[Recorded by Electronic Apparatus]

Thursday, June 13, 1996

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[Translation]

The Vice-Chairman (Mr. Bergeron): We are here this morning to review the Main Estimates 1996-97 under Canadian International Development Agency. We have the pleasure of welcoming the Honourable Pierre Pettigrew, Minister for International Cooperation and Minister Responsible for Francophonie. With him are Ms. Huguette Labelle, who is a regular at this committee, Mr. John Robinson, Vice-President, Policy Branch, and Ms. Claudia Roberts, Director General, Finance and Contracting Management, Personnel, Administration and Corporate Management Branch.

The Minister has already given us a copy of his speech, which was handed out to committee members. Mr. Minister, I understand you just want to make a short opening statement after which committee members can ask you a few questions.

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The Honourable Pierre Pettigrew (Minister for International Cooperation and Minister responsible for Francophonie): Yes, but I would nonetheless like to make the comments that were prepared with such great care for parliamentarians and for those who are kind enough to listen to us.

The Vice-Chairman (Mr. Bergeron): You have the floor, Mr. Minister.

Mr. Pettigrew: Thank you for your invitation, Mr. Chairman. I would like to thank my officials for being here with me this morning. I am delighted to appear before you today. I did come once before on April 18, 1994, as Chairman of the National Forum on Canada's International Relations, and then again on April 18th, 1996.

I am delighted to be here today to discuss my view of international cooperation and my desire to establish ties that go well beyond the confines of Parliament Hill. I wanted to point that out, because I wanted to give you a positive impression of the process.

Immediately after the House has adjourned for the Summer, I will undertake a cross Canada tour in order to meet with CIDA's partners. My tour has several objectives, and I will be discussing each of these.

I would like to discuss with these groups how we can adjust our international cooperation program to our difficult financial situation. I would like to raise the awareness of Canadians of what is at stake in international cooperation. I want to stimulate interest in the partnership program in order to enhance the effectiveness of our curtailed programming. And, I would like to encourage all regions in the country to participate in CIDA's programs.

[English]

Since we agreed to meet today, well before my travel plans had been finalized, I propose to take advantage of this opportunity to begin these discussions and get some first reactions from members of this standing committee.

First, I would like to give my view of my mandate, of CIDA and of international cooperation. You know that I do not come to CIDA lacking international experience. I have spent the better part of my professional life studying globalization and helping Canadian companies to make sound decisions within the context of globalization, something that is essential if they are to remain competitive and survive.

I do not need to go into detail with you about globalization and its consequences, because you are well acquainted with this as members of this committee. However, I would like to discuss certain aspects of globalization that affect my mandate and that of CIDA. Globalization affects not only the developed countries but all countries.

Since the collapse of the Berlin Wall, we have witnessed the triumph of economic liberalism and democratization; however, we have also witnessed unprecedented upheavals. The liberalization of commerce deprives the state of certain means and tools and thus limits its capacity to respond to the needs and demands of citizens and interest groups that tend to grow with the democratization of societies.

For instance, it becomes more and more difficult to redistribute wealth at the same time as the gap between rich and poor is growing and widening, leading to social imbalances. If the clash between capitalism and communism dominated much of the 20th century, I think, and even hope, that the question of wealth redistribution will dominate the 21st century. Humanity owes it to itself to provide an answer.

[Translation]

What are the inescapable realities of globalization? What are the phenomena which must learn to face and turn to our advantage, though we know we cannot master them? I would like to concentrate on three, at this time.

First, we are going through an era of integration. Commerce, production, technology, distribution, and finance are no longer watertight compartments or well-defined, distinct steps in a process. All have merged and no longer necessarily involve a multitude of different players.

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Second, this new era is characterized by extremely mobile and volatile capital. Capital movements are not, moreover, the only significant transnational flows. Individuals, goods, services, and ideas are just as mobile.

Third, integration and mobility are resulting in an unprecedented heightening of competition - not only between companies but between countries as well. Countries are being forced to recognize that their economies must be able to offer absolute advantages, not only to foreign investors but to their own private sectors, as well.

[English]

Globalization bears within it the seeds of great hope, hope for technological, social and political progress, hope for prosperity. But globalization also has its own logic of exclusion, not only of individuals but even of countries.

The forces driving globalization do not wait for slower economies. Developing countries are therefore at risk of being relegated to subcontractor status, with developed countries allowing them to produce what they themselves no longer wish to produce.

The connection between globalization and international cooperation is therefore growing much clearer. It is more important than ever, as a result, to include the developing countries in the world system to link the peripheries to the centres.

I would say, however, that this is necessary not only for developing countries but for Canada too. A many-tiered world economy is a threat to the security of the entire planet.

Canada must also maintain the influence it already has on the international scene. We must contribute to building a fairer, more equitable global system, because our country is a positive force in the world and because we are concerned about solidarity, justice and sharing here in Canada. We must project these values internationally and make sure they occupy an important place in the global debate that is now opening.

The best way to redistribute wealth is not simply to increase capital transfers from the north to the south or to give to the poor, as we say. No, the best way to redistribute wealth is to enable and promote conditions that will make it possible for the south to create and increase wealth. That is the goal of our aid program.

Those of us in this country who are turning inwards, who have succumbed to the lure of isolationism and think in terms of every man for himself - in short, those who want Canada to stop helping others - forget that our prosperity depends on a stable international environment. Briefly put, the best way to jeopardize all we have is to abandon the rest of the world to its fate.

So it is not by chance that the G-7 heads of government will be discussing international cooperation at their upcoming summit in Lyon next July. This has become a major, indeed vital, issue for the future of developing and developed countries alike, an important element of the world order.

[Translation]

International cooperation is nothing new... far from it. But it is changing. I said earlier that the role of the state has been significantly modified in recent years. The state has lost a large part of its autonomy. The same applies to its support for international cooperation.

It is important to note that for the first time, the flow of private investment to developing countries has outstripped the flow of investment from the donor community.

I have just returned from a trip to Africa, where I was accompanied by a delegation of business people. I saw that there are concrete opportunities for our businesses in Africa, a part of the world which we too often overlook out of pessimism.

Some of you attended the CIDA/CEA one-day session. I am glad that you did, and I urge you to continue helping the private sector forge cooperative ties with the Canadian International Development Agency.

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The private sector has an important role to play in the social and economic development of developing countries. I am impressed by the quality of the Canadian private sector's initiatives in developing countries and by its genuine interest in becoming an agent of international development and supporting the government's efforts. I am also convinced, however, that our private sector can play a still more important role.

The redefining of the role of the state and the fragility of the social apparatus increases the responsibility of individuals but also makes them more vulnerable. Our cooperation activities must, therefore, be aimed not only at fighting poverty but also at increasing the capabilities of societies, enabling them to take full responsibility for their own destiny.

To this end, the government set out six objectives for international cooperation in its foreign policy statement. The upshot of these objectives, which you are all familiar with, is that CIDA can concentrate its efforts in areas which are particularly important for the future of developing societies.

