On June 3, 2005, at the commencement of debate on second reading of Bill C-363, an act to amend the Canada Mortgage and Housing Corporation Act (profits distributed to provinces), a point of order was raised by the Parliamentary Secretary to the Government House Leader concerning the need for this bill to be accompanied by a royal recommendation. A submission on this matter was also made by the sponsor of the bill, the hon. member for Beauport—Limoilou. The Chair thanks both members for having raised this matter at an early opportunity.
Bill C-363 proposes that the Canada Mortgage and Housing Corporation distribute any surplus from its reserve fund to the provinces for social housing purposes, for the supply of quality housing at affordable prices, and for an increase in housing choices for the people in the provinces.
The parliamentary secretary argues that the transfer of such monies to the provinces constitutes new spending for a new purpose and ought to be accompanied by a royal recommendation.
The Chair has carefully reviewed this matter, especially the details pertaining to the operation of the CMHC reserve fund. Currently, section 29 of the Canada Mortgage and Housing Corporation Act prescribes how profits made by CMHC are credited to the CMHC reserve fund, and how amounts in that fund exceeding limitations established by the Governor-in-Council are then transferred to the Consolidated Revenue Fund.
The reserve fund of the Canada Mortgage and Housing Corporation has a unique character. Subsection 29(2) of the act explains that the board of CMHC places its profits in this fund to cover costs related to its operations:
--the profits of the Corporation in each fiscal year remaining after such provision...as the Board thinks proper for bad and doubtful debts, depreciation in assets, anticipated future losses and all other matters whatever that in the opinion of the Board should be provided for in carrying out the purposes of the Corporation shall be credited to the reserve fund....
In other words, the reserve fund is an operational account that CMHC uses to conduct its corporate business. Until amounts from the reserve fund are actually transferred to the Consolidated Revenue Fund each year, they are not available to the Crown for general appropriations.
Although the parliamentary secretary acknowledged that the reserve fund is not part of the Consolidated Revenue Fund, he did argue that because monies from the reserve fund are integrated into the Consolidated Revenue Fund on an annual basis they may be considered to form part of the general revenues under the control of the Crown.
The Chair has some difficulty with that statement.
The narrow question which the Chair must decide is whether the financial initiative of the Crown is being infringed through the provisions of Bill C-363, that is, whether the bill seeks an authorization for appropriations to be made out of the consolidated revenue fund without being first recommended by the Crown.
The Chair is not convinced that this is the case. Bill C-363 proposes that monies within the control of CMHC—not the Crown—be dedicated for a particular purpose. A royal recommendation is required when a bill seeks an authorization to withdraw monies from the Consolidated Revenue Fund. Is Bill C-363 seeking to withdraw monies from the Consolidated Revenue Fund? I would conclude that it is not. Bill C-363 is preventing CMHC monies from being placed in the Consolidated Revenue Fund by having them used for another purpose. The transfer of monies from the CMHC reserve fund to the Consolidated Revenue Fund—or in this case to the provinces—is not a matter relating to the appropriation of monies from the Crown. Therefore, Bill C-363 does not infringe on the financial initiative of the Crown.
The parliamentary secretary also cited a May 9, 2005 ruling, which among other things addressed the objects, purposes, conditions and qualifications of the royal recommendation. He argued that Bill C-363 is adding a new purpose which was not contemplated in the original legislation establishing CMHC and would therefore need a new royal recommendation. Again I wish to stress that the original royal recommendation strictly applied to matters concerning the objects, purposes, conditions and qualifications of an appropriation of monies within the control of the Crown; that is not the case with Bill C-363. As Bill C-363 does not appropriate from the Consolidated Revenue Fund, it cannot be considered as altering the purpose of the original royal recommendation.
Therefore, in its present form, this bill can proceed through the normal stages in the legislative process without the need of a royal recommendation.
The Chair once again thanks the Parliamentary Secretary to the Government House Leader and the hon. member for Beauport—Limoilou for having raised this matter at an early opportunity. By doing so, they have provided the entire House with the clarity it needs to take an informed decision on this piece of legislation.