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MINUTES OF PROCEEDINGS

Meeting No. 16

Tuesday, May 1st, 2001

The Standing Committee on Finance met at 9:39 a.m. this day, in Room 209, West Block, the Chair, Maurizio Bevilacqua, presiding.

Members of the Committee present: Sue Barnes, Carolyn Bennett, Maurizio Bevilacqua, Scott Brison, Roy Cullen, Ken Epp, Roger Gallaway, Yvan Loubier, Lorne Nystrom and Gary Pillitteri.

Acting Members present: Larry Bagnall for Nick Discepola and Dennis Mills for John McCallum.

In attendance: From the Legislative Services: Susan Baldwin, Legislative Clerk. From the Library of Parliament: Marc-André Pigeon, Researcher and Marion Wrobel, Senior Analyst. From Committees and Associations Directorate: Mike MacPherson, Committee Clerk.

Witnesses: From the Department of Finance: Dominique La Salle, Chief, Strategic Planning, Federal-Provincial Relations Division; Sean Keenan, Senior Program Analyst, Federal-Provincial Relations Division.

Pursuant to its Order of Reference of Monday, April 2, 2001, the Committee resumed consideration of Bill C-18, An Act to amend the Federal-Provincial Fiscal Arrangements Act (See Minutes of Proceedings, Tuesday, April 24, 2001, Meeting No. 12).

The Committee proceeded to Clause-by-Clause consideration of the Bill.

On Clause 1.

Scott Brison moved, -That Bill C-18, in Clause 1, be amended by replacing lines 4 to 27 on page 1, of the following:

"1. Subsection 4(9) of the Federal-Provincial Fiscal Arrangements Acts is repealed."

The Chair ruled as follows:

Under the Canadian system of government, the Crown alone initiates all public expenditure, where public expenditure is deemed to be a charge on the public revenue. Parliament may only authorize spending which has been recommended by the Governor General. This prerogative, referred to as the "financial initiative of the Crown", is signified by way of the "royal recommendation". (Marleau and Montpetit, p. 709)

A royal recommendation not only fixes the allowable charge, but also its objects, purposes, conditions and qualifications. An amendment which either increases the amount of an expenditure, or extends its objects, purposes, conditions and qualifications is inadmissible on the grounds that it infringes on the Crown’s financial initiative. (Marleau and Montpetit, p. 711)

The effect of the amendment is to remove the ceiling on equalization payments provided for under the Federal-Provincial Fiscal Arrangements Act. Increasing the public expenditure infringes on the financial initiative of the Crown and therefore contravenes the terms of the Royal Recommendation. For this reason, the amendment is inadmissible.

Therefore, the amendment was not proceeded with.

Scott Brison moved, – That the Committee ask the Minister of Finance seek a Royal Recommendation to amend Bill C-18 in Clause 1 by replacing line 17 on page 1 with the following:

"amount of the equalization entitlement for 1999-2000 were changed"

After debate, the question being put on the motion, it was, by a show of hands, negatived: YEAS: 4; NAYS: 7.

Lorne Nystrom moved, -That Bill C-18, in Clause 1, be amended by replacing line 14 on page 1 with the following:

"On April 1, 2002"

The Chair ruled as follows:

The effect of the amendment is to remove the ceiling on equalization payments for the fiscal years 2000-2001 and 2001-2002. This both increases the charge and extends the object of Bill C-18 and therefore contravenes the terms of the Royal Recommendation. For this reason, the amendment is inadmissible.

Therefore, the amendment was not proceeded with.

Scott Brison moved, -That Bill C-18, in Clause 1, be amended by replacing line 17 on page 1 with the following:

"amount of the Final Estimate for 1999-2000 were changed"

The Chair ruled as follows:

The effect of the amendment is to remove the ceiling on equalization payments provided for under the Federal-Provincial Fiscal Arrangements Act. The amendment extends the object and conditions of Bill C-18 as provided for under the Royal Recommendation. For this reason, the amendment is inadmissible.

Therefore, the amendment was not proceeded with.