This being said, our cooperation program also aims to encourage alliances between donors, between multilateral institutions, and between local NGOs here in Canada and in developing countries.

In this context of alliances and cooperation, the traditional donor-recipient relationship no longer exists. We must be attentive to the increasingly specific needs of developing countries. At the same time, developing countries must be fully aware of the constraints which are forcing donor countries, such as Canada, to review their role and their actions.

We must also strive to improve the effectiveness of the international aid system as a whole. I believe it is important to offer more encouragement to the multitude of agencies and institutions that work in the field of development to make better use of their individual strengths in order to avoid duplications and overlap and, thereby, increase the efficiency of their efforts.

[English]

In terms of constraints, it is clear the government does not have the same room to manoeuvre as it once did. Our Canadian agency is not exempt from contributing to the government's deficit reduction efforts. We must do our part.

You will note that at $2.2 billion, the agency's resource envelope for 1996-97 is essentially the same as it was last year, but we must look at the following fiscal years, 1997-98 and 1998-99, during which CIDA will have to make budget cuts totalling $309 million. We must therefore start now to make the necessary adjustments to absorb the planned cutbacks. This is a delicate and painful but essential task if we are to assure a coherent future for CIDA.

I intend to involve other departments and CIDA's partners in this exercise. The standing committee and its members will of course be kept abreast of our decisions. I will be, at all times, open to the committee's suggestions and attentive to its priorities.

I entered the cabinet in order to support the Prime Minister's efforts to maintain Canadian unity and to make the changes needed to prepare the Canadian federation for the challenges of the next century.

[Translation]

The words of Louis St-Laurent come to mind. I believe he spoke them in 1947, but such was their foresight and relevance that they remain as true today as they ever were. St-Laurent saw a direct link between our foreign policy and national unity. He said, and I quote, ``our country will play a significant role in the affairs of the world only to the extent that we maintain this principle, for a disunited Canada will be powerless.''

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Canada is an example to the world. We must put the values and qualities, which have earned us the respect of the international community, to use and apply them to our national debate.

Canada is also a bridge to the world. We play an essential role in promoting a better understanding between the North and the South. I was recently reminded of this at the Information Society and Development Conference, held in South Africa, where Canada played out its role beautifully with the G-7, and arrived with its own principles on the very touchy subject of information technology, principles over which the G-7 countries had had very tough negotiations, but which the Canadian delegation was able to negotiate with the countries in the South which needed a few changes. It was Canada's insight that enabled us to make that conference as worthwhile as it was.

[English]

Before concluding, I would like to talk about another important objective that I hope my cross-Canada tour will help to achieve.

CIDA has been criticized for failing to represent all regions of the country. I agree that CIDA could be more representative; however, I don't think the solution is simply to revise CIDA's allocation practices. This would overlook the fact that the majority of Canadian non-governmental organizations and companies active in cooperation come from Quebec and Ontario and that they have a long-standing tradition and years of experience in aid and international cooperation.

Rather, what we must do is make Canadians more aware of what is at stake in international development and encourage more companies across the country to submit proposals to CIDA and undertake projects in support of international development. That is the message I intend to carry across Canada.

I hope this presentation has given you a better idea of my mandate and the vision I am bringing to my new responsibilities. CIDA has difficult choices to make. The key is to make these choices without compromising our Canadian agency's reputation and the strength and advantages it has developed since its creation.

[Translation]

I promised, at the outset, that I would take advantage of this meeting to begin my cross-Canada consultations here today. I would be pleased to hear your comments, and I will try to answer as many questions as possible. I thank you for your kind attention.

[English]

Thank you very much for your kind attention.

[Translation]

The Vice-Chairman (Mr. Bergeron): Thank you very much, Mr. Minister. We will now move on to questions. Mr. Paré.

Mr. Paré (Louis-Hébert): Mr. Minister, it is a pleasure to have you with us, especially since you have just been appointed to your position. It might make it easier to talk to you.

First of all, you talked about globalization. I am pleased to see you also highlighted the inherent dangers of globalization. I personally think we are heading towards a neo-liberalism that could have very serious consequences, particularly for developing countries. I am pleased to see you are aware of those problems.

A recent meeting of Nobel prize recipients focused on the impact globalization had on poverty, and especially on the widening gap between the rich and the poor. Unicef also recently stressed the fact that globalization led to increased child labour.

I think those two points have to be taken into account. My question is this: do you plan to make sure Canada plays a leadership role in the World Trade Organization so that we can tame the monster that neo-liberalism and globalization could turn into?

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There must be rules so that these two can be useful tools to society. The world must not be at the mercy of globalization.

Mr. Pettigrew: I can certainly relate to your concerns. As far as I am concerned, I can assure you one thing is certain. It is true that a global economy coupled with total liberalism does present opportunities.

Some of them might be wonderful and some people may derive tremendous benefit from them. They will, indeed, create an efficiency and dynamism that cannot be ignored. But there is the huge risk of exclusion. One thing we must never forget is that there is also a human finality to the economy.

An economy is pointless if it becomes inhuman. An economy exists to organize and facilitate relationships between humans. Therefore, the human finality of the economy is a critical part of the economic policy and international policy in countries such as Canada.

The Canadian international Development Agency and the government as a whole must never lose sight of that fact. I certainly agree that those factors must be viewed as critical by the World Trade Organization.

As you know, CIDA also works with the World Trade Organization. We promote the International Labour Organization, which, as you know, is also located in Geneva, and works closely with the World Trade Organization. We encourage links between the International Labour Organization, one of our partners, and the World Trade Organization.

Mr. Paré: I am now going to change areas. Earlier on, you said you attended a public awareness session on April 18th. I think you were correct in saying that in times of financial restraint, many Canadians tend to look inward and say they can no longer afford to help others and that they should start by helping themselves.

That would be very short-sighted. We must avoid that at all costs. Doesn't that make it more important to implement awareness programs to educate Canadians? Mr. Minister, do you plan to review the public participation program with CIDA in order to give your partners a tool to heighten Canadians' awareness?

Mr. Pettigrew: I agree with you that it would be most unfortunate if Canadians lost the solidarity that has been a part of their identity for years. It is extremely important to show the rest of the world we care, but it is also important to act.

We have a very clear interest in doing so, if only for the sake of the planet's stability, as I said earlier. We must constantly remind ourselves of that. CIDA is already trying to see how we can improve awareness. I had announced that that would be one of my priorities, right from the outset, a few weeks after being appointed minister responsible for International Cooperation, and even prior to being elected. I think I have made that one of my priorities during the first week of my election campaign, in February.

So I had made that announcement from the outset. CIDA has already been thinking about it, and we have had round table discussions where we talk about how we could heighten Canadians' awareness. In fact, as soon as the House adjourns, I will be starting a cross country tour.

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I will be going to nine Canadian cities to talk about the importance of international cooperation, thereby increasing public awareness of the importance of staying committed to countries in the South.

Mr. Paré, I would say that Canadians are aware of what is going on despite de major problems we have, because the gap between North and South countries is the same as we see in our own society.

