Parliamentary Privilege / Rights of the House

Contempt of the House: accountability of Ministers to Parliament

December 12, 2002

Debates, pp. 2600-1

On December 9, 2002, John Reynolds (West Vancouver–Sunshine Coast) rose on a question of privilege to accuse Elinor Caplan (Minister of National Revenue) of contempt of Parliament. He alleged that she had failed to comply with a Financial Administration Act requirement to report, in the Public Accounts of Canada, cases of fraud, theft and loss of taxpayers’ money, specifically on matters related to the Goods and Services Tax.^[1] After hearing from another Member, the Acting Speaker (Réginald Bélair) took the matter under advisement.^[2]

On December 12, 2002, the Speaker delivered his ruling. He declared that it was not his role to rule on points of law. The situation at hand constituted a difference of opinion between Mr. Reynolds and the Minister as to the legal interpretation of the Act, and as such was more a matter of debate than of procedure. However, the issue was nevertheless of concern to the House since the changes the Government made to how the Public Accounts were to be reported were not preceded by any attempt to seek the advice or agreement of Members, or even inform them of the change. The Speaker pointed out that for the House to be effective in holding the Government to account, Members require complete and accurate information that is provided in a timely fashion. He concluded that, although there was no procedural irregularity in a strict sense, Members might wish to pursue the matter through the Standing Committee on Public Accounts.

Decision of the Chair

The Speaker: I am now prepared to rule on the matter raised by the hon. Member for West Vancouver–Sunshine Coast on December 9 concerning the alleged failure of the Government to report on cases of fraud related to the Goods and Services Tax. The hon. Member charged that the Minister of National Revenue should be found in contempt for failing to table a full accounting of cases of theft, fraud and losses of tax revenue in the Public Accounts of Canada as required by the Financial Administration Act.

I would like to thank the hon. Member for West Vancouver–Sunshine Coast for raising the question and the hon. Government House Leader for his contribution on this matter.

Referring to Sections 23 and 24 of the Financial Administration Act relating to the remission of taxes, the hon. Member for West Vancouver–Sunshine Coast cites Section 24(2) which states:

Remissions granted under this or any other Act of Parliament during a fiscal year shall be reported in the Public Accounts for that year in such form as the Treasury Board may direct.

While it is a longstanding practice that the Speaker does not interpret matters of law, I suppose one could question whether the funds paid out by the Canada Customs and Revenue Agency in response to fraudulent applications qualify as “remissions” under this section. In this respect, I must note for the sake of precision that a “remission” is not the same as a loss.

The Chair finds more enlightenment by considering the issues raised by the hon. Member for West Vancouver–Sunshine Coast in the context of the provisions of Section 79 of the Financial Administration Act. I will return to this in a moment.

The hon. Member also cited a National Post article on Saturday, December 7, 2002 alleging that, since 1995, the Government has failed to report on the loss of public money due to fraudulent claims for GST refunds.

Through a written submission to the Chair, the hon. Minister of National Revenue has confirmed that following a 1995 agreement reached between the Department of National Revenue and the Treasury Board, her department ceased reporting fraudulent losses in the Public Accounts on a year by year basis. According to the hon. Minister, virtually all such confirmed losses were the result of court decisions rendered some months [or]^[3] years after the original losses were detected.

Explaining that items included in the Public Accounts of a given year must have occurred in that year, the hon. Minister argues that the time delay between the discovery of a loss and its confirmation by the courts made the timely inclusion of the losses in the Public Accounts impossible. The Minister notes that her department, now an agency, addressed this quandary by addressing the Treasury Board. She reports their conclusion that the requirements of the Financial Administration Act could be met through the aggregate information on tax write-offs included in the Public Accounts, and through media bulletins issued at the time any “loss” was confirmed by a court decision.

In short, the Minister contends that the Canada Customs and Revenue Agency is in full compliance with the Act, by virtue of the Treasury Board having agreed to this manner of reporting.

It is not of course for the Speaker to decide if the Agency is acting in compliance with the law. As I have had occasion to mention in several recent rulings, it is a long-accepted principle that the Speaker does not pronounce on points of law.

There is clearly a difference of opinion between the hon. Opposition House Leader and the hon. Minister concerning interpretation of the legalities flowing from the facts of this case. That is a matter for debate and a variety of different opportunities are available by which the matter can be raised in this Chamber or in committee. There is no procedural issue here and so I need not elaborate on that further.

However, there is another aspect of this case that gives me pause and that will, I think, pose difficulties for Members on both sides of the House. We are all aware that hon. Members cannot carry out the important task of holding the Government to account unless they are provided with complete, accurate information in a timely fashion. For much of this information they must depend upon the Government through such documents as the Public Accounts.

The Chair is troubled that although Revenue Canada recognized that it had a reporting difficulty and rightly sought the advice and approval of the Treasury Board as to how best to rectify the situation, no effort was made to consult Parliament.

As the Minister herself points out in her written submission:

Section 79 of the Financial Administration Act (FAA) provides regulation-making authority to prescribe, amongst other things, the manner by which losses of public funds should be reported in the Public Accounts. The Treasury Board has chosen to prescribe these requirements by way of policy rather than regulation.

There is little doubt that the Treasury Board’s decision to proceed by policy rather than by regulation grants it greater flexibility in dealing with the cases that arise, but that decision does not obviate the responsibility for remaining accountable to Parliament. Put another way, had the Treasury Board chosen to avail itself of its authority to make regulations in this regard, at least the Standing Joint Committee on Scrutiny of Regulations might have detected any changes in approach by the Government with regard to the reporting of such losses.

As it stands, not only was the advice or agreement of Members not sought to the reporting solution agreed to by the department and the Treasury Board, no indication that the change had been made was included in the Public Accounts or in any public accounts document.

Information that was available in one year simply vanished the next without explanation. It is surely disingenuous to suggest, as does the Minister in her submission, that aggregate information on tax write-offs in the Public Accounts and media bulletins on court decisions are adequate or sufficiently evident for parliamentary requirements.

As I said, this is not, strictly speaking a procedural issue but it is an issue that directly affects the rights of hon. Members to timely and accurate information. It is a matter that Members may wish to pursue in a more appropriate forum, possibly in the Standing Committee on Public Accounts, whose Chair, an opposition member, is very competent.

I thank the hon. House Leader of the Official Opposition for having raised this matter. While there is no basis for finding a procedural irregularity here in the strict sense, it does raise an issue of concern to all hon. Members.