 years, and I respect the rules of the House. I tabled the bill in the House and then showed them the bill. Probably that's what they were complaining about a little bit.

What is important, I think, is not the final process but the contents of the bill, which respect, I would say, 99.9% of their recommendations.

Mr. Gilles Bernier: Clause 14 requires members of the dispute adviser panel to have relevant knowledge or experience, but it does not define that. Why have you not defined who should be on the panel in the legislation, thereby ensuring that panel members are chosen for their expertise, not their political affiliation?

I'm not saying you, Mr. Minister, would do that, but perhaps it would protect against future ministers who may try to do that.

Mr. Alfonso Gagliano: As we discussed at the beginning of this meeting, I would like this committee to be as inclusive as possible, definitely having all the stakeholders represented. The problem is, if you start naming organizations you risk excluding some of them.

For instance, what if one organization doesn't exist any more, or there's a new organization? With professional associations sometimes they merge into one. If there are specific names in the bill, every time there is a change of membership, not because it's wanted by the minister but because of certain circumstances, then we have to go to an amendment, and you know how long the amendment process takes. For example, we have been working on this bill, which is not the most complicated bill, since 1995.

So that was the reason. Definitely there has to be representation from the professional associations, the municipalities, and the assessing authorities, but naming them becomes a great problem. For one thing, we risk excluding somebody, and two, if there's a change of names or a change in an organizational structure, we have to amend the bill.

Mr. Gilles Bernier: Will the panel members be appointed when the legislation comes into effect or only when needed? Because I can see a problem here.

According to the bill, there will be two members from each province and territory. I don't have anything against the territories, or even against any province in particular, but let's take Nunavut as a specific example. We might not have a dispute there in the next thirty years. Would you appoint two persons there after this legislation comes into effect? I mean, what would be their mandate for the next thirty years if there's no dispute in that territory?

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Mr. Alfonso Gagliano: That is a very interesting question. I'll ask my officials to look into it when we have to appoint them.

Actually, if we want an effective and up-to-date advisory committee, I don't say it has to meet every month but it does have to have a couple of meetings a year for updates on what's happening in the municipal taxation world. I mean, it's a world that moves and changes very rapidly.

The other disadvantage if you appoint just when you need them is that you might delay things, because those who are appointed have to take time to get updated on what's happening.

I don't know if my officials want to add something to what I've just said.

Mr. Colin Boutin: In the recommendations of the joint technical committee, or JTC, with FCM, we had agreed to this, because we felt the panel had to be effective and responsive. One of the criticisms of our current panel is that it takes too long from the point when our request for a review is received until the time the panel is set up and the hearing takes place. We thought we could shrink that timeframe by having members pre-appointed so that at the time the hearing came in, there would not be any lag time between then and when the hearing took place.

So the matter is one of timeliness, and that was one of the concerns of the municipalities.

Mr. Alfonso Gagliano: Perhaps I can add something here. During the consultation, the only constant message we got from the mayors and the other municipal authorities was that it takes too long. Sometimes it takes one or two years before something is finally settled. The objective here is to cut the time so that we can pay the bill.

So we understand the view of the municipalities. They're counting on those payments. They're part of their budgets.

Mr. Gilles Bernier: Thank you, Mr. Chairman.

The Chair: Mr. Provenzano.

Mr. Carmen Provenzano (Sault Ste. Marie, Lib.): I have just one question, Mr. Chair, probably to Monsieur Boutin.

It's my understanding that payments to municipalities in lieu of taxes are not calculated on the basis of the assessed values prepared by the respective provincial authorities. Why is that?

Mr. Colin Boutin: The values that are used to calculate the grants in lieu of taxes for a municipality are those values that, in the minister's opinion, would be applicable if our federal property were taxable.

As you know, the federal government is exempt from grants in lieu of taxes. Therefore, under the act, the minister's opinion of the value is the value used. In many cases, provincial legislation varies from the legislation of the Municipal Grants Act. We therefore have to take that into consideration.