The fact that a government wants to reduce the widening gap between North and South countries shows that it also wants to stem the widening of the gap in its own society.

It involves the same steps, the same thrust, and I am very much aware of that.

Mr. Paré: I have no doubt whatsoever, Mr. Minister, that you can personally have a great deal of influence on Canadians during your tour, but it seems to me that a number of Canadians were working on that public participation program. We will have to find ways to make their efforts more worthwhile.

Mr. Pettigrew: I agree with you. As I said in the first part of my answer, there is already a think tank at CIDA that is currently dealing with all that. But we also stay involved in other public awareness programs.

I appeared on the show ``Course destination monde''. If you watch that show, which attracts thousands of Canadians who watch French television, you will see that it really helps heighten public awareness.

As you know, CIDA is largely responsible for that show's success. In fact, I took the initiative, and I surprised a lot of people, in announcing CIDA's contribution on the air.

Do you know what I was told afterwards? I was told that since CIDA had been the first to commit itself to the exercise, which is a huge public awareness exercise, other sponsors followed suit. We are Course destination monde's major partner and we continue to give it some credibility.

Thank you.

The Vice-Chairman (Mr. Bergeron): Mr. Morrison.

[English]

Mr. Morrison (Swift Current - Maple Creek - Assiniboia): Thank you, Mr. Chair.

Mr. Minister, rather than deal in generalities, I have a number of short, concise questions here - one-liners, if you will - I'm going to go through until the chairman, in his wisdom, brings down his guillotine.

First, I would like to know why the budget for CIDA's expenditures for agency executives has increased by $217,000, or 10%, while every other area, including corporate management, personnel, administration, and so on, has decreased. Could you explain that for us, please? It's on page 49 of the estimates.

Mr. Pettigrew: The eastern European program used to belong to the Department of Foreign Affairs and International Trade. Last year, my predecessor decided to transfer the eastern European program from Foreign Affairs to CIDA, so of course we transferred the resources for managing that program to CIDA instead of Foreign Affairs. We have cut our operational costs at CIDA by 15%, which is exactly the same cut we made in our programming.

Mr. Morrison: But even if they get moved laterally, the people at the top never get cut. It's only the peasantry that gets cut.

Mr. Pettigrew: No, Mr. Morrison. They were cut by 15%. That's what I'm telling you. The amount is higher because they've been moved from Foreign Affairs. The eastern European program was in Foreign Affairs. If CIDA takes it, obviously its numbers will go up. But it has also been cut by 15% in the transfer, like all the rest of CIDA executives and the operational cuts in general. We're very proud of that achievement.

Mr. Morrison: There's another question that has been bothering me for some time. I'm concerned about the consultants who work right inside the CIDA offices at 200 Promenade du Portage. Where can we find a statement showing how much aid money is spent on consultants who are actually working on the premises?

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I'd also like to know if any of these consultants working at CIDA are in positions where they can make recommendations on the issuing of contracts to associates, or possibly even to themselves. Do they have this function? Basically, just run me through this. What are these people doing in government offices?

Ms Huguette Labelle (President, Canadian International Development Agency): There are two or three more significant areas where there are consultants who work in CIDA, although in our 15% reduction this was the first area we looked at and there were significant reductions in that area.

The areas of work are in information technology, where it is very difficult to retain in the government some of the kinds of resources we need. Also, sometimes we need them for short periods of time to develop a new information system. Once that is done you don't need those kinds of resources any more, so to hire staff would not be in the best interest.

A second area is in some of the short-term professional and technical requirements, where one might have to develop a particular project and do the preparatory work for it. These are not people who work in large companies, but individuals who are professionals and provide the kind of interim assistance we may need.

The other area has been training, but in terms of training, for example, we have cut back by 50% the kind of consultant resources we were using when we reduced by 15%.

So these are the three prime areas that have been cut significantly, and that's where we looked first.

Mr. Morrison: Thank you, Madame Labelle. However, I understand there is a consultant there - I won't name him here in the committee - who is actually serving as a director general in your department, working in information management technology. If I've been ill-informed, please tell me. If it is so, he must have been there for a while. I have a problem, again, with the possibility that he would have influence over the issuing of contracts.

Mr. Pettigrew: That individual was in computer services and, I understand, was part of the executive exchange program, which is a very healthy interchange we have between the private sector and government. So that person was not a consultant and had nothing to do with any contracting that was ever done. Mrs. Claudia Roberts personally looked into all the contracting elements from that particular shop, so there was no possibility of conflict of interest.

Mr. Morrison: Returning to Madame Labelle and the response to my initial question, I also asked if there's any way we can find out how much it is costing to have these consultants in-house. In other words, what is their remuneration, and how much does it cost to sustain them? There is some infrastructure involved there. We certainly can't find it in the estimates, so where can we get this information?

Ms Labelle: We can provide you with this information because we know who the people are. They're usually there for periods of time and then they're out. We may then hire another person to fill a different need at another time. But, Mr. Minister, it would be a pleasure for us to provide the committee with that information.

Mr. Morrison: Mr. Minister, I'd like to return, perhaps peripherally, to a question I previously asked in the House. This is with respect to the open bidding process, specifically the case of Markham Electric International. If you would like to further explain why CIDA would exclude an internationally successful firm from the bidding process, that's fine.

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However, I am really more interested in the appeals process, which I didn't get a chance to raise in the House. According to the Treasury Board rules, CIDA is obligated ``to use an independent bid dispute mechanism that allows suppliers to submit bid protests concerning any aspects of the procurement process''.

Markham was told by CIDA that it could appeal, so it went to the Canadian International Trade Tribunal. But the tribunal refused to hear the case because the end-recipient of the work being contracted was the Government of Mali, which is not a department or ministry of the Government of Canada. Of course the Canadian taxpayers are financing the project; CIDA is selecting the supplier.

Since the end-recipients of most CIDA contracts are certainly not Canadian, since we're in business to serve foreign entities, where is this independent bid dispute mechanism? If you're going to be excluded for the reasons that were given to Markham, then nobody can appeal. So where is a company in Markham's situation supposed to go for relief?

Mr. Pettigrew: It's the first time I have heard that the tribunal did not have the jurisdiction on that particular account.

If what you're telling us today reflects what has happened in that particular case, then we will definitely find another way of ensuring fair treatment of all bidders. The element of transparency is very important. It is extremely important, and I'm extremely pleased to see, first of all, that the number of competitive contracts has increased substantially within CIDA in the last few years.

In the last two years we've increased from 53% to 69% the level of competitive contracts, and in the next six months, with the standing offer system that we're bringing into our operations right now, we will be taking that 69% to 85%. So that is very good.

Let me come back to the results of this open bidding system, which has really brought transparency into our operations. It's very important that we look into that.

The regions that get the contracts really perfectly reflect the regions where the number of bidders come from. If fewer firms are bidding from a particular region, then obviously fewer firms there will be getting the contracts. If you look at the numbers, the regions that get the contracts are the regions that bid into the system.

