Newfoundland (Treasury Board) v. N.A.P.E.,  3 S.C.R. 381, 2004 SCC 66
Newfoundland and Labrador Association of Public and
Private Employees Appellant
Her Majesty The Queen in Right of Newfoundland as represented
by the Treasury Board and the Minister of Justice Respondent
Attorney General of Quebec, Attorney General of New
Brunswick, Attorney General of British Columbia, Attorney
General of Alberta, Canadian Association for Community
Living, Canadian Hearing Society, Council of Canadians with
Disabilities, Hospital Employees’ Union, British Columbia
Government and Service Employees’ Union, Health Sciences
Association, Women’s Legal Education and Action Fund,
and Canadian Labour Congress Interveners
Indexed as: Newfoundland (Treasury Board) v. N.A.P.E.
Neutral citation: 2004 SCC 66.
File No.: 29597.
2004: May 12; 2004: October 28.
Present: McLachlin C.J. and Major, Bastarache, Binnie, LeBel, Deschamps and Fish JJ.
on appeal from the court of appeal for newfoundland and labrador
Constitutional law — Charter of Rights — Equality rights — Gender discrimination — Pay equity — Pay equity agreement signed in favour of female employees in health care sector — Whether s. 9 of Public Sector Restraint Act deferring commencement of wage adjustment payments infringes right to equality — If so, whether infringement justifiable — Canadian Charter of Rights and Freedoms, ss. 1, 15(1) — Public Sector Restraint Act, S.N. 1991, c. 3, s. 9.
Constitutional law — Charter of Rights — Reasonable limits — Oakes test — Separation of powers — Whether explicit recognition of separation of powers doctrine should be added to Oakes test — Canadian Charter of Rights and Freedoms, s. 1.
In 1988, the government of Newfoundland and Labrador signed a Pay Equity Agreement in favour of female employees in the health care sector including those represented in collective bargaining by the appellant union. In 1991, the same government introduced the Public Sector Restraint Act, which deferred from 1988 to 1991 the commencement of the promised pay equity increase (s. 9) and extinguished the 1988-91 arrears. The effect of s. 9 was to erase an obligation the Province had for approximately $24 million. The justification was that the government was experiencing a financial crisis unprecedented in the Province’s history. The government adopted other severe measures to reduce the Province’s deficit, including a freeze on wage scales for public sector employees, a closure of hospital beds, and a freeze on per capita student grants and equalization grants to school boards. It also laid off almost two thousand employees and terminated medicare coverage for certain items. Grievances were filed on behalf of some female employees affected by the cut to pay equity. The Arbitration Board ordered the government to comply with the original terms of the Pay Equity Agreement, holding that s. 9 of the Act infringed s. 15(1) of the Canadian Charter of Rights and Freedoms and that the infringement could not be saved under s. 1. On judicial review, the motions judge quashed the Board’s decision and dismissed the grievances. He agreed that s. 9 infringed s. 15(1) but found the infringement justifiable under s. 1. The Court of Appeal upheld the motions judge’s decision. In so doing, one appeal judge suggested that explicit recognition of the separation of powers doctrine should be added to the s. 1 test.
Held: The appeal should be dismissed. Section 9 of the Public Sector Restraint Act is constitutional.
When the provincial government signed the Pay Equity Agreement in 1988, it changed the legal landscape by creating enforceable contractual rights to end pay discrimination by a procedure contractually binding on all of the parties. This process converted pay equity from a policy argument into an existing legal obligation for the benefit of the female hospital workers. The purpose of the Public Sector Restraint Act was to reduce the women’s pay below this contractual entitlement and its intended effect was to continue to pay women less than was paid to men for work of equal value. Passage of the Act on April 18, 1991 put women hospital workers in a worse position than they were on April 17, 1991.
The contextual factors listed in Law lead to the conclusion that the targeting of an acquired right to pay equity amounted to discrimination within the meaning of s. 15(1) of the Charter. First, a pre-existing disadvantage is shown since “women’s jobs” are chronically underpaid and the Act perpetuated and reinforced the idea that women could be paid less for no reason other than the fact that they were women. Second, the postponement of pay equity did not correspond to the actual needs, capacity or circumstances of the claimants. Indeed, it did just the opposite. Third, the Act did not have an ameliorative purpose in relation to the workforce. Fourth, since work is an important part of life, the interest affected by the Act was of great importance. In sum, s. 9 of the Act affirmed a policy of gender discrimination which the provincial government had itself denounced three years previously.
Section 9 of the Public Sector Restraint Act is justifiable under s. 1 of the Charter. The need to address the fiscal crisis was a pressing and substantial legislative objective in the spring of 1991. The crisis was severe. The cost of putting pay equity into effect according to the original timetable was a major expenditure. A lower credit rating, and its impact on the government’s ability to borrow, and the added cost of borrowing to finance the provincial debt, were matters of great importance. Moreover, the government was debating not just rights versus dollars, but rights versus hospital beds, layoffs, jobs, education and social welfare.
Courts will continue to look with strong scepticism at attempts to justify infringements of Charter rights on the basis of budgetary constraints. To do otherwise would devalue the Charter because there are always budgetary constraints and there are always other pressing government priorities. Nevertheless, the courts cannot close their eyes to the periodic occurrence of financial emergencies when measures must be taken to juggle priorities to see a government through the crisis.
The government’s response to its fiscal crisis was also proportional to its objective. First, as the pay equity payout represented a significant portion of the budget, its postponement was rationally connected to averting a serious financial crisis. Second, the government’s response was tailored to minimally impair rights in the context of the problem it confronted. Despite the scale of the fiscal crisis, the government proceeded to implement the pay equity plan, albeit at a slower pace. In addition, the government initiated a consultation process with the union to find alternative measures. There were broad cuts to jobs and services. The exceptional financial crisis called for an exceptional response. In such cases, a legislature must be given reasonable room to manoeuvre. Third, on a balance of probabilities the detrimental impact of a delay in achieving pay equity did not outweigh the importance of preserving the fiscal health of a provincial government through a temporary but serious financial crisis. The seriousness of the crisis, combined with the relative size of the $24 million required to bring pay equity in line with the original schedule, are the compelling factors in that respect. The fiscal measures adopted by the government did more good than harm, despite the adverse effects on the women hospital workers.
While the separation of powers is a defining feature of our constitutional order, it cannot be invoked to undermine the operation of a specific written provision of the Constitution like s. 1 of the Charter. Section 1 itself reflects an important aspect of the separation of powers by defining certain express limits on legislative sovereignty. Judicial review of governmental action long predates the adoption of the Charter. Since Confederation, courts have been required by the Constitution to ensure that legislatures comply with the division of legislative powers. The Charter has placed new limits on government power in the area of human rights, but judicial review of those limits involves the courts in the same role in relation to the separation of powers as they have occupied from the beginning, that of the constitutionally mandated referee. It is not the courts which limit the legislatures. It is the Constitution.
The doctrine of separation of powers is an important concern, but the Oakes test, which is itself based on the text of s. 1, provides the proper framework in which to consider what the doctrine requires in situations where legislative action is alleged to come into conflict with entrenched constitutional rights. The suggestions that the onus be transferred to an applicant to show that the exercise of the claimed Charter right is reasonable, that the Court exempt legislation embodying “policy initiatives” from Charter review, and that the Court decline to consider what, if any, less infringing measures were available to the legislature to achieve its policy objectives, must all be rejected.
Referred to: R. v. Oakes,  1 S.C.R. 103; Reference re Canada Assistance Plan (B.C.),  2 S.C.R. 525; Ferrel v. Ontario (Attorney General) (1998), 42 O.R. (3d) 97; Reference re Public Service Employee Relations Act (Alta.),  1 S.C.R. 313; Law v. Canada (Minister of Employment and Immigration),  1 S.C.R. 497; R. v. Big M Drug Mart Ltd.,  1 S.C.R. 295; Dagenais v. Canadian Broadcasting Corp.,  3 S.C.R. 835; R. v. Find,  1 S.C.R. 863, 2001 SCC 32; McKinney v. University of Guelph,  3 S.C.R. 229; Reference re ss. 193 and 195.1(1)(c) of the Criminal Code (Man.),  1 S.C.R. 1123; R. v. Heywood,  3 S.C.R. 761; Canada (Auditor General) v. Canada (Minister of Energy, Mines and Resources),  2 S.C.R. 49; Reference re Remuneration of Judges of the Provincial Court of Prince Edward Island,  3 S.C.R. 3; Nova Scotia (Workers’ Compensation Board) v. Martin,  2 S.C.R. 504, 2003 SCC 54; Singh v. Minister of Employment and Immigration,  1 S.C.R. 177; R. v. Lee,  2 S.C.R. 1384; Schachter v. Canada,  2 S.C.R. 679; Figueroa v. Canada (Attorney General),  1 S.C.R. 912, 2003 SCC 37; PSAC v. Canada,  1 S.C.R. 424; M. v. H.,  2 S.C.R. 3; Egan v. Canada,  2 S.C.R. 513; Operation Dismantle Inc. v. The Queen,  1 S.C.R. 441; Eldridge v. British Columbia (Attorney General),  3 S.C.R. 624; R. v. Edwards Books and Art Ltd.,  2 S.C.R. 713; Irwin Toy Ltd. v. Quebec (Attorney General),  1 S.C.R. 927; RJR-MacDonald Inc. v. Canada (Attorney General),  3 S.C.R. 199; Vriend v. Alberta,  1 S.C.R. 493.