In many cases, certain provisions in provincial legislation allow certain attributes of the property to be valued, while in the municipal grants some of these do not—for instance, historical attributes of a property, or things we would call “superadequacies”, such as limestone exteriors. Normally an assessment jurisdiction would value those on their cost to replace, but in reality they do not add to the value of the utility of the property. That's where we try to set the value that, in the opinion of the minister, would be applicable if it were a taxable property.

Mr. Carmen Provenzano: I guess as you go across the country the manner of arriving at assessed values would vary from province to province, in some cases sophisticated and in others less so.

Mr. Colin Boutin: From province to province the legislation is different, and the application can be different even within the provinces.

Mr. Carmen Provenzano: Thank you.

The Chair: Thank you, Mr. Provenzano.

Mr. Chatters.

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Mr. David Chatters (Athabasca, Ref.): I tend to have a healthy dose of skepticism when it comes to this bill or this whole process. It seems so unnecessarily complex to me. If the federal government has decided, in spite of the constitutional requirement, that they want to be a good municipal citizen and pay what amounts to be the taxes, I think it would simply be a matter of paying your taxes like every other citizen. If you have a concern about what your taxes are, there is a system in place, in every municipality I'm aware of, where every citizen can appeal their level of taxes.

Given that, I do have some concerns over what seems to be an exorbitant amount of discretionary power given to the minister on this whole issue. If a particular municipal council seemed more favourable to the government of the day, I would be curious to know whether this could perhaps affect how quickly they might receive the grant or payment in lieu of taxes.

Mr. Alfonso Gagliano: To your first question and comment, on most of the property the Government of Canada owns, it's rather like most of the property Canadians own. There is no problem. We pay the same taxes on buildings, on offices. I mean, there is no problem. It's easy to evaluate.

But the Government of Canada is not a regular taxpayer. A lot of properties are not very easy to evaluate, and there are different values—for example, historical, heritage, recreational. That's why it becomes a little bit complicated. Really, this legislation is getting closer to answering the message I know I got from some of the mayors, who asked me the same question: why don't we just send you the bill and you just pay it?

Well, it's not that easy.

Mr. David Chatters: Well, it really is that easy, Mr. Minister, because every citizen in the country thinks they pay too many taxes. Many citizens every year appeal, through the tax appeal system of the municipality, to reduce the taxes they pay. Just because you don't think that assessment is easy to arrive at, or that it's fair, every citizen in the country feels the same way you do about federal property, and feels that perhaps they're being unfairly treated.

Mr. Alfonso Gagliano: That's why we try to improve it so that we have fairness in the system. I'll give you an example. How do you evaluate a penitentiary? Is it a rooming house? Is it an apartment house? Is it a hotel?

Voices: Oh, oh!

Mr. Alfonso Gagliano: What is it? The way in which you evaluate it depends on what you call it. That's the dilemma. I put it that way at every meeting I had across the country.

I think we're trying to have a fair system, and we also are trying to modernize the legislation. This is fifty years old, this piece of legislation. For example, sidewalks were not considered assessable property. I assume they didn't have sidewalks fifty years ago. In our modern society, we do. That's why I said I didn't want it too limited and defined, because things change.

So this is a piece of legislation where, yes, there may be some who argue there is too much power for the minister, and that somebody else in my place might not be so willing to make it work this way. I believe the municipal government is the most important government, since it's the closest to the people. In fairness, however, with this legislation, no matter who is the minister and no matter who is the government, I think this will continue to work.

Municipal leaders are supporting it and asking us to go ahead as soon as possible, because I think they see it as a better system.

The Chair: Thank you, Mr. Minister.

Thank you, Mr. Chatters.

I see no other questions, so I'll thank you, Mr. Minister, and your staff for coming before us and giving us your views on the bill.

I'm going to adjourn the meeting to the call of the chair, which will probably be very early next week.

An hon. member: [Inaudible—Editor]

The Chair: We don't have quorum, so we'll deal with it afterwards.

The meeting is adjourned.