Lorne Nystrom moved, -That Bill C-18, in Clause 1, be amended by replacing line 17 on page 1 with the following:

"amount of $10.8 billion were changed"

The Chair ruled as follows:

This amendment raises the ceiling on equalization payments under the Federal-Provincial Fiscal Arrangements Act, thereby increasing the level of public expenditure. The amendment infringes on the financial initiative of the Crown and therefore contravenes the terms of the Royal Recommendation. For this reason the amendment is inadmissible.

Clause 1 carried, on division.

The Title carried, on division.

The Bill carried, on division.

ORDERED, -- That the Chair report Bill C-18, An Act to amend the Federal-Provincial Fiscal Arrangements Act, to the House as the Third Report of the Committee.

Yvan Loubier moved, – That the Committee recommend to the Minister of Finance that he examine the possibility of lifting the equalization ceiling for the fiscal year 2000-2001, and thereafter.

After debate, the question being put on the motion, it was, by a show of hands, negatived: YEAS: 4; NAYS: 5.

Scott Brison moved, – That the Committee recommend to the Minister, by way of a report to the House, that the Minister seek a Royal Recommendation to accompany an amendment to Bill C-18 to replace, in Clause 1, line 17 on page 1, with the following:

"amount of the equalization entitlement for 1999-2000 were changed"

After debate, the question being put on the motion, it was negatived, on the following recorded division:

YEAS

Scott Brison

Ken Epp

Yvan Loubier

Lorne Nystrom – 4

NAYS

Larry Bagnell

Sue Barnes

Carolyn Bennett

Roy Cullen

Roger Gallaway

Gary Pillitteri – 6

Yvan Loubier moved, – That the Committee could, perhaps, recommend to the Minister of Finance that might examine the possibility of lifting the ceiling on equalization for the fiscal year 2000-2001 and possibly thereafter.

After debate, the question being put on the motion, it was negatived, on the following recorded division:

YEAS

Scott Brison

Ken Epp

Yvan Loubier

Lorne Nystrom – 4

NAYS

Larry Bagnell

Sue Barnes

Carolyn Bennett

Roy Cullen

Roger Gallaway

Gary Pillitteri – 6

Lorne Nystrom moved, – That the Committee report to the House in order to request a Royal Recommendation for a motion to amend Bill C-18 at Report Stage which would allow for an increase in the base level of equalization payments.

After debate, the question being put on the motion, it was negatived on the following recorded division:

YEAS

Scott Brison

Ken Epp

Yvan Loubier

Lorne Nystrom – 4

NAYS

Larry Bagnell

Sue Barnes

Carolyn Bennett

Roy Cullen

Roger Gallaway

Gary Pillitteri – 6

Scott Brison moved, – That the Committee ask the Minister of Finance to consider amending Bill C-18 in Clause 1 by replacing line 17 on page 1 with the following:

"amount of the equalization entitlement for 1999-2000 were changed"

After debate, the question being put on the motion, it was negatived on the following recorded division:

YEAS

Scott Brison

Ken Epp

Yvan Loubier

Lorne Nystrom – 4

NAYS

Sue Barnes

Carolyn Bennett

Roy Cullen

Roger Gallaway

Gary Pillitteri – 5

Scott Brison moved, – That the Committee invite the minister to appear before the Committee on the subject of equalization.

After debate, the question being put on the motion, it was, by a show of hands, negatived: YEAS: 4; NAYS: 5.

At 10:38 a.m. the Committee proceeded to sit in camera to consider its future business.

It was agreed, – That, pursuant to Standing Order 109, the Committee request a comprehensive Government response to Challenge for Change: A Study of Cost Recovery, the Ninth Report of the Standing Committee on Finance, tabled in the House June 15, 2000 during the Second Session of the 36th Parliament, and

That this request be considered the Committee’s Fourth Report to the House.

It was agreed, – That the Committee adopt the proposed workplan, including itinerary, for the Pre-Budget Consultations study.

It was agreed, – That the Committee adopt the travel budget of $492,150 based on the proposed Pre-Budget Consultations workplan.

It was agreed, – That the Committee adopt the workplan for the months of May and June, as indicated on the calendar.

It was agreed, – That the Committee approve the proposed operational budget of $118,350.

It was agreed, – That the Committee seek the authority of the House to televise any or all of its Pre-Budget proceedings.

At 10:59 a.m., the Committee adjourned to the call of the Chair.

Pat Steenberg

Clerk(s) of the Committee