Statutes and Regulations Cited
Public Sector Restraint Act, S.N. 1991, c. 3 [rep. & sub. 1992, c. P-41.1], ss. 5, 9.
Abella, Rosalie Silberman. “Employment Equity” (1987), 16 Man. L.J. 185.
Morgan, Edmund M. “Judicial Notice” (1944), 57 Harv. L. Rev. 269.
Newfoundland. House of Assembly. Preliminary Report (Hansard), 41st General Assembly, 3rd Sess., vol. XLI, No. 11, March 19, 1991.
APPEAL from a judgment of the Newfoundland and Labrador Court of Appeal (2002), 221 D.L.R. (4th) 513, 220 Nfld. & P.E.I.R. 1, 657 A.P.R. 1, 103 C.R.R. (2d) 1, 2003 CLLC ¶230-019,  N.J. No. 324 (QL), 2002 NLCA 72, affirming a decision of the Newfoundland Supreme Court, Trial Division (1998), 162 Nfld. & P.E.I.R. 1, 500 A.P.R. 1, 51 C.R.R. (2d) 323,  N.J. No. 96 (QL). Appeal dismissed.
Sheila H. Greene and Paula M. Schumph, for the appellant.
Donald H. Burrage, Q.C., and Justin S. C. Mellor, for the respondent.
Isabelle Harnois, for the intervener the Attorney General of Quebec.
Written submissions only by Gaétan Migneault, for the intervener the Attorney General of New Brunswick.
George H. Copley, Q.C., and Neena Sharma, for the intervener the Attorney General of British Columbia.
Roderick Wiltshire, for the intervener the Attorney General of Alberta.
William Holder and Lesli Bisgould, for the interveners the Canadian Association for Community Living, the Canadian Hearing Society, and the Council of Canadians with Disabilities.
Joseph J. Arvay, Q.C., and Catherine J. Parker, for the interveners the Hospital Employees’ Union, the British Columbia Government and Service Employees’ Union, and the Health Sciences Association.
Karen Schucher and Fiona Sampson, for the intervener the Women’s Legal Education and Action Fund.
Mary Cornish and Fay C. Faraday, for the intervener the Canadian Labour Congress.
The judgment of the Court was delivered by
1 Binnie J. _ In this appeal, the Court is required to consider what sort of government fiscal crisis is sufficient (if any) to justify limiting a right or freedom guaranteed by the Canadian Charter of Rights and Freedoms. The appellant union says cost considerations can never amount to such a justification. Therefore, scheduled progress towards pay equity should not have been sacrificed as it was in the Province’s fiscal crisis that arose in the spring of 1991. The respondent government replies that the Court should not second-guess budgetary allocations made by the House of Assembly in the severe and unanticipated financial emergency occurring at that time. Marshall J.A. of the Court of Appeal of Newfoundland and Labrador was not only persuaded by the government’s position on the facts but went on to argue that the jurisprudence under s. 1 of the Charter should be rewritten to explicitly require compliance with the doctrine of the separation of powers at every step of the way. Thus rewritten, he concluded, the even greater measure of judicial deference to legislative and executive choices that he advocates would allow the law at issue in this case to be justified.
2 In my view, the separation of powers has been a preoccupation of the s. 1 jurisprudence in general, and it was a pivotal concern in R. v. Oakes,  1 S.C.R. 103, in particular, as will be discussed. I do not agree with Marshall J.A., with respect, that the present s. 1 jurisprudence fails to reflect the words of s. 1. Accordingly, while I agree in the result with Marshall J.A., I reach that conclusion by a more orthodox route.
3 On June 24, 1988, the provincial government signed a Pay Equity Agreement in favour of female employees in the health care sector including those represented in collective bargaining by the appellant. Less than three years later, before any money had actually flowed to the intended recipients, the same government introduced legislation to defer the commencement of the promised increase for three years until 1991. The justification was that the government’s budgetary deficit had unexpectedly ballooned to the point where the provincial credit rating on international money markets was at risk. The House of Assembly enacted the bill retroactive to March 31, 1991 as the Public Sector Restraint Act, S.N. 1991, c. 3 (the “Act”), continued by S.N.L. 1992, c. P-41.1. The appellant union contends that the Act singled out female hospital workers for budget cuts that amounted to discriminatory treatment contrary to s. 15(1) of the Charter. The courts in Newfoundland agreed that the effects of the Act were discriminatory, but that in light of the fiscal crisis then confronting the provincial government, the measure could be justified under s. 1 of the Charter. As stated, I agree with that conclusion and would dismiss the appeal.
4 The collective agreements that had been in force between the government and the public sector unions for a number of years included a prohibition against discrimination on the ground of sex (art. 4.01). Despite this provision, the parties had negotiated collective agreements from year to year which, they eventually acknowledged, paid female-dominated work classifications less than was paid to male-dominated classifications for work of equal value. There had been in existence, the government agreed on June 24, 1988, systemic discrimination. The resulting Pay Equity Agreement between the government and the major public sector unions, including the appellant, did not itself achieve pay equity, but laid out a process and methodology for its implementation. The intention was to begin the pay equity process in the hospital sector and in Newfoundland Hydro, but eventually to “bring in pay equity in all segments” of the provincial public service (Newfoundland Preliminary Report (Hansard), Vol. XLI, No. 11, March 19, 1991, at p. 363).
5 Under the scheme of the Pay Equity Agreement, the first wage adjustment was to be made effective April 1, 1988, and thereafter the adjustments would come in increments over a period of four years at a rate per year not exceeding 1 percent of the 1987 payroll for each job “grouping” as defined therein. The full balance to achieve pay equity was to be paid out in the fifth year, on April 1, 1992. The agreement established a Pay Equity Steering Committee for the hospital sector with a membership that included equal representation from the unions and government.
6 The complex task of evaluating work of equal value across different job classifications, and working out the wage adjustments necessary to achieve equity, took longer than anticipated. Eventually, on March 20, 1991, the financial analysis was complete. The government estimated the immediate cost at that date of implementation of the initial stages of pay equity in the health care sector at $24 million.
7 At the time these cost estimates were received, the provincial government was experiencing what the President of the Treasury Board said was a financial crisis unprecedented in the Province’s history. Existing and projected budgetary deficits had risen to the point where the Province’s credit rating in financial markets was seriously at risk. He told the House of Assembly:
For the first time in our history we are faced with the prospect of having a limitation on what we can borrow . . . We could not take the chance that our credit rating would drop one more notch.
. . .
We were facing a horrendous problem that had to be dealt with for the sake of the people of the Province.
(Hansard, supra, at pp. 359 and 361)
8 The House of Assembly responded on April 18, 1991 with passage of the Public Sector Restraint Act, that was made retroactive by about three weeks to the Province’s fiscal year end, being March 31, 1991.
9 Section 5 of the Act purported to freeze the wage scales of all public sector employees, from cabinet ministers to hospital workers, for one year, later extended to March 31, 1993. (An exception was made for increases to individual wages on account of step progression within a job classification or reclassification.) Pay equity was in part exempted from the freeze. It would still be implemented but the first adjustment was delayed to March 31, 1991 instead of April 1, 1988. It was provided that nothing would be paid on account of the three-year period from April 1, 1988 through to March 31, 1991. The effect of the Act, according to the President of the Treasury Board, was that “it erases an obligation we had there of approximately $24 million” (Hansard, supra, at pp. 362-3 (emphasis added)).
10 Eventually the government and the union (without prejudice to the union’s position in this litigation) agreed that instead of the contemplated five-year payout the pay equity objective would be implemented by a series of adjustments not exceeding 2 percent of individual salaries each year until pay equity as between male and female employees was achieved.
11 In April 1991, grievances were filed on behalf of some affected employees in respect of matters including non-payment of the pay equity wage adjustments. The parties subsequently agreed to proceed only with the grievances concerning pay equity.
II. Relevant Legislation
12 Public Sector Restraint Act, S.N. 1991, c. 3
9. (1) Notwithstanding the terms and conditions of a pay equity agreement contained in a collective agreement or added by agreement to an existing collective agreement, no pay equity agreement shall contain a provision which implements that pay equity agreement retroactively.
(2) Where there is a provision in a pay equity agreement which provides that the pay equity agreement shall be implemented retroactively, that provision is void.
(3) Notwithstanding the other provisions of this Act, a pay equity agreement may be negotiated or implemented, but the 1st pay equity wage adjustment date shall be the date on which the pay equity wage adjustment is agreed upon.
(4) This section applies whether the pay equity agreement is reached or the pay equity wage adjustment date is agreed upon before or after the date this Act comes into force.
(5) In this section “pay equity agreement” means an agreement between a public sector employer and a group of public sector employees to recognize the compensation practice which is based primarily on the relative value of the work performed, irrespective of the gender of employees, and includes a requirement that no employer shall establish or maintain a difference between compensation paid to male and female employees, employed by that employer, who are performing work of equal or comparable value.
III. Judicial History
A. Arbitration Board (D. L. Alcock, Chair; J. Sack, Q.C., and R. S. Noseworthy, Q.C., Members), April 4 and 14, 1997
13 The Board held that as the Pay Equity Agreement of June 24, 1988 had been incorporated into the relevant collective agreements, the Board had jurisdiction to deal with the grievances.