Obviously, many of the firms who will get them are from Quebec and Ontario. Very often they have an office here but they come from somewhere else in the country. They are counted as being in Ontario and Quebec because they're in Hull and in Ottawa looking after their affairs, which is an extremely good way of going about things.

A minister does not intervene in that process very easily. A minister cannot intervene in the process. You need to go through a pre-qualification, which is done by our civil servants at CIDA with very objective criteria. Those who pre-qualify are brought to us, and then we have a list of eight, ten or twelve companies.

I was an international business consultant myself. I was a consultant for many years. You will not ask ten companies to bid for one contract. Nine will lose and one will get the contract. It costs the private sector companies a great deal of money, and the private sector is asking us, begging us, not to raise their expectations too high.

So there is only one winner each time. At that time we are given a qualitative analysis of the expertise of a particular company, and their own past experience, and the matching with the contract and all that, and we bring it to a short list of three to five companies. Normally it is three, because we think that is the way it works best.

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The case you raised of Markham is one of those cases in which nine companies applied for the contract. Of those, seven did pre-qualify. Out of the nine that applied, seven were from Quebec. Out of the seven that pre-qualified, six were from Quebec when we brought it down to the short list.

We looked at the expertise in relation to the particular mandate that was requested by the Mali government and we reduced it to three, looking at the qualifications and the particular needs of that individual contract. I can tell you one thing: we'll be delighted to attribute contracts. The process will do it, but it's done in all transparency.

Then when the three companies end up at the line, the minister just gets the result. We are told that after the bids, this is the company. I can ask questions. I can ask why, I can ask how many points we're giving for this. It's my job as a minister to make sure that is taking place.

I can tell you that this is done in all transparency and it is not a political process whatsoever. It's very important that we ask more companies to bid for the system. It will be good for the beneficiary countries and it will be good for our system. I'm going to go across the land to ask more companies from all over the country to do it.

The Chairman: I'm sorry, Mr. Morrison, we have to move on to the next questioner. I'll put you on the list after Mr. Mills.

Mr. Speller.

Mr. Speller (Haldimand - Norfolk): Thank you, Mr. Chairman.

Mr. Minister, thank you for coming. I have a couple of questions regarding program review and budget cuts. Actually, after hearing the questions from the third party I might want to throw you a bit of a lob, because I think the Canadian public has a right to know from you, the minister, exactly why it is that we have foreign aid. There is a lot of misinformation out there as to what foreign aid is all about, how it benefits Canada, and these sorts of questions.

I know you said you're going on a tour across Canada, and you mentioned you're going to be visiting a number of cities. Well, there are a lot of rural areas out there, and I think that since we're televised today I might give you an opportunity to explain to Canadians, just in simple terms, why it is that we have foreign aid.

Mr. Pettigrew: There are a number of reasons we have foreign aid. First of all, we Canadians in our own country have experienced solidarity. We experience solidarity among our regions. We are very sensitive to making sure all Canadians benefit from the same kind of public service from coast to coast, independently of the wealth we create in our own regions. So we experience solidarity and we realize how important it is for us as Canadians. I think it is a duty for us to project that human solidarity abroad for all of humanity. That's the basic principle.

The reason we do it, on top of that solidarity we need to express, is also that we believe that a world in which there will be more developed economies and more development is a world in which there will be more opportunities for Canadians as well. We need to improve other economies; that way they become partners of our own economy afterwards. It is done for human reasons, but it is also good economically that these countries go up the ladder in economic development terms. They then become partners of our own economy, and that's a very healthy way of going about things.

There are security elements as well. A stable world is a better world for Canada. A world in which the gap widens badly would bring about an instability that would be detrimental to our interests.

Canadians benefit a great deal from our international cooperation programs. I think all these would be good enough reasons to do it. But if you look at the way we actually do it, Canadians need to know that of every dollar we spend at CIDA, 70¢ is for goods and services bought from Canadians; 70¢ of every CIDA dollar is actually goods and services bought from Canadians. So that's directly benefiting our own people.

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There are also spin-offs, extraordinary spin-offs. We sometimes have contracts.... If you take the MBA program we had with Romania, this is a contract for $400,000, an MBA program in which some of our people went to help the Romanians get better management and administration. In particular, we went there to help them to privatize their civil aviation. They needed help for the privatization of civil aviation.

Well, Laurent Beaudoin of Bombardier, De Havilland, and Canadair, was part of that MBA program subsidized by CIDA. In Romania he established contacts with people who ended up privatizing civil aviation and sold them $600 million worth of aircraft - $600 million worth of aircraft - a spin-off from privileged contacts that had been established in that particular program of CIDA.

I could give you numerous stories like that. I could give you other examples.

This is something we have to work on. I am insisting very much with our people at CIDA that the network the CIDA people have developed in the last thirty years is extraordinary and we must share it more with other Canadians.

I was in South Africa at the ISAD conference on technology. The leaders in South Africa, the leaders who had been excluded from power but who are in power in the regime they have now, are old friends of CIDA people. Some of these people were visited in jail by CIDA officers. Some of them were saved from jail by CIDA officers. Many of them were fed by CIDA officers. Many of them were educated in jail by CIDA officers. CIDA people educated them in jail, knowing one day freedom would prevail. These are now ministers and deputy ministers as heads of organizations. This is an extraordinary network of privileged contacts we Canadians have developed.

I could go on and on. I am deeply convinced the best dollars we have as Canadian taxpayers are the money have in our international cooperation program.

Mr. Speller: Mr. Minister, I have a couple of quick questions on the whole issue of budget cuts. I think there might be a concern out there. As we cut our ODA budgets, other countries are also cutting budgets. Everyone's cutting. Is any sort of international coordination going on so certain countries don't get left out? When everyone's moving out, they're also moving out of countries, I suppose.

Secondly, while I'm on that, because I probably won't get another question, I want to know how your program review process is going and whether or not we in this committee can have some sort of influence in that process. You're going to be making certain tough decisions, and it might be useful for this committee to become involved in that process. We represent certain areas of the country, and it might give you a hand in your deliberations there.

Mr. Pettigrew: Thank you very much.

On your first question, yes, you're quite right, we need to be preoccupied and to make sure there are not countries that are simply ignored because we are all in this very difficult situation. The OECD in particular is working on it and has produced a paper trying to help us coordinate these policies, but we need to do more as far as that is concerned.

We meet quite a lot. Ms Labelle will meet with Brian Atwood of USAID, for instance. Next Monday and Tuesday I will be in Geneva. We have invited the leaders of nine aid agencies of donor countries to meet, particularly on the great lakes region in Africa, Rwanda and Burundi. We will be meeting on the specific Burundi case. This is a Canadian initiative. I will be chairing that meeting myself, and Ms Labelle will be attending.

So we are doing more along those lines, and we will continue to do more.

On Haiti, there are regular coordination meetings involving France, the United States, and ourselves in particular, but also other countries that are involved.

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On the program review, thank you very much for your interest. I want to make it clear that I am sincerely open to suggestions from your committee. You have more experience than I do with this angle of things. Even though I have international business experience, you have more in the CIDA approach program, and I will be very much looking forward to hearing your views and your suggestions.

