Monday the Senate came within a vote of splitting the budget bill in two, after a senator who had been leaning in favour of the amendment decided at the last minute to abstain. Appetite whetted, senators voted Wednesday to amend it in another way, deleting a provision that would have allowed federal excise taxes on alcohol to rise in line with inflation.
There was a distinct whiff of rebellion in the air: “I keep hearing that we should yield to (the House),” said Sen. Serge Joyal in debate. “Well, I’m sorry.” (A Canadian-style rebellion, that is, complete with apologies.)
The Commons having sent the bill back to the Senate in its original form, the Senate then refused to take it up, at least initially. At time of writing it was not clear when, or whether, Sen. Joyal’s colleagues would yield. But however this latest confrontation may be resolved, the two Houses are on a rising arc of brinksmanship.
Sometimes the Commons defers; sometimes the Senate does. But there is no assurance that a crisis can be dodged forever. It is not at all clear the inmates of the Upper House acknowledge any limitations on their role, as a body of appointees, versus that of the elected Commons. Nor do their apologists: for every one who dismisses concerns that the new “independent, merit-based” Senate might veto the Commons as fear-mongering, there is another who wonders why anyone would object if they did.
But if senators are in danger of overstepping their bounds procedurally, that is not to say their criticisms are without merit in substantive terms.
Serge Joyal, one of the rebellious — but polite — Senators.
The excise tax dispute might seem a small matter — there have been calculations that it would cost consumers perhaps an extra couple of dollars annually apiece — but the principle that taxes should not be raised except by the express authority of the people’s elected representatives is an ancient one, and one the elected representatives might themselves have been a little more eager to defend.
More serious are the issues that prompted senators to demand the bill — another of those enormous omnibus bills the Liberals had promised to eschew — be divided: specifically, to enable consideration of legislation to create the new Canada Infrastructure Bank on its own, rather than as part of the overall budget package.
This would be advisable simply as a matter of proper parliamentary procedure; that the Commons failed to do so is all the more lamentable in light of the many questions that have been raised about the bank.
Ostensibly the bank, as a Crown corporation, is supposed to be at arm’s length from the government, to provide assurance to the private investors from whom it hopes to raise tens of billions of dollars in capital that their investments will not be subject to political interference.
Ostensibly, too, its investments are supposed to be based on market principles, meaning private capital is rewarded only commensurate with the risk it assumes: if investors should not be at risk of having their capital confiscated by some politically-motivated decision, neither should they be, in effect, subsidized by government guarantees.
The ultimate objective, after all, is not merely to move such investments off the federal balance sheet — though that is a worthwhile goal in itself: the more that scarce tax dollars are used to pay for things that could be paid for in other ways, the less there is left to pay for the things that can only be paid for through taxes — but to subject them to market tests of demand. If, that is, the revenues accruing to any particular capital investment come from charges to their users — for example, road tolls — decisions on which projects to invest in will tend to focus on projects for which there are actual users. If, conversely, the people who use a road or bridge do not think it worth as much, measured by their willingness to pay for it, as it cost to build, chances are it shouldn’t be built.
But all of this depends heavily on those two “ostensiblys.” And the more we have learned about the government’s plans for the infrastructure bank, the more doubtful it has seemed whether those conditions would in fact be met.
An early warning sign was the government’s declared intent to mix public with private funding: while most of the money it hopes to raise would come from private investors, a fifth or more of it — $35 billion — would come from the federal treasury. That’s certainly better than the federal government raising, and spending, all of it, but should perhaps have been a signal that something was amiss.
And since then we have learned that in fact the bank’s board would not be as independent as all that — that the federal cabinet would have the power to overrule its decisions and fire its directors. Likewise there have been reports that, indeed, public funds would be used to make up the difference in the event that a project failed to deliver the promised return to investors: in effect, transferring the risk to the public.
“Public risk for private profit” is not exactly a winning slogan. Far better to take the bank back into the shop over the summer for some retooling, making it both more truly independent and more truly private than the ungainly pushmi-pullyu the government envisions.
Naturally, as a democrat I insist the Senate yields to the Commons. But as a taxpayer, I might not be entirely put out if the government took the opportunity for some sober second thought of its own.