14 The effect of s. 9(1) of the Public Sector Restraint Act was to eliminate the “retroactive” benefit of three months between the date the Pay Equity Agreement was signed (June 24, 1988) and the beginning of fiscal year 1988-89 on April 1, 1988. More significantly, the Board noted the date of the initial adjustment (i.e., increase) would be delayed from April 1, 1988 to March 31, 1991, and the workers’ entitlement to arrears for the 1988-91 period was wiped out (or, as the President of the Treasury Board said, “erased”).
15 The Board was unanimous that the Act infringed s. 15(1) of the Charter because the “government knew that s. 9 would have an adverse economic impact on females who had been subjected to widely recognized gender discrimination” (p. 86). The government had undertaken, in the Pay Equity Agreement, to address what it had agreed was discrimination, and the House of Assembly could not, without infringing s. 15(1), nullify by legislation the agreed-upon remedial plan. The Board wrote, at p. 87:
By curtailing the adjustments required under the Pay Equity Agreement, s. 9 of the Public Sector Restraint Act disproportionately and adversely affected female employees working in the public sector by depriving them of the benefit of pay equity in comparison with employees in male-dominated job classifications who are paid in accordance with the value of their work.
16 As to the government’s attempt to justify the infringement of equality rights, the Board agreed that “the objective of the Public Sector Restraint Act was to reduce an escalating deficit in circumstances where the financial health and well-being of the Province was at stake” (p. 96). The Board stated:
The money sought to be saved would result from the reduction of expected collective bargaining expenditures. Most would be saved by wage restraint. The remainder (some $24 million in Mr. Baker’s estimation) would have to come from a group of women suffering systemic gender discrimination who were awaiting that amount of money as partial redress for that discrimination.
17 While pay restraint was rationally connected to solving the Province’s financial dilemma, a majority of the Board found that the Public Sector Restraint Act could not be saved under s. 1 because the government had failed to demonstrate it had examined less drastic or less unfair means of solving its fiscal problems such as unpaid leave, job sharing, early retirement or reduced employees pension contributions in respect of all public sector employees. The majority decision of the Arbitration Board therefore declared s. 9 of the Public Sector Restraint Act to be void and ordered the government to comply with the original terms of the Pay Equity Agreement.
18 The government nominee, Ronald S. Noseworthy, Q.C., in a partial dissent, agreed that the Public Sector Restraint Act infringed s. 15(1) of the Charter because it singled out female-dominated work classifications for adverse impact by denying them the 1988-91 pay equity adjustments. However, in his view the Act was legislation “of an emergency nature” and was saved under s. 1. It was rationally connected to the pressing and substantial objective of putting the Province’s finances in order. It also met the proportionality test. Other measures could have been taken but a “high degree of deference” is owed to the House of Assembly “when they are allocating scarce resources amongst competing groups” (p. 132). In his view, the Public Sector Restraint Act was valid legislation and the grievances should therefore be dismissed.
B. Newfoundland Supreme Court, Trial Division (1998), 162 Nfld. & P.E.I.R. 1
19 On judicial review, Mercer J. agreed that s. 9 of the Act infringed s. 15(1) of the Charter because it “had an adverse economic impact upon a class of employees which Government had recognized as the victims of systemic gender discrimination” (para. 55). The impact was particularly significant for employees who retired, were injured on the job or received severance pay between April 1, 1988 and March 31, 1991, because they entirely lost the pay equity benefit to which they were entitled. “Section 9 therefore constituted the statutory basis for the continuance of gender discrimination past the date when Government was obliged to eliminate it” (para. 55).
20 With respect to s. 1 of the Charter, Mercer J. considered that in a period of severe fiscal restraint the objective of reducing expenditures was sufficiently important to justify a limitation on the s. 15(1) Charter right. Section 9 of the Act eliminated the payment of pay equity adjustments for the 1988-90 fiscal years. The necessary rational connection to the objective had therefore been established.
21 With respect to the proportionality of the legislative response, Mercer J. held that the courts should accord a measure of deference to the legislature when that body responds to social problems, including the resolution of competing rights between different sectors of society. The $24 million saved by the deferral of the pay equity adjustments was part of a larger $200 million fiscal problem. To address that problem the government had considered various alternatives such as borrowing, tax increases, budget freezes and reductions in government expenditures. The union had agreed from the outset that pay equity could properly be put into effect by incremental adjustments. The effect of the Act was to defer, not repudiate, implementation of the Pay Equity Agreement. In Mercer J.’s view the Act did not have a disproportionately severe effect upon the affected group of female hospital workers in relation to the broader benefits achieved by fiscal restraint for the Province as a whole.
22 Mercer J. therefore quashed the majority decision of the Board and dismissed the grievances.
C. Newfoundland Court of Appeal (2002), 221 D.L.R. (4th) 513, 2002 NLCA 72
23 Marshall J.A. agreed that s. 9 had a discriminatory effect, and concurred with the motions judge’s conclusion that the Arbitration Board was correct in its unanimous holding that s. 9 of the Public Sector Restraint Act infringed equality rights guaranteed under s. 15(1) of the Charter. Although, in his view, the government was under no constitutional obligation to have addressed the problem of pay discrimination in the first place, once it did so it was not open to the government to revoke its commitment without infringing s. 15(1).
24 With respect to justification, Marshall J.A. held that s. 1 of the Charter must be “harmonized with the Separation of Powers Doctrine by foreclosing the potential for the judiciary to assume the role of final arbitrator of the correctness of policy initiatives within the purview of the political branches of government” (para. 351).
25 Since, in his view, the Oakes proportionality requirements courted a risk of putting the judiciary in the shoes of the other branches of government as ultimate arbitrator of which policy choices were in the best interests of the people of the province, Marshall J.A. suggested, at para. 365, that explicit recognition of the separation of powers doctrine should be added to the s. 1 test:
There is a need, then, to revisit those three gateways to proportionality [set out in Oakes], and if not to completely reframe them, at least to oil their hinges to assure they swing in harmony with the Separation of Powers.
26 In his view, the sheer magnitude of the severe financial situation presented by the prospect of burgeoning fiscal deficits in early 1991 demonstrated that the reduction and containment of fiscal deficits was an urgent, pressing and substantial objective. Fiscal restraint was rationally connected to that objective. A perusal of the “extended budgetary explanation” in Hansard provided ample support for the motion judge’s conclusion that the government had considered various alternatives such as borrowing, tax increases, budget freezes and reduction in government expenditures.
27 The fact that the impugned legislation delayed pay equity implementation rather than eliminating it showed that “reasonable effort” had been made to minimize the infringement. The deleterious effects of limiting constitutionally protected equality rights were outweighed by the pressing and substantial objective of containing and reducing the forecasted budgetary deficits.
28 “Swinging in harmony” with the separation of powers doctrine required judicial deference to the policy choices adopted by the elected representatives to address communal or societal needs.
IV. Constitutional Questions
29 On October 29, 2003, the Chief Justice stated the following constitutional questions:
To which the appellant adds a supplementary question:
3. Did the Court of Appeal err in adding a further step to the section 1 analysis, namely a requirement for the Court to determine explicitly at each stage whether the separation of powers doctrine has been offended?
30 Pay equity has been one of the most difficult and controversial workplace issues of our times. There is no doubt that in the 1980s women hospital workers in Newfoundland and Labrador (and elsewhere) were being paid less than men for work of equal value. By 1988, it had become a significant collective bargaining issue between the provincial government and the public sector unions.
31 The Pay Equity Agreement signed on June 24, 1988 was a major achievement. No doubt it was bought by the public sector unions with concessions on other fronts. Progress on such an important issue, once achieved, should not be lightly set aside. Yet, the effect of the Public Sector Restraint Act was not only to shift the start of the provincial government’s pay equity adjustments from 1988 to 1991, but to eliminate any liability for amounts otherwise payable to the underpaid female hospital workers in respect of the three fiscal years ending March 31, 1991. For those workers who retired prior to 1991, the Act meant they derived no benefit at all from the agreement their union had achieved. Nevertheless the provincial government argues that the Public Sector Restraint Act is entirely valid on the basis that: (1) there being nothing in the Charter (the government says) imposing pay equity as a constitutional obligation, there can be no constitutional impediment to its repeal, let alone a “deferral” of its effective date; (2) in any event, there is nothing in the Public Sector Restraint Act that creates a distinction that qualifies as discrimination within s. 15(1) of the Charter; and (3) if any such discrimination is found to exist it is justified under s. 1 of the Charter.
32 I do not believe there is much substance in the first two points. The battleground in this case is the s. 1 justification. Nevertheless, I propose to deal with the points in the order presented.
A. Absence of a Constitutional Obligation
33 The respondent says that female workers have no right under s. 15(1) of the Charter to equal pay for work of equal value. What the government gave in 1988, the government could take away in 1991. It is true that in the ordinary course, legislative adoption of a remedial measure does not “constitutionalize” it so as to fetter its repeal: Reference re Canada Assistance Plan (B.C.),  2 S.C.R. 525, at p. 563. Here, however, the provincial government signed a Pay Equity Agreement on June 24, 1988 which changed the legal landscape by creating enforceable contractual rights to end pay discrimination by a procedure contractually binding on all of the parties. The Pay Equity Agreement was incorporated into the public sector collective agreements.
34 This process converted pay equity from a policy argument into an existing legal obligation for the benefit of the female hospital workers. The purpose of the Public Sector Restraint Act was to reduce the women’s pay below their contractual entitlement. Its intended effect was to pay them less than was paid to men for work of equal value. Passage of the Act on April 18, 1991 left women hospital workers worse off than they were on April 17, 1991. The issue is whether the disadvantage thus imposed on April 18, 1991 amounted to discrimination within the scope of s. 15(1) of the Charter.