We have just terminated our own internal review of this. I have met all of the departments within our agency to look at what it will mean to have the 14% cuts we have to go through in the next two years. So I have a complete picture right now of our activities.

The minute the session is over, I will be going to nine Canadian cities, and I invite you to be involved in this process, as parliamentarians. When I go to the cities and the regions you come from, you're very welcome to participate in the process.

I will then see what our on-the-ground partners recommend in terms of what is the most useful in the work they do and what is less useful. People are very frank about that sort of thing. Some NGOs and some of our partners will tell us that they did this in the past and it's not been very successful, and all that. So we will be listening to Canadians.

We will make those decisions over the course of the summer. By October I would like to have a clear picture of where we're going in terms of the reductions we need to make. That is the calendar on which I'm working right now.

I would like people to have notice of where we're going six months before the budget is applied, rather than just coming in with the two months. I'm not promising it will be by October, but I'm telling you my objective is that by October we will have made those decisions. I welcome your contributions to them.

Mr. Speller: Is that your outlook document you're talking about? No. Have you finished the outlook document?

Mr. Pettigrew: Yes. You'll have it very shortly, in the next week.

The Chairman: Thank you.

[Translation]

Mr. Paré.

Mr. Paré: I am pleased to hear you say we could attend the consultations. I, personally, will try to be discreet, but I think it is important for parliamentarians to be there.

With the cuts planned for 1998-1999, Canada's official development assistance will drop below $2 billion, i.e. to $1.9 billion, which represents just 0.25% of our gross domestic product. So this is half what it was ten years ago.

Given that, do you not think it would be a good idea - and perhaps that is one of the goals of your cross Canada tour - to completely review the breakdown of the budget envelope for the various areas of development assistance?

I have two comments to make on that point, the first of which is on NGOs.

Since NGOs have to put in the same amount as the subsidies they receive from CIDA, since we are in a period of budget restraint, would it not be worthwhile to increase NGOs' contribution, since they themselves contribute $1 for every dollar CIDA contributes? I think that is something to look into. It seems to me it is a worthwhile proposition.

My second comment is on international financial institutions. I was somewhat surprise, appalled and even shocked to read in a document tabled yesterday before the Committee on Sustainable Development, that in a recent report, the World Bank rejected any relationship between international trade and labour rights, working conditions and other human rights issues.

On the one hand, the Bank invited governments to enforce market policies and goes as far as suggesting that union rights and privileges should be restricted.

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On the other hand, there are no provisions in the Canadian legislation on human rights in terms of multilateral aid. Given those two factors, I have been asking myself a lot of questions, since I know that a huge part of Canada's public assistance is handled by international financial institutions.

What is the best vehicle? Does Canada have any control whatsoever on those funds, especially since our representatives on those boards are not accountable to parliamentarians? Don't you think it is time to look into all that?

I can understand that we might be bound by contracts. That is often what Ms. Labelle tells us, but I would like to know what is happening with Canada's public assistance that is being handled by international financial institutions, since we have very little control over it and since the World Bank seems to disregard human rights.

Mr. Pettigrew: In answer to the first part of the question, I must admit I have not yet decided whether we should withdraw from certain areas.

I have thought of a number of scenarios, but I am really not sure what to do. That is why I am fully open to suggestions. I have not yet made any decisions.

When I worked in the private sector and saw what ministers and governments were doing, I did not like the 10% across the board approach. I did not like the 10% across the board cuts, because I felt the government was shunning its responsibilities.

When I saw someone make those kinds of decisions, I felt it was someone who did not want to make any choices and should therefore not be in government. I felt that person should be holding another job, because to govern is to choose, depending, of course, on the mandate the public has given you.

So for philosophical and political reasons, I would prefer to have someone study those solutions. Will I be doing it? Is that the best way to optimize service and financial resources? We will see and I will be very pleased to hear any recommendations CIDA's partners throughout the country may have and any recommendations from your committee.

I would also like to tell you that our contributions to the World Bank and to regional banks have been greatly reduced. Our contributions to regional banks, the Asian Development Bank, the African Development Bank and the American Development Bank have been reduced by 40%. We have already reduced Canada's contribution to those regional banks by 40% and our contribution to the World Bank by 27%.

I can assure you that the Finance Minister has also done his part in that regard.

As for your question on the relationship between trade and respect of human rights, I have not seen the World Bank report you are referring to. On the one hand, I am surprised that it would be stated in those words. I have no doubt whatsoever that what you are saying is true, but I have not yet seen the document. I will read it with great interest and will be pleased to raise the matter with some of our contacts at the World Bank and with the president of the World Bank himself.

I must say that I, personally, do not have a dogmatic attitude towards this, but there are situations that are clearly unacceptable. You say that according to a Unicef study, child labour has increased because of globalization. Something must be done to thwart that trend using any tools available to us. I agree with you on that.

But you also have to be very careful about what you mean by human rights in the work place, because the interpretation varies a lot depending on a country's economic development. Conditions that prevailed here in the 50s would be totally unacceptable nowadays. It would be considered abuse. You know what I mean. Obviously, as a society evolves, the quality of life improves.

Developing economies must not be excluded, because those countries are not yet capable of maintaining the same conditions as we have. In fact, it would hinder their progress. I think our international trade policies must be realistic and fair. The only way to be fair, though, is to give those countries a chance and to try to have a positive influence on them.

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[English]

The Chairman: Mr. Flis.

Mr. Flis (Parkdale - High Park): Thank you, Mr. Chairman.

Mr. Minister, I'm very pleased that you referred to Louis St. Laurent and his vision for Canadian unity through foreign policy, and I'm very pleased that you are crossing the country. While crossing the country, I hope you will be on the lookout to see if we can identify Canadian niches.

When this committee was in the Arctic, I personally was very impressed with the kind of technology that's being developed in Canada, and we're beginning to export this technology.

For example, we met a company that learned to build wood-frame homes in the Arctic, and it's a special technology. You can't build basements; you have to build on stilts. They had already built over 400 such homes in Siberia. This provided jobs for people in Yellowknife and the north and also created jobs for the Russians. It was a very real success story, but it was successful because this company found a Canadian niche: building wood-frame homes in the north.

As you're travelling out west, you will also find there are certain Canadian niches.

Yes, we have to be competitive on the world market, whether it's with aid or with trade, but I think it may be time we started looking at what we're the best at delivering, whether it's removing mines in Cambodia, whether it's preschool programs in Uruguay and Argentina, etc.

When I asked this company how they got started building homes in Siberia, they said it was thanks to the technical assistance program. If it were not for the technical assistance program, which is now under CIDA, they probably would have not been into that market. This also ties in with Canadian unity.

So I hope, as you're crossing the country, you'll look for these Canadian niches.

We're here on estimates. Because, as you said, you have to cut by $309 million over the next two fiscal years, is there any danger that these former technical assistance programs will get the sharp axe more than others?

Mr. Pettigrew: That is one thing we will need to be very careful about. You are absolutely right.