35 The respondent government relies on Ferrel v. Ontario (Attorney General) (1998), 42 O.R. (3d) 97 (C.A.), which upheld the authority of Ontario to repeal an affirmative action provision in the Employment Equity Act, 1993, put in place by the previous government. The repealed provision authorized regulations to require private employers to adopt employment equity plans. Such plans could require “numerical goals determined . . . with reference to percentages approved by the [Employment Equity] Commission that, in the opinion of the Commission, fairly reflect[ed] the representation of the designated groups in the population of a geographical area or in any other group of people” (s. 55(2)). After noting that workplace discrimination was already prohibited by the Ontario Human Rights Code, and that the law in question was supplementary “machinery” to promote hiring practices “under the shield of s. 15(2) of the Charter” (p. 110), Morden A.C.J. concluded that the preference of the newly elected legislature for the “machinery” of the Ontario Human Rights Code over the “numbers-driven” repealed provision did not violate s. 15(1). If the result were otherwise, he noted, the Charter would itself “have an inhibiting effect on legislatures enacting tentative, experimental legislation in areas of complex social and economic relations” (p. 110).
36 The argument here is not over the “machinery” of government. On April 18, 1991 when the Public Sector Restraint Act was passed, the female hospital workers were not workers in search of machinery to pursue a claim. They were entitled under their collective agreements to four years of pay equity adjustments (1988, 1989, 1990 and 1991) which, at that point, had been ascertained and agreed to by the government and the union. The debt was payable on April 1, 1991. It was this entitlement, due to an historically disadvantaged minority in the workforce, that was targeted by the Act.
37 I do not wish to be taken as agreeing with counsel for the respondent that there is no direct infringement of s. 15(1) when a government employer discriminates in the payment of wages for work of equal value on the basis of the sex of the employee. We do not get to that issue in this case. For present purposes, it is sufficient to hold that the question whether the targeting of acquired rights of women hospital workers in this case was discriminatory is clearly within the ambit of s. 15(1) scrutiny.
B. Does Section 9 of the Public Sector Restraint Act Breach Section 15(1) of the Charter?
38 Counsel for the appellant concisely summarized her s. 15(1) argument against the Public Service Restraint Act:
It repudiates recognition by the state of the undervaluation of work done by women, it identifies pay inequity for women as acceptable and it repudiates state responsibility [as employer] for redressing systemic discrimination for women.
While this description necessarily sacrifices nuance in the interest of brevity, it certainly captures the essence of the debate.
39 The provincial government has an uphill battle contesting an infringement of s. 15(1) in light of the opening clauses of the Pay Equity Agreement it signed on June 24, 1988:
1.1 To achieve pay equity by redressing systemic gender discrimination in compensation for work performed by employees in female dominated classes within the bargaining units represented by AAHP, IBEW, CUPE, NAPE and NLNU, and whose members are employees covered by The Public Service (Collective Bargaining) Act, 1973. [Emphasis added.]
40 The value placed on a person’s work is more than just a matter of dollars and cents. The female hospital workers were being told that they did not deserve equal pay despite making a contribution of equal value. As Dickson C.J. observed in Reference re Public Service Employee Relations Act (Alta.),  1 S.C.R. 313, dissenting, at p. 368:
Work is one of the most fundamental aspects in a person’s life, providing the individual with a means of financial support and, as importantly, a contributory role in society. A person’s employment is an essential component of his or her sense of identity, self-worth and emotional well-being. Accordingly, the conditions in which a person works are highly significant in shaping the whole compendium of psychological, emotional and physical elements of a person’s dignity and self-respect. [Emphasis added.]
41 This case thus fits easily within the framework established in Law v. Canada (Minister of Employment and Immigration),  1 S.C.R. 497, which identified the affirmation of human dignity and self-worth as a central purpose of s. 15(1) of the Charter.
42 The effect of the Public Sector Restraint Act in 1991 was to affirm a policy of gender discrimination which the provincial government had itself denounced three years previously. The Act draws a clear formal distinction between those who were entitled to benefit from pay equity, and everyone else. The appropriate comparator group consists of men in male-dominated classifications performing work of equal value. That group was not similarly targeted. They were paid according to their contractual entitlement. The adverse impact of the legislation therefore fell disproportionately on women, who were already at a disadvantage relative to male- dominated jobs as they earned less money. It is true that the Act targeted an advantage secured to “female dominated classes”, and thus presumably included some males, but such inclusion does not change the result. The category of “female dominated classes” was established in the original Pay Equity Agreement, wherein the government formally acknowledged that in relation to workers thus defined the pay differential constituted “systemic gender discrimination”.
43 The differential treatment did not arise merely because of the type of job but rather because the job is one that is generally held by women. Sex is a prohibited ground of discrimination.
44 As to the government’s argument that the targeting of an acquired right to pay equity did not amount to discrimination within the meaning of s. 15(1), the contextual factors listed in Law, supra, provide a useful (though not exhaustive) checklist.
(1) Pre-Existing Disadvantage
45 “Womens’ jobs” are chronically underpaid. As Abella J.A. wrote in a 1987 law journal article:
The existence of a gap between the earnings of men and women is one of the few facts not in dispute in the “equality” debate. There are certainly open questions about it, the two main ones being the width of the gap and the right way to go about closing it. But no one seriously challenges the reality that women are paid less than men, sometimes for the same work, sometimes for comparable work.
(R. S. Abella, “Employment Equity” (1987), 16 Man. L.J. 185, at p. 185)
46 Postponement of pay equity and extinguishment of the 1988-91 arrears could reasonably be taken by the women, already underpaid, as confirmation that their work was valued less highly than the work of those in male-dominated jobs. The Public Sector Restraint Act reinforced an inferior status by taking away the remedial benefits their unions had negotiated on their behalf. This perpetuated and reinforced the idea that women could be paid less for no reason other than the fact they are women: Law, supra, at para. 64.
(2) Correspondence, or Lack Thereof, Between the Ground or Grounds on Which the Claim Is Based and the Actual Need, Capacity, or Circumstances of the Claimant
47 The government conceded in the 1988 Pay Equity Agreement that the women’s existing pay did not do justice to their contribution. The postponement of pay equity in 1991 therefore did not correspond to the actual needs, capacity or circumstances of the claimants. Indeed, it did just the opposite. This is not a situation where the Province can be said to treat employees differently on the basis of actual personal difference between individuals.
(3) Ameliorative Purpose or Effect
48 This Act did not have an ameliorative purpose in relation to the workforce. On the contrary, it rolled back the ameliorative effects of the collective agreements that required pay equity adjustments beginning in 1988. It “erased” a debt of $24 million to female hospital workers that fell due on April 1, 1991, prior to passage of the Act.
(4) The Nature and Scope of the Interest Affected by the Impugned Law
49 Work is an important part of life. For many people what they do for a living, and the respect (or lack of it) with which their work is regarded by the community, is a large part of who they are. Low pay often denotes low status jobs, exacting a price in dignity as well as dollars. As such, the interest affected by the Act was of great importance.
50 The Act froze wage scales in the male-dominated jobs as well as in the female-dominated jobs, but the men were already paid money for value whereas the women were not.
51 I therefore conclude that both the trial judge and the Court of Appeal were correct to affirm the Board’s unanimous finding of a breach of s. 15(1).
C. Is Section 9 of the Public Sector Restraint Act Saved by Section 1?
52 It should be stated at the outset that legislation aimed at perpetuating pay inequity is a very serious matter. Counsel for the respondent acknowledged at the hearing that this is so, but argued that this is one of those “exceedingly rare cases” where the issue is not about “administrative convenience or cost simpliciter or majorit[arian] [p]reference”. It is, he says, about “the province’s ability to deliver on some of its most basic social programs, such as education, health and welfare”.
53 Oakes itself cautioned that “rights and freedoms guaranteed by the Charter are not, however, absolute” (p. 136). Section 1 permits a law to limit a Charter right provided it is a “reasonable” measure that “can be demonstrably justified in a free and democratic society”. Demonstration of a reasonable limit involves consideration of five related questions with close attention to the factual context:
1. Does the law address a sufficiently important legislative objective? “It is necessary, at a minimum, that an objective relate to concerns which are pressing and substantial.” (Oakes, at pp. 138-39)
2. Is the substance of the law “rationally connected to the objective”? (Oakes, at p. 139)
3. Does the law impair the right no more than is reasonably necessary to accomplish the legislative objective, i.e., impair “as little as possible the right or freedom in question”? (R. v. Big M Drug Mart Ltd.,  1 S.C.R. 295, at p. 352)
4. Is there proportionality between the effects of the legislation and the objective which has been identified as of “sufficient importance”? (Oakes, at p. 139)
5. Even if the importance of the objective outweighs the adverse effect of the measure on protected rights, do the adverse effects of the measure outweigh its “actual salutary effects”? (Dagenais v. Canadian Broadcasting Corp.,  3 S.C.R. 835, at p. 888 (emphasis deleted))
54 Marshall J.A. advocated adding a further question “at the end of each stage of the appraisal of compliance with the Oakes criteria”, namely
. . . whether the exercise of the judicial power in coming to those findings was in consonance with the Separation of Powers Doctrine. [para. 372]
(1) The Section 1 Record
55 As with any matter that must be approached with close attention to context, the evidence led in support of a s. 1 justification is very important to the outcome. The only evidence before the Board consisted of an extract from Hansard and some budget documents. The government witnesses were not employed in the relevant policy group at the time.
56 Ordinarily such a casually introduced s. 1 record would be a matter of serious concern. However the essential subject matter of the s. 1 justification in this case consists of the public accounts of the Province that are filed with the House of Assembly, and comments by the Minister of Finance and the President of the Treasury Board as to what they thought the accounts disclosed and what they proposed to do about it, which are reported in Hansard. This is all material of which courts may take judicial notice, as noted in R. v. Find,  1 S.C.R. 863, 2001 SCC 32, per McLachlin C.J., at para. 48:
Judicial notice dispenses with the need for proof of facts that are clearly uncontroversial or beyond reasonable dispute. Facts judicially noticed are not proved by evidence under oath. Nor are they tested by cross-examination. Therefore, the threshold for judicial notice is strict: a court may properly take judicial notice of facts that are either: (1) so notorious or generally accepted as not to be the subject of debate among reasonable persons; or (2) capable of immediate and accurate demonstration by resort to readily accessible sources of indisputable accuracy . . . . [Emphasis added.]
I would also refer to the comment of La Forest J. in McKinney v. University of Guelph,  3 S.C.R. 229, at p. 300: “The general objectives of the legislature . . . are readily apparent from a reading of the debates leading to their enactment.” See, as well, Reference re ss. 193 and 195.1(1)(c) of the Criminal Code (Man.),  1 S.C.R. 1123, at pp. 1137-38, and R. v. Heywood,  3 S.C.R. 761, at pp. 788-89.
57 The purpose of judicial notice is not only to dispense with unnecessary proof but to avoid a situation where a court, on the evidence, reaches a factual conclusion which contradicts “readily accessible sources of indisputable accuracy”, and which would therefore bring into question the accuracy of the court’s own fact-finding processes. A finding on the evidence led by the parties, for example, that the Newfoundland deficit in 1988 was $5 million whereas anyone could ascertain from the public accounts that it was $120 million would create a serious anomaly. As Professor Morgan famously wrote:
. . . [the court] cannot adjust legal relations among members of society and thus fulfill the sole purpose of its creation if it permits the parties to take issue on, and thus secure results contrary to, what is so notoriously true as not to be the subject of reasonable dispute . . . .
(E. M. Morgan, “Judicial Notice” (1944), 57 Harv. L. Rev. 269, at p. 273)
58 The Board was critical of the government in failing to call witnesses who could describe at first hand what alternatives were examined to secure cost reductions that might, if adopted, have avoided a deferral of pay equity. I agree with the Board that the government ought to have called witnesses who were better placed to explain the government accounts and ministerial observations. However, in the context of this particular subject matter, I do not agree that failure to do so was fatal to the government’s s. 1 case. There are serious limits to how far the courts can penetrate Cabinet privilege in order to require information about the deliberations of the Executive Council: Canada (Auditor General) v. Canada (Minister of Energy, Mines and Resources),  2 S.C.R. 49, at p. 89. What transpires in the budgetary process, of course, lies at the high end of Cabinet confidences, and here there was no need to precipitate a confrontation between the courts and the government. In my view, the material brought to the Board’s attention, and of which we may take judicial notice, is sufficient for the purposes of disposing of this appeal.
(2) Was There a Pressing and Substantial Legislative Objective?
59 It cannot reasonably be disputed that the provincial government faced a severe fiscal crisis in the spring of 1991. In part, this was due to a reduction of anticipated federal transfer payments by $130 million. Over 45 percent of Newfoundland government spending is financed either through federal equalization payments or federally established program financing, “money that is transferred down here”, as it was explained by the President of the Treasury Board (Hansard, supra, at p. 364).
60 The Minister of Finance advised the House of Assembly that instead of a modest surplus of $10 million for the fiscal year ending March 31, 1991, there would be a deficit of $120 million. The prospective deficit for 1991-92, unless serious expenditure cuts were made, would be “in the vicinity of $200 million” (Hansard, supra, at p. 359). Deficits of this magnitude could have serious consequences for the Province, not only in borrowing to meet the current account deficit but in refinancing existing provincial debt as it fell due:
There is one rating agency that still gives us an A minus rating. The other rating agencies were in the B category. And if our rating were to drop one more notch, and we would have a B rating, things would get extremely difficult. As the Minister of Finance has explained the financial markets are such that many investors get involved with only A level bonds — many of the larger investors — so that much less of the market would be available to us and what was available to us we would have to pay a lot more for.
. . .
In the past Governments have allowed the credit rating to drop. When they ran into trouble in 1985, there was some trouble, there was a downturn, the credit rating dropped. It is easy — let the credit rating drop. We no longer had that luxury. We could not take the chance that our credit rating would drop one more notch.
(Hansard, supra, at p. 359)
61 The government’s s. 1 evidence includes its expenditure reduction program. In addition to the freeze of wage scales for public sector employees including members of the House of Assembly, Cabinet Ministers, executives, managers and non-unionized employees, the budgetary measures froze or cut budgets for government-funded agencies; closed 360 acute care hospital beds; froze per capita student grants and equalization grants to school boards; made government-wide reductions in operating budgets; reduced or eliminated a range of programs; imposed a 10 percent reduction in executive and management positions; laid off 1,300 permanent, 350 part-time and 350 seasonal employees and eliminated a further 500 vacant positions in government departments; and terminated medicare coverage for items such as routine dental surgery in hospitals and basic vision assessment under the optometry and medicare programs.
62 It seems to me the severity of these measures, including the cut to pay equity, corroborates the government’s statement that it believed itself, on reasonable grounds, to be in the middle of a fiscal crisis.
63 The appellant union says that these cost savings should not be recognized as sufficiently important to justify the limitation of Charter rights. It relies on the statement of Lamer C.J. in Reference re Remuneration of Judges of the Provincial Court of Prince Edward Island,  3 S.C.R. 3 (“PEI Provincial Court Judges Reference”), at para. 284:
Three main principles emerge from this discussion. First, a measure whose sole purpose is financial, and which infringes Charter rights, can never be justified under s. 1 (Singh and Schachter). Second, financial considerations are relevant to tailoring the standard of review under minimal impairment (Irwin Toy, McKinney and Egan). Third, financial considerations are relevant to the exercise of the court’s remedial discretion, when s. 52 is engaged (Schachter). [Emphasis added.]
64 It seems to me that these and other similar statements have to be read in context. It is true, as the Court recently affirmed in Nova Scotia (Workers’ Compensation Board) v. Martin,  2 S.C.R. 504, 2003 SCC 54, that “[b]udgetary considerations in and of themselves cannot normally be invoked as a free-standing pressing and substantial objective for the purposes of s. 1 of the Charter” (para. 109 (emphasis added)). The spring of 1991 was not a “normal” time in the finances of the provincial government. At some point, a financial crisis can attain a dimension that elected governments must be accorded significant scope to take remedial measures, even if the measures taken have an adverse effect on a Charter right, subject, of course, to the measures being proportional both to the fiscal crisis and to their impact on the affected Charter interests. In this case, the fiscal crisis was severe and the cost of putting into effect pay equity according to the original timetable was a large expenditure ($24 million) relative even to the size of the fiscal crisis.
65 It is convenient at this point to look more closely at what this Court has said in the so-called “dollars versus rights” controversy.
66 In Singh v. Minister of Employment and Immigration,  1 S.C.R. 177, a case dealing with the Charter rights of refugee claimants, Wilson J. made the following statement about s. 1, at pp. 218-19:
Seen in this light I have considerable doubt that the type of utilitarian consideration brought forward by Mr. Bowie can constitute a justification for a limitation on the rights set out in the Charter. Certainly the guarantees of the Charter would be illusory if they could be ignored because it was administratively convenient to do so. No doubt considerable time and money can be saved by adopting administrative procedures which ignore the principles of fundamental justice but such an argument, in my view, misses the point of the exercise under s. 1. The principles of natural justice and procedural fairness which have long been espoused by our courts, and the constitutional entrenchment of the principles of fundamental justice in s. 7, implicitly recognize that a balance of administrative convenience does not override the need to adhere to these principles. [Emphasis added.]
67 However, this broad statement must be read together with her concluding observations at p. 220, that “[e]ven if the cost of compliance with fundamental justice is a factor to which the courts would give considerable weight, I am not satisfied that the Minister has demonstrated that this cost would be so prohibitive as to constitute a justification within the meaning of s. 1.” Singh certainly cautioned against the limitation of rights to save dollars, but the scope of the caution was left open for a case where the evidence warranted its consideration.
68 R. v. Lee,  2 S.C.R. 1384, dealt with legislation that denied an accused the right to trial by jury after he or she failed to appear for trial without a legitimate excuse. Lamer J., for the majority, said that the legislative objective was the “cost” to potential jurors and to the criminal justice system of wasted time in terms both of economic loss and of community disaffection. These objectives went beyond the purely financial (e.g., “to protect the administration of justice from delay, inconvenience, expense and abuse, and to secure the respect of the public for the criminal trial process” (p. 1390 (emphasis deleted))) but on the issue of cost, Lamer J. observed, at p. 1391:
I do not believe that the importance of the objective can be measured solely by reference to the amount of money lost as a result of the non-appearance of accused persons, and the cost of empanelling a second jury. Rather the cost, and by implication the importance of the objective, must be measured in terms of the overall “cost”, both in the sense of economic loss and disruption to lives, and in the sense of confidence and respect for the system, to the individuals selected for jury duty and to society as a whole. When viewed in this light, I conclude that the legislative objective is of sufficient importance to override a constitutionally protected right, especially where the restriction is limited to those who have abused the system without a legitimate excuse. [Emphasis added.]