One way we are addressing this question, Mr. Flis, is the leverage we have with international institutions. That's part of the answer I should have also given to Mr. Paré a little earlier.

We do have some leverage with international institutions with our contributions. Very often someone from the private sector will get some assistance from CIDA to start a project in a developing country and the rest of the financing will come from the World Bank. That's why we need to be there. Much of our leverage would be limited if we were not part of that sort of club.

Indeed, in the partnerships that are built, we do a great deal in terms of transfer of technology. You have superlative examples in the environment, energy, health and telecommunications fields. We do a lot of transfer of technology in those fields and it's very good.

That's a very nice way to address the unity element, because on many of those contracts there are partnerships that will unite Quebec companies, Alberta companies, Nova Scotia companies and so on. That's a very important way, and that's something I wanted to bring to Mr. Morrison's attention.

Another thing has been brought to my attention that I see with great pleasure relates to both our unity and our efficient contribution. For instance, very often it is an Ontario company that gets a contract, but it will subcontract. So you have secondary beneficiaries of CIDA contracts that are in western Canada or eastern Canada. I could give you some numbers about it that are quite impressive.

So you are right that we are doing it in a very concrete way, but that will be part of my strategy. All my professional life has been built on building networks, alliances and partnerships across Canada in the private sector, and certainly I will continue to address the question very much the way you've just seen. And if there are such niches you want to call my attention to in your own regions, please do it, and if we can match them with some other partners across the country...I think that's a very important element of my role as a minister in the government.

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Thank you very much.

The Chairman: Minister, since you've spent most of your answer answering Mr. Morrison's question, maybe Mr. Morrison would like to give his time to Mr. Flis.

Some hon. members: Oh, oh!

The Chairman: Mr. Morrison.

Mr. Morrison: As you can see, Mr. Minister, we're all friends here.

Mr. Pettigrew: That's what I like about this place. It's nice.

Mr. Morrison: I'd like to return again to this service contracting process and the appeals.

Would you, Mr. Minister, please get back to the committee with a detailed summary of your appeals process? If it's of any help, I can tell you that it was on May 8, 1996 that Markham Electric was informed that the International Trade Tribunal wouldn't hear their case because they were not dealing directly with the Canadian government.

I find this whole question of the bidding process disturbing, Mr. Minister. I was in business for a long time. This idea of pre-qualification is very paternalistic.

You say you're doing it to save the time and money of the bidders, but I haven't talked to any one of the people who have complained to me about this process who have objected to spending their efforts to put in a bid in the normal fashion, as they do for the private sector. Or as far as that goes, if you're bidding on a World Bank job or one of the regional development bank jobs, it's wide open. You submit your bid and you take your chances.

Why should we be specifically excluding people and not giving them a chance to see what they're worth? This is great for people who are already in the loop, but for a new kid on the block who wants to come in, it's exclusionary.

Would you like to address that briefly? Then I'll ask you another question.

Mr. Pettigrew: Mr. Morrison, the pre-qualification element, the shorter list, is something that has been asked for by the private sector. You tell me that you never met a company that was not ready to do it, and I only meet companies who say to me, Mr. Minister, if there's no chance of our having it, please don't let us work so very hard to prepare a bid.

It costs a lot of money and takes a lot of time and energy to prepare a bid. I've done that a lot in my own life, and I was much happier when I was told from the beginning that there was no chance I would get it because I didn't really have the pertinent experience.

We will have a new system in the next few months precisely to address the newcomers and the smaller companies and that will also allow us.... That's why I said we will probably be able to bring the competitive system from 69% to 85%, and the newcomers and those from a longer distance from Ottawa, those who don't have the same immediate access as those who have public relations offices here watching everything that is coming out, will be able to get into the system a great deal more easily.

It will be a standing system in which they will pre-qualify. The standing system means that they will pre-qualify from the beginning. You will pre-qualify once, and you will be in the system for three years. I think that will help companies from a distance and will also help newcomers - the new kids on the block - to join in.

Mr. Morrison, I want you to know that it's a priority of mine to integrate more Canadian companies and to widen the regional basis of our agency, and I will work very hard at that in the next few years.

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Mr. Morrison: I'm really pleased you do share my misgivings about this system, Mr. Minister, and I do hope the revisions you make will make it better.

I also am a little concerned about the shortlist. Do you personally feel a little bit uncomfortable to have this thrust upon you, to have to go through the list of pre-qualified bidders and make a shortlist when clearly you're not an expert in everything - in many things, and perhaps even most things, but not everything - and you have to select bidders from the pre-qualification list to go to the final bidding process? Are you at all uncomfortable with this, Mr. Minister?

Mr. Pettigrew: No. First of all, you must understand that we receive advice and certain quantifications on all those who did qualify. That is, you can qualify, but we always get some information, such as a statement on the companies and their past experience. So there is a qualitative assessment.

But I think it is my job. It is important at one stage, as a minister, to make your judgment. Regional distribution is something we look after very carefully. We're working on the process to widen it. We're not reducing it; on the contrary. I'm not sure if ministers did not intervene that the results would not be worse than what they are right now.

The situation we have right now is not healthy. We need to improve it and work on it. I think the role of the minister is to widen it. It is better if we do it that way, because the system itself probably would encourage even more those who have already been in the system.

The Chairman: I'm sorry, Mr. Morrison, but you're over your time limit.

Mr. Morrison: You are an evil man.

Some hon. members: Oh, oh!

The Chairman: Well, everything is relative. Evil in the eye of the Reform Party might in some circumstances be good in the eye of others.

Mr. Assadourian.

Mr. Assadourian (Don Valley North): Thank you, Mr. Chairman.

Mr. Minister, I have a few questions. Most of the discussions that have taken place so far were about what happens in this country. I would like to know what happens when aid gets to the recipient country. If you recall, last week there was an article listing the ten most corrupt countries in the world and the ten least corrupt countries in the world. One of the least corrupt countries was Canada, which makes me very pleased and happy.

When we award a contract to a Canadian company to do work in some foreign country, what kind of mechanism do we have to control the corruption in that country? If you're talking about human rights, I think corruption is the worst form of human rights violation that takes place in Third World countries. I may be wrong - and correct me if I'm wrong - but it seems to me that once we award the companies, we have no mechanism to ensure that the contract is being executed according to the contract terms, and benefit is going to the individuals en masse, not certain government officials or bureaucrats in X, Y, Z countries.

I know some people living in Toronto who came in as so-called clerks from Third World countries. They were multimillionaires when they came in. It seems to me you can't be a millionaire when you're a clerk in the import-export department of the government of a foreign country.

So perhaps you can address what happens to the contributions we send overseas, and from there work your way back to the program here in this country.

Mr. Pettigrew: Mr. Assadourian, I want to confirm to you that there are no such millionaires with CIDA money. I can promise you that. There are no such CIDA millionaires among those who have come.