69 It was thus clear from an early date that financial considerations wrapped up with other public policy considerations could qualify as sufficiently important objectives under s. 1.
70 In Schachter v. Canada,  2 S.C.R. 679, in the course of discussing remedies under s. 52, Lamer C.J. stated at p. 709:
This Court has held, and rightly so, that budgetary considerations cannot be used to justify a violation under s. 1. However, such considerations are clearly relevant once a violation which does not survive s. 1 has been established, s. 52 is determined to have been engaged and the Court turns its attention to what action should be taken thereunder.
71 I do not read this statement as contradicting what Lamer C.J. had earlier said in Lee regarding the legitimacy of a government response to mixed financial and non-financial objectives, particularly when read with his later statement in the PEI Provincial Court Judges Reference, already quoted, that “a measure whose sole purpose is financial” (para. 284 (emphasis added)) is not a sufficient justification under s. 1. The “sole purpose” test accords well with the Court’s statement in Martin, quoted above, that “[b]udgetary considerations in and of themselves cannot normally be invoked as a free-standing pressing and substantial objective for the purposes of s. 1” (para. 109 (emphasis added)). This rather qualified dictum was followed up in Figueroa v. Canada (Attorney General),  1 S.C.R. 912, 2003 SCC 37, where Iacobucci J. stated, at para. 66:
. . . I do not wish to rule out the possibility that there might be instances in which the potential impact upon the public purse is of sufficient magnitude to justify limiting the rights of individual citizens.
72 The result of all this, it seems to me, is that courts will continue to look with strong scepticism at attempts to justify infringements of Charter rights on the basis of budgetary constraints. To do otherwise would devalue the Charter because there are always budgetary constraints and there are always other pressing government priorities. Nevertheless, the courts cannot close their eyes to the periodic occurrence of financial emergencies when measures must be taken to juggle priorities to see a government through the crisis. It cannot be said that in weighing a delay in the timetable for implementing pay equity against the closing of hundreds of hospital beds, as here, a government is engaged in an exercise “whose sole purpose is financial”. The weighing exercise has as much to do with social values as it has to do with dollars. In the present case, the “potential impact” is $24 million, amounting to more than 10 percent of the projected budgetary deficit for 1991-92. The delayed implementation of pay equity is an extremely serious matter, but so too (for example) is the layoff of 1,300 permanent, 350 part-time and 350 seasonal employees, and the deprivation to the public of the services they provided.
73 This is not the first time the Court has been asked to determine the constitutionality of public sector restraint legislation whose objective is to remedy a serious financial situation. In PSAC v. Canada,  1 S.C.R. 424, the union had attacked a federal law which automatically extended existing collective agreements. PSAC argued that the law interfered with collective bargaining contrary to freedom of association (s. 2(d) of the Charter). The only judges who found a Charter infringement, and who therefore had to address s. 1, were Dickson C.J. and Wilson J. The Chief Justice accepted that the then need to control inflation justified the law. Wilson J. accepted that controlling inflation at the time of passage of the legislation was an object “of sufficient importance” (p. 455), but considered the government’s response to have been disproportionate, and therefore unjustified. In this context, Dickson C.J. made the following comments at pp. 439-40:
In the present case, though there is no explicit indication of Parliament’s objective in the Act, it is apparent that the general or overriding purpose for enacting the Public Sector Compensation Restraint Act was the reduction of inflation. This is, in my view, an objective of sufficient importance for the purpose of s. 1. Inflation at the time of the Act’s passage was a serious problem. The evidence established that wage and price inflation had reached double digit levels, that Canada’s inflation rate was exceeding that of the United States, and that the monetary and fiscal restraint policies of 1979 were not having a significant effect.
. . . The seriousness of inflation underlined by the Court’s decision in Re Anti-Inflation Act supports the characterization of Parliament’s objective in the present case as relating to a “pressing and substantial concern”. I am of the opinion, therefore, that the objective of reducing inflation was, at the time of passage of the Act, an objective of sufficient importance for the purpose of s. 1 of the Charter.
See also Wilson J., dissenting, at p. 455.
74 In my view, the union’s argument that budgetary issues should effectively be given no weight in these circumstances goes too far. With respect, the need to address a fiscal crisis such as that described by the President of the Treasury Board was a pressing and substantial legislative objective.
75 Loss of credit rating, and its impact on the government’s ability to borrow, and the added cost of borrowing to finance the provincial debt which, in the case of Newfoundland, requires “[h]undreds of millions of dollars every year in interest” (Hansard, supra, at p. 362), are matters of high importance. The President of the Treasury Board told the House of Assembly that “the financial health of the Province was at stake” (Hansard, supra, at p. 359). The Newfoundland Government had already experienced a period of trusteeship in the 1930s, a fact glumly referred to by the President of the Treasury Board in his speech. The financial health of the Province is the golden goose on which all else relies. The government in 1991 was not just debating rights versus dollars but rights versus hospital beds, rights versus layoffs, rights versus jobs, rights versus education and rights versus social welfare. The requirement to reduce expenditures, and the allocation of the necessary cuts, was undertaken to promote other values of a free and democratic society: Oakes, supra, at p. 136; M. v. H.,  2 S.C.R. 3, at para. 107. And, as Sopinka J. pointed out in Egan v. Canada,  2 S.C.R. 513, at para. 104, “[I]t is not realistic for the Court to assume that there are unlimited funds to address the needs of all.”
76 In my view, the evidence establishes a substantial and pressing objective on the facts of this case. Whether or not this objective was pursued in a manner that complies with s. 1 of the Charter will now be addressed.
(3) Was There a Rational Connection Between the Legislative Measure and the Pressing and Substantial Objective?
77 As the pay equity payout represented a significant portion of the budget, its postponement was rationally connected to averting a serious fiscal crisis in Newfoundland and Labrador.
(4) Minimal Impairment
78 Were the Charter rights of the female hospital workers impaired no more than was reasonably necessary to achieve the pressing and substantial legislative objective of fiscal viability?
79 In the PEI Provincial Court Judges Reference, supra, a decision much relied on by the appellant to oppose the relevance of budgetary constraints, Lamer C.J. stated, at para. 283:
While purely financial considerations are not sufficient to justify the infringement of Charter rights, they are relevant to determining the standard of deference for the test of minimal impairment when reviewing legislation which is enacted for a purpose which is not financial. [Emphasis added; emphasis in original deleted.]
80 A few preliminary points should be emphasized. Marshall J.A. noted that the s. 1 case is essentially about budgets and that the making of a budget is a quintessentially political activity. However, these facts do not immunize the budget choices from Charter review. The notion that there are inherently “political” questions beyond the courts’ jurisdiction was emphatically rejected in Operation Dismantle Inc. v. The Queen,  1 S.C.R. 441, per Dickson J., at p. 459:
I have no doubt that disputes of a political or foreign policy nature may be properly cognizable by the courts.
81 If an individual’s Charter right or freedom is violated by the state, it is no answer to say the violation was driven or is justified for political reasons. Indeed forms of state discrimination that are undertaken for political reasons are among the most odious, as the recent history of parts of the world from South Africa to the Balkans can attest.
82 The second preliminary point is that in framing the Charter, Canadian legislators chose to identify certain rights and freedoms as having special constitutional status and these were placed for protection in a legal strongbox. As such they have a privileged status, and the appellant is right to call attention to that fact. However, of course, Charter rights must yield when the requisites of s. 1 are satisfied.
83 Thirdly, the Oakes test recognizes that in certain types of decisions there may be no obviously correct or obviously wrong solution, but a range of options each with its advantages and disadvantages. Governments act as they think proper within a range of reasonable alternatives, and the Court acknowledged in M. v. H., supra, at para. 78, that “the role of the legislature demands deference from the courts to those types of policy decisions that the legislature is best placed to make”. Thus, for example, in Eldridge v. British Columbia (Attorney General),  3 S.C.R. 624, La Forest J. stated for the Court, at para. 85:
It is also clear that while financial considerations alone may not justify Charter infringements . . . governments must be afforded wide latitude to determine the proper distribution of resources in society . . . This is especially true where Parliament, in providing specific social benefits, has to choose between disadvantaged groups . . . .
84 It is therefore recognized that in such cases governments have a large “margin of appreciation” within which to make choices. It seems evident that the scope of that “margin” will be influenced, amongst other things, by the scale of the financial challenge confronting a government and the size of the expenditure required to avoid a Charter infringement in relation to that financial challenge. Thus, in Eldridge, supra, it will be recalled, the cost of providing sign language interpretation in hospitals was tiny, i.e., “only $150,000, or approximately 0.0025 percent of the provincial health care budget” (para. 87). It was held that the denial of the rights of the deaf could have no financial justification in that case.
85 In the present case, I believe the government’s response to its fiscal crisis was proportional to its objective, and therefore saved under s. 1. I do so for a number of reasons, none of which taken in isolation would necessarily be sufficient, but when added to each other cumulatively signal a quite exceptional situation.
(a) The Scale of the Fiscal Crisis
86 The only comparable financial justification asserted in the jurisprudence of this Court was the level of inflation at issue in PSAC, supra. I will not repeat what has already been quoted from the judgment of Dickson C.J. at para. 73 of these reasons. Judicial statements made in less drastic circumstances about the inadequacy of budgetary concerns must be read in context.
(b) The Cost of Implementing the Remedial Plan
87 The arrears owing under the Pay Equity Agreement as of April 18, 1991 was $24 million, representing a significant percentage of the threatened 1991-92 deficit. In one sense, the size of the debt illustrates the scale of discrimination experienced by women hospital workers. Nevertheless, it provides a contrast with Eldridge, supra, where the cost of compliance amounted to no more than a matter of administrative convenience.
(c) The Public Sector Restraint Act Affirmed the Government’s Commitment to Pay Equity
88 No doubt the women hospital workers would say that erasing $24 million of arrears is a peculiar form of affirmation, but the fact is that despite cuts to other services and programs the Act not only affirmed pay equity in principle but required an immediate pay equity wage increase to female hospital workers (albeit three years behind the original 1988 commitment). In a very tight budget, $3.5 million was set aside for the immediate payment on the pay equity account.
(d) The Appellant Union Was Invited to Participate in a Government Process Examining Alternatives
89 The Board majority condemned the government’s s. 1 case because of the government’s failure to give adequate consideration to “alternative means” to combat the deficit. The only “alternative” mentioned to the House by the President of the Treasury Board was an additional 900 layoffs:
Twenty-four million dollars would have meant another 900 laid off in the hospital sector — 900 jobs. So we had a choice to make, and we chose to remove the retroactivity from the pay equity agreement.
(Hansard, supra, at p. 362)
90 The documentary evidence, however, demonstrates that other options were also considered and rejected including a hiring freeze, layoffs and cuts to other programs such as social assistance as well as tax increases. In fact, to avoid additional cuts the government also borrowed approximately $50 million to finance its current expenses.
91 The criticism of the Board majority that the government failed adequately to consider alternative measures overlooks the more telling point that the appellant union, on behalf of the female hospital workers, had been invited by the government to participate in a process to identify just such alternative measures. The President of the Treasury Board stated (and the union led no evidence to the contrary) as follows:
. . . we made it quite clear at that point in time that we were not looking for compliance, we were not looking for support, we were not looking for their okay, we just wanted to make sure that if there was any other method that we had overlooked, that that possibility could be conveyed to us, so we did that and that first meeting with the four major unions was held on February 20. Then there was a request from the unions for a joint meeting — the first meeting was an individual meeting — there was a request for a joint meeting to clarify the choices we had facing us so that meeting was held on Sunday, 24th February.
. . .
. . . And we did get some feedback and some response from a couple of unions, but by and large we got none. [Emphasis added.]
(Hansard, supra, at p. 361)
92 In most s. 1 cases, the government has moved unilaterally to limit the Charter right or freedom without consulting with the rightsholders in advance. The union may not have liked the consultative process but there is no evidence that it was undertaken in bad faith.
(e) The Government Was Mediating Claims Between a Number of Important Stakeholders
93 The women hospital workers were a disadvantaged group, but so in reality were the medical patients who lost access to 360 hospital beds, students of school boards whose transfers were frozen, and those who relied on other government programs that were reduced or eliminated (although it is true that in their case Charter rights were not implicated). As was pointed out in the House, “there was enough misery to go around”.
94 It is also true that the government here wore two hats potentially in conflict, firstly as steward of the financial health of the Province and secondly as an employer who owed a $24 million debt to its female workers. The beneficiaries of other public programs did not necessarily have a contractual right to the benefit, as did the women hospital workers. Nevertheless there were numerous legitimate claims on the public purse by disadvantaged people which the government was bound to mediate and this provides important context to the budgetary decisions that were made. This point was made by La Forest J. in upholding the constitutional validity of the Retail Business Holidays Act in R. v. Edwards Books and Art Ltd.,  2 S.C.R. 713, at p. 795:
. . . having accepted the importance of the legislative objective, one must in the present context recognize that if the legislative goal is to be achieved, it will inevitably be achieved to the detriment of some. Moreover, attempts to protect the rights of one group will also inevitably impose burdens on the rights of other groups. There is no perfect scenario in which the rights of all can be equally protected.
In seeking to achieve a goal that is demonstrably justified in a free and democratic society, therefore, a legislature must be given reasonable room to manoeuvre to meet these conflicting pressures. [Emphasis added.]
See also Irwin Toy Ltd. v. Quebec (Attorney General),  1 S.C.R. 927, at p. 999.
95 In this context, the requirement that the measure impair “as little as possible” the infringed Charter right cannot be applied in a way that is blind to the consequences for other social, educational and economic programs. The provincial government in this case could have thrown other claims and priorities to the winds and simply paid the $24 million but in its view, the cuts it would have had to make elsewhere to permit this to happen would have created even greater grief and social disruption. The budget is simply a forum for juggling spending priorities of all types. It is not convincing simply to declare that an expenditure to achieve a s. 15 objective must necessarily rank ahead of hospital beds or school rooms. To do so would be to ignore the very difficult context in which these decisions were made.
96 As in most cases, resourceful counsel, with the benefit of hindsight, can multiply the alternatives. It was suggested, for example, that the government could have frozen the step progressions (0.5 percent of the payroll) rather than postponing pay equity and extinguishing the accumulated 1988-91 benefits. This, too, might have been a justifiable approach, but there is no compelling rule that says step progression should have been denied all employees, including women, in order to keep to the original schedule of the pay equity program. The Act might also be criticized for its failure to recognize the different situations of workers who had retired prior to March 31, 1991, and who were thus denied altogether the benefits intended to flow from the Pay Equity Agreement. However, to make a special provision for these people would have required drawing distinctions within the class of female hospital workers who were employed in the 1988-91 period, favouring some and not others. The attempt to solve the problem of inequality among the larger group of hospital workers would create another inequality within the smaller group of female hospital workers. I cannot say that the government’s “line drawing” in this instance is fatal to its s. 1 defence.
97 I believe we should affirm what we said in Martin, supra, namely that “[b]udgetary considerations in and of themselves cannot normally be invoked as a free-standing pressing and substantial objective for the purposes of s. 1 of the Charter” (para. 109). But we should also affirm the factual finding by the Newfoundland courts that the spring of 1991 was not a normal time. It was an exceptional financial crisis that called for an exceptional response. I agree with the motions judge that the government response was tailored to minimally impair rights in the context of the problem it confronted. The government has therefore discharged its onus under this branch of the Oakes test.
(5) Proportionality of Means to Objective
98 The salutary effects of the legislation were far reaching. Maintaining the credit rating had a positive effect on interest rates and lender confidence. The government was better able to finance the provincial debt and continue to provide essential programs to its residents. The effect of the Act on the Charter rights of female employees who continued to work after March 1991, in purely financial terms, was to defer pay equity and leave the women hospital workers with their traditionally lower wage scales for a further three years. In light of the exceptional circumstances already recited, I accept on a balance of probabilities that the detrimental impact of a delay in achieving pay equity, deeply unfortunate as it was, did not outweigh the importance of preserving the fiscal health of a provincial government through a temporary but serious financial crisis. The seriousness of that crisis, combined with the relative size of the $24 million required to bring pay equity in line with the original schedule, are the compelling factors in that respect.
(6) Proportionality of Salutary Effects of the Act to Deleterious Effects of the Act
99 For the reasons already stated, the evidence shows that taken as a whole the fiscal measures adopted by the Province did more good than harm, despite the adverse effects on the women hospital workers, serious and deeply regrettable though such adverse effects were.
(7) Should Conformity with the Separation of Powers Doctrine Be Added as an Element of the Section 1 Analysis?
100 As stated, Marshall J.A. proposed that a court should ask itself at each stage of the s. 1 analysis whether the judicial response to the questions posed conform to the separation of powers doctrine. He wrote, at para. 362:
. . . it cannot be said that s. 1 endows the judiciary with licence to stand in the shoes of the other branches of government as ultimate arbitrator of which policy choices were in the best interests of the governed. For the foregoing reasons, it would appear that the Oakes proportionality requirements court such a risk. Accordingly, it seems that some revisitation of them is in order.
101 The essential propositions advanced by Marshall J.A. were that the Oakes test does not sufficiently respect the actual wording of s. 1 of the Charter (para. 262) and that in the result inadequate deference is paid to legislative and executive choices at each and every stage of the s. 1 justification. It is thus out of step with the doctrine of the separation of powers. While I respect the care and detail with which Marshall J.A. set out his concerns in the course of a 231-page judgment, I do not agree with his analysis.
(a) Fidelity to the Text of Section 1
102 The Oakes test, of course, is itself based on the text of s. 1. Thus in Oakes itself, Dickson C.J. observed at p. 137:
It is clear from the text of s. 1 that limits on the rights and freedoms enumerated in the Charter are exceptions to their general guarantee. The presumption is that the rights and freedoms are guaranteed unless the party invoking s. 1 can bring itself within the exceptional criteria which justify their being limited. This is further substantiated by the use of the word “demonstrably” which clearly indicates that the onus of justification is on the party seeking to limit: Hunter v. Southam Inc. . . .
103 The textual analysis was carried forward by McLachlin J. in RJR-MacDonald Inc. v. Canada (Attorney General),  3 S.C.R. 199. Referring to the words “reasonable limits prescribed by law as can be demonstrably justified in a free and democratic society”, she wrote at paras. 128 and 136:
The process is not one of mere intuition, nor is it one of deference to Parliament’s choice. It is a process of demonstration. This reinforces the notion inherent in the word “reasonable” of rational inference from evidence or established truths.
. . .