We have seen that list, as well, of the corrupt countries. In no case - in no case - does CIDA ever give money to foreign governments. We never give money to foreign governments. We actually contract companies to do work in certain regions of the world, but it is our own people who deliver the services and the goods in most cases. They therefore subscribe to Canadian norms and Canadian ways of doing things. We monitor our projects very closely and make sure all of our own criteria are respected in whatever part of the world the contract is actually delivered. We actually evaluate every contract we give, and we have a very close audit system. So we both evaluate and audit our work abroad.

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[Translation]

The Chairman: Mr. Bergeron.

Mr. Bergeron (Verchères): Mr. Minister, I am pleased to speak with you, not as chairman, but as a participant in the work of this committee.

For your information, I would like to draw your attention to the reference Mr. Paré quoted earlier. He was referring to a document that was submitted yesterday to the Subcommittee on Human Sustainable Development which referred to a recent World Bank report. However, that report is not identified in the document I just mentioned, entitled ``Human Rights, Global Markets: Some Issues and Challenges for Canadian Foreign Policy''. It is a document from the Library of Parliament that was prepared by our distinguished researcher, Mr. Gerald Schmitz, and one of his colleagues, Ms. Corinne McDonald. That is what he was referring to.

Mr. Minister, I would like to refer to a report by the Special Joint Committee of the Senate and House of Commons on Reviewing Canadian Foreign Policy. I would like to make two comments.

First of all, the report contains a new, broader vision of the notion of security. It included topics such as environment, migration trends, and so forth.

The report also referred to a much more active policy to prevent conflicts, troubles and crises. So it was about preventive diplomacy.

I have two questions, the first of which deals with the notion of security. In the Defence Department's White Paper, there was emphasis on peace missions since it was agreed that external problems could have an effect on our national security. Does it not then follow that since that department's budget is five times greater than the development assistance budget, that inherent humanitarian aid costs involved in those peace missions should be added to the Defence Department's budget?

Secondly, with respect to conflict prevention and preventive diplomacy, I would like to ask you about budgetary efficiency and the proper management of public money when it comes to development assistance. Canada spent a lot of money to come to the assistance of Rwandans when the crisis hit a few months ago. I even remember that we talked to Ms. Labelle about how much it had cost Canada when these tragic events occurred.

Now there seems to be a similar crisis building in Burundi and that from a fiscal point of view Canada will certainly have to intervene and invest large amounts of money in this country.

I know, Mr. Minister, that you are concerned by the situation in Burundi. We have had an opportunity to discuss this. I believe that you have an action plan for Burundi and I would like you to talk to us about it if you could.

Mr. Pettigrew: Yes, with great pleasure. Let me begin with Burundi. This weekend I'm off to Geneva where we have organized a meeting of nine agency heads from the main donor countries. We took the initiative to organize this international meeting and I myself will be chairing it next week because we want to send out a message that it is important for the international community to act since the situation is worsening week after week. The point is to avoid another Rwanda.

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Our purpose at this meeting is to coordinate the humanitarian aid efforts of the nine main donor countries and to bring in the government of Burundi which will be attending the meeting. Now I pointed out that Burundi has been invited because we don't want them to think that they are being excluded. On the contrary, we want their full involvement, we want a full political dialogue through a closer cooperative effort with the political assistance of the nine donor countries.

We want to start up a process that will include the Burundi government and at the same time organize the financial aid that is being sent to Burundi. I share your concern about Burundi which is why we have organized this meeting. We have not waited until the fall. We are acting now to show our concern. It's very important. We will report back to you on the Geneva meeting next Monday and Tuesday.

I am not too sure I understood the first part of your question about costs. The Department of Defence already covers the cost of sending peacekeepers as well as the military side of our efforts to bring about stability in certain countries, together with the United Nations, of course.

Mr. Bergeron: My question was for the minister.

The Chairman: Your time has expired.

Mr. Bergeron: The minister didn't understand my question so it's difficult for him to answer it.

The Chairman: Could you explain what you mean, very briefly?

Mr. Bergeron: Yes, Mr. Chairman.

The Chairman: You must explain what you mean very quickly, because there are others -

Mr. Bergeron: All members of this committee and the government itself agrees on a new definition of security so couldn't the Department of National Defence itself cover the costs of humanitarian aid during peacekeeping missions since its budget is five times the size of the ODA budget?

Mr. Pettigrew: That's an excellent suggestion. You are quite right Mr. Graham, yours is a very good committee and I would like to commend you on it, because we can work together on our respective responsibilities. I take note of your suggestion. It is true that we must come up with broader definitions of security. We are doing so, and if more costs could be covered by other budgets, I would be delighted. That would leave more money for the other aspects of our development work.

For the time being, since it is a development issue, you'll agree with me that it's more important to act now rather than to wait for others to take on this responsibility.

This will be our approach, and I am pleased with it. I do think however that preventive diplomacy must remain a priority for international development. There are places where the Department of Defence cannot go to and where the Canadian International Development Agency must intervene.

As I explained earlier, because of a different culture and a different experience, because it's a different world, and because we each have our role to play, there are things that we could do but which DND would not be as suited to.

Let's take the example of round tables. Prime Minister Chrétien talked about this at the Cotonou Summit. We had hoped to hold round tables in Burundi bringing together parliamentarians, journalists and representatives from various military factions. We were unable to organize them through la Francophonie - given this falls within the context of la Francophonie - , but any contribution with regard to preventive diplomacy remains a priority for us.

I would like to take this opportunity today to point out how pleased I am to see la Francophonie taking on a more political dimension. With this level of political maturity la Francophonie will be able to do extremely important work over the coming year. The Bordeaux meeting really was a turning point in the political debate, especially with regard to Nigeria.

[English]

The Chairman: Mr. Iftody.

Mr. Iftody (Provencher): Thank you, Mr. Chairman.

If you're wondering why we're having such long preambles to the questions today, Mr. Minister, it's because we're on television.

Some hon. members: Oh, oh!

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Mr. Iftody: Anyway, I thank you for your presentation.

Mr. Pettigrew: I sense the sensitization of the Canadian public to these important issues.

Mr. Iftody: Absolutely.

In your presentation you spoke at great length about liberalization, globalization of trade, a change of the nation-state institutions and instruments within there, and, as part of that process, technology change and the disparity between the rich and the poor as these countries are readjusting. If I understood your presentation correctly, one of the reasons why we are getting involved in some of these countries is to help in that process of redistributing wealth to the poor. Ultimately - and I hope I understand this correctly - in doing so there would be a direct linkage to the investment of Canadians into these countries with these poor people.

I want to tie that in and make a distinction between those developing countries and the shift in wealth between urban and rural areas. Presumably in a number of these countries, when they're undergoing this change, you see the largest degree of suffering and deprivation and so on particularly in the rural areas. If this is true, if it's primarily in the rural areas, then I'm wondering if you could see a greater role, for example - and perhaps we could tie this in with greater applications from western Canada - through CIDA particularly in the agricultural sector.

I want to comment very briefly in terms of my own riding - we have a multicultural agricultural group, if you will: people who speak French, Ukrainian people from the first Ukrainian settlement in western Canada, and Germans as well - and if these kinds of people in western Canada can play a greater role in this process.