. . . [C]are must be taken not to extend the notion of deference too far. Deference must not be carried to the point of relieving the government of the burden which the Charter places upon it of demonstrating that the limits it has imposed on guaranteed rights are reasonable and justifiable. Parliament has its role: to choose the appropriate response to social problems within the limiting framework of the Constitution. But the courts also have a role: to determine, objectively and impartially, whether Parliament’s choice falls within the limiting framework of the Constitution. The courts are no more permitted to abdicate their responsibility than is Parliament. To carry judicial deference to the point of accepting Parliament’s view simply on the basis that the problem is serious and the solution difficult, would be to diminish the role of the courts in the constitutional process and to weaken the structure of rights upon which our constitution and our nation is founded. [Emphasis added.]
No doubt Parliament and the legislatures, generally speaking, do enact measures that they, representing the majority view, consider to be reasonable limits that have been demonstrated to their satisfaction as justifiable. Deference to the legislative choice to the degree proposed by Marshall J.A. would largely circumscribe and render superfluous the independent second look imposed on the courts by s. 1 of the Charter. Deference to the majority view on that scale would leave little protection to minorities. Marshall J.A.’s proposal, with respect, is not based on fidelity to the text of s. 1 but to dilution of the requirement of “demonstrable” justification.
(b) The Separation of Powers
104 No one doubts that the courts and the legislatures have different roles to play, and that our system works best when constitutional actors respect the role and mandate of other constitutional actors, including an “appreciation by the judiciary of its own position in the constitutional scheme” (Auditor General, supra, at p. 91, per Dickson C.J.). While the separation of powers is a defining feature of our constitutional order (PEI Provincial Court Judges Reference, supra), the separation of powers cannot be invoked to undermine the operation of a specific written provision of the Constitution like s. 1 of the Charter. Section 1 itself expresses an important aspect of the separation of powers by defining, within its terms, limits on legislative sovereignty.
105 Judicial review of governmental action long predates the adoption of the Charter. Since Confederation, courts have been required by the Constitution to ensure that state action complies with the Constitution. The Charter has placed new limits on government power in the area of human rights, but judicial review of those limits involves the courts in the same role in relation to the separation of powers as they have occupied from the beginning, that of the constitutionally mandated referee. As the Court affirmed in Vriend v. Alberta,  1 S.C.R. 493, at para. 56, “. . . it is not the courts which limit the legislatures. Rather, it is the Constitution, which must be interpreted by the courts, that limits the legislatures. This is necessarily true of all constitutional democracies.”
106 It is evident that adoption of the Charter placed new limits on the sovereignty of Parliament, as Marshall J.A. freely acknowledges in his decision, at para. 246:
A true perspective of the Charter is that it added another arrow to the quiver of the individual’s arsenal, broadening the scope of challenge to laws and actions of the legislative and executive arms of government. This observation in no way detracts from the importance of the Charter. The greater protection it accords to basic fundamental rights and freedoms, and its tempering of the powers of the political branches of government in its redefining of long-established concepts of parliamentary supremacy, herald reforms of no insignificant moment. [Emphasis added.]
107 Marshall J.A. makes a number of suggestions as to how this redefinition of Parliamentary sovereignty can be squared with his view of the Separation of Powers.
108 Firstly, Marshall J.A. would seemingly impose on a rights claimant not only the onus of establishing entitlement to the right but also of showing that its exercise “in the specific circumstances” of the case is reasonable. He writes at para. 244:
The new constitutional mechanism for enforcing fundamental rights rather addressed individual impotence in the face of encroachments upon them by providing a means of their protection through the courts to the extent that their exercise in the specific circumstances obtaining could be shown reasonable in a free and democratic society. [Emphasis added.]
109 To the extent Marshall J.A. is advocating a removal of the onus on government to justify infringement of a Charter right, and to substitute an onus under s. 1 on the complainant to show that his or her exercise of the right is reasonable, it would again contradict the text of s. 1 in which the word “reasonable” modifies “limits” not “rights”. Nowhere in the Charter is it suggested that the exercise of fundamental rights and freedoms should be presumed unreasonable unless and until a claimant proves the contrary “in the specific circumstances”.
110 Secondly, Marshall J.A. would seemingly remove from judicial scrutiny “policy initiatives within the purview of the political branches of government”. He writes, at paras. 362 and 351:
It is true that s. 1 effectively invests it [the judiciary] with responsibility to pass upon the justifiability of policy choices behind Charter infringements. However, that power is exercisable in the context of judicial deference to the other branches of government, and in harmony with the Separation of Powers Doctrine.
. . .
In the result, s. 1 of the Charter is harmonized with the Separation of Powers Doctrine by foreclosing the potential for the judiciary to assume the role of final arbitrator of the correctness of policy initiatives within the purview of the political branches of government.
111 The “political branches” of government are the legislature and the executive. Everything that they do by way of legislation and executive action could properly be called “policy initiatives”. If the “political branches” are to be the “final arbitrator” of compliance with the Charter of their “policy initiatives”, it would seem the enactment of the Charter affords no real protection at all to the rightsholders the Charter, according to its text, was intended to benefit. Charter rights and freedoms, on this reading, would offer rights without a remedy.
112 Thirdly, Marshall J.A. would preclude the courts from looking at alternative measures the “political branches” might have adopted to achieve their legitimate objectives with minimal impairment to Charter rights and freedoms. Thus he writes, at para. 424:
A perusal of s. 1’s wording reflects intent that the judicial justification power be rationalized through deference to the adopted policy choice without inquiry into other options which the judiciary might consider to have been available. [Emphasis added.]
113 With respect, it is difficult to understand how a court could satisfy itself that a particular legislative limit is “reasonable” if it is blinkered from considering whether other less limiting measures were available.
114 Marshall J.A.’s concerns lead back to his fundamental point that in appropriate cases, courts should defer to legislative and executive choices. Yet it is not at all necessary to rewrite the Court’s jurisprudence to reflect this concern. While I do not agree with Marshall J.A. that the courts should “oil th[e] hinges” of the Oakes test to ensure that it “swing[s] in harmony with the Separation of Powers” (because in my view such an approach would contradict the explicit wording of s. 1), it is nevertheless clear that there is built into the Oakes test a healthy respect for legislative choice in areas of economic and social policy. Marshall J.A. himself quotes approvingly (at para. 427) from the reasons of Dickson C.J. in PSAC, supra, on the subject of judicial deference at p. 442:
In my opinion, courts must exercise considerable caution when confronted with difficult questions of economic policy. It is not our judicial role to assess the effectiveness or wisdom of various government strategies for solving pressing economic problems. The question how best to combat inflation has perplexed economists for several generations. It would be highly undesirable for the courts to attempt to pronounce on the relative importance of various suggested causes of inflation, such as the expansion of the money supply, fiscal deficits, foreign inflation or the built-in inflationary expectations of individual economic actors. A high degree of deference ought properly to be accorded to the government’s choice of strategy in combatting this complex problem.
115 It is difficult to think that when he wrote those words in 1987, Dickson C.J. overlooked what he had said the previous year in Oakes. On the contrary, what the Chief Justice wrote in the PSAC case entirely conforms to what he had said in the Oakes test. He saw no need to amend the Oakes test on this point at that time and, with respect, I do not believe Marshall J.A. has made out a persuasive case for its modification in the present appeal.
116 In summary, whenever there are boundaries to the legal exercise of state power such boundaries have to be refereed. Canadian courts have undertaken this role in relation to the division of powers between Parliament and the provincial legislatures since Confederation. The boundary between an individual’s protected right or freedom and state power must also be refereed. The framers of the Charter identified the courts as the referee. While I recognize that the separation of powers is an important constitutional principle, I believe that the s. 1 test set out in Oakes and the rest of our voluminous s. 1 jurisprudence already provides the proper framework in which to consider what the doctrine of separation of powers requires in particular situations, as indeed was the case here. To the extent Marshall J.A. invites a greater level of deference to the will of the legislature, I believe acceptance of such an invitation would simply be inconsistent with the clear words of s. 1 and undermine the delicate balance the Charter was intended to achieve. I would therefore not do as he suggests.
117 The constitutional questions should therefore be answered as follows:
118 The appeal is dismissed with costs.
Appeal dismissed with costs to the respondent.
Solicitor for the appellant: Newfoundland and Labrador Association of Public and Private Employees, St. John’s, Newfoundland and Labrador.
Solicitor for the respondent: Department of Justice, St. John’s, Newfoundland and Labrador.
Solicitor for the intervener the Attorney General of Quebec: Department of Justice, Sainte-Foy.
Solicitor for the intervener the Attorney General of New Brunswick: Attorney General of New Brunswick, Fredericton.
Solicitor for the intervener the Attorney General of British Columbia: Ministry of Attorney General of British Columbia, Vancouver.
Solicitor for the intervener the Attorney General of Alberta: Alberta Justice, Edmonton.
Solicitor for the interveners the Canadian Association for Community Living, the Canadian Hearing Society, and the Council of Canadians with Disabilities: ARCH, A Legal Resource Centre for Persons with Disabilities, Toronto.
Solicitors for the interveners the Hospital Employees’ Union, the British Columbia Government and Service Employees’ Union, and the Health Sciences Association: Arvay Finlay, Victoria.
Solicitor for the intervener the Women’s Legal Education and Action Fund: Women’s Legal Education and Action Fund, Toronto.
Solicitors for the intervener the Canadian Labour Congress: Cavalluzzo Hayes Shilton McIntyre & Cornish, Toronto.