The first question, in summary, is what are the linkages there between the distribution of wealth and what we're supposed to be doing as a taxpayer investment? Also, Mr. Minister, is there some way in which you can tie that in to a greater role of western Canadians in this Government of Canada exercise?

Mr. Pettigrew: Thank you very much for your multifaceted question. It's an interesting question. It's a nice angle of development for western Canadians; you're quite right.

We have a number of programs that already are focused on rural development. I think you're quite right. In particular, we have an important program on what we call micro-enterprise, micro-businesses, which can take place better in rural areas. It is a program in which we assist, in particular in the field of agriculture, small companies to get created and formed. Indeed, we could certainly look together at western experiences of smaller companies that could actually go and help rural small companies in rural developing countries. That's a very good idea, and I thank you for it.

Indeed, the taxpayer would also see some of its people benefit from the experience. It not only would get some profit from transferring its experience but also would get to be a better company, because it would bring back some experience that would certainly make its company a better one.

So we have a good program, and let's hope that some western companies will get more involved in it. We'll make that one of our foci in the next few months.

What we're doing, basically, is trying to strengthen civil societies. About a year ago I read a very beautiful book by Alain Peyrefitte, a French intellectual who wrote a book on the miracles of development and who shows how political, social, and cultural values are very much related to the level of development you're able to have. So when you help a society to strengthen its civil society, it's a very impressive contribution to its economic development as well.

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We need better institutions. We need more stable countries with strong civil societies. That has been the problem in the past. Strengthening civil societies and contributing to civil societies are the only ways a market can really develop and really grow. Once the market picks up you end up realizing you can actually become trade partners and industrial partners.

In Poland, for example, we are helping with dairy farming. It's a western Ontario contract doing that in Poland, Mr. Flis will be glad to hear. Mr. Flis has visited it. That is already taking place, and more of that should be taking place. Prince Edward Island is contributing in Poland on a vegetable growing project in one of these micro-businesses.

The Chairman: Without asking a question, Minister, I might just inform you that this committee has recently been in the Arctic, and I think I speak for most of the members when I say we were extremely impressed by the evidence we received from various aboriginal groups - Inuit groups, Dene nations - and I'm sure when it comes to land claims or other issues in other evolving societies there is no reason why they, like the people Mr. Iftody referred to, wouldn't be very valuable assets for CIDA to refer to.

I just leave that with you. I see Madame Labelle nodding her head, so I suspect that as usual she's ahead of us on this one.

We are now in the Manichaean world again, so I'll ask for Mr. Morrison to take up his cudgels.

Mr. Morrison: Madame Labelle, as a follow-up to your December 12 appearance before this committee you informed us that 93% of CIDA's program expenditures in 1994-95 took the form of CIDA grants, contributions, and other transfer payments, but within the total $335 million a very large percentage was slated for service contracts. Now, I understand you do need some flexibility in the allocation of budget, but I'd like to know why the figures for service contracts are buried in grants, contributions, and other transfer payments. Do the funds spent on service contracts come from these other three categories? If so, what goes on here? I just don't understand the accounting.

Ms Labelle: For those service contracts that are under or utilizing program money, what we're talking about here is where we will hire a company or an institution - because sometimes it is an NGO, it could be a university, a college - to do a feasibility study. It's not a project yet, and therefore we don't put it under that rubric. So that's one example.

A second example would be that if we want to do a particular program design of a very limited nature, again it does not necessarily become a project. We use program money to hire individuals, when necessary, or very small institutions, or larger ones, before the development of a project or at times to do the monitoring or at times to be part of the evaluation process. This is when we use program money. On the other hand, we will use operating money if we're talking about informatics or if we're talking about training of staff, for example.

Mr. Morrison: Well, I'm going to have to go back to the drawing board on that one. I really don't follow you.

Here's something a little simpler and more direct. When we're talking about grants, how do you explain a 71% increase, $72 million, in the partnership program?

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Ms Labelle: Mr. Chairman, in the 15% cut of program review one, the previous minister looked very carefully at all aspects of our budget. In the partnership program, a significant number of NGOs were eliminated from receiving funds from us.

In order to ensure that in doing so we were still providing an opportunity for smaller NGOs from across Canada to be able to continue to contribute to development, a small project facility was started. And you will remember that we shared that with you at the time. This does explain.... Quite a significant amount was cut from the partnership program and a part of that cut was retained to establish a project facility in the form of grants, because we're dealing with very small amounts each time. It's usually up to $200,000 and not more, and it is for NGOs.

Mr. Morrison: In the estimates, I noticed that the list of types of entities that can receive these partnership grants includes just about everybody on earth. There are very few exceptions. I think I could get one if I went about it in the right way.

And that brings up another thing I'd like to ask about. Are there any cases where contribution agreements have been given to non-NGOs, that is, to private sector actors? If so, what are the Treasury Board guidelines and regulations regarding accountability for these grants?

The Chairman: Madame Labelle, before you answer, as chair I should point out that we as a committee would object strenuously if you were to give a grant to Mr. Morrison, because we would miss him.

Some hon. members: Oh, oh!

The Chairman: His collaboration here is far too important to take him out of the country.

Ms Labelle: Mr. Chairman, I was really trying to see if there was any way that we could make this feasible, but now that I've been directed otherwise -

Some hon. members: Oh, oh!

Ms Labelle: When the eastern and central Europe program was transferred, the terms and conditions of that program were such that it did allow for the granting of a contribution to all those doing business with the central and eastern European program, but it was very much within the guidelines of the Treasury Board, because for each of these projects there is a contribution by the firm, by the university, by whatever the institution is that we work with in doing business in that country. Therefore, you're not dealing with the purchase of a particular kind of expertise where we pay the total amount, including a reasonable revenue to the institution.

These are the kinds of situations where we would be making a contribution to a for-profit enterprise. It's when they contribute as well. The share will vary. It can be 25% or it can be more than that, depending on the kinds of projects we have.

Mr. Morrison: Okay.

Ms Labelle: If I may, Mr. Chairman, I'll just add that in terms of central and eastern Europe, in most of these cases the country was the recipient, and the country also contributes. It's usually a trilateral contribution where we contribute one-third or so.

Mr. Morrison: I'd like to pursue that, but the clock is ticking so I'm going to switch.

The Chairman: Sorry, Mr. Morrison, we've ticked it. The clock has not only ticked, it's tocked.

Mr. Dupuy.

[Translation]

Mr. Dupuy (Laval-West): Mr. Chairman, as I am following Mr. Morrison who puts such learned and sharp questions, I'm afraid I will give the impression that I'm going from the trivial to the sublime, since my question is very general.

It has to do with the problems of developing countries and the international economic program. The 1970s were somewhat of a golden age for North-South relations, which is understandable since during that time there was really a great deal of solidarity shown between developing countries.

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They worked within the group of 77 at the United Nations, through the non-aligned, and they had the support of the oil exporters who could at that time put pressure on industrialized countries. So there was a time when the economic problems of developing countries were at the forefront of the international economic agenda.

Now, things have changed considerably. These countries no longer act together. Some have made terrific progress. Others, like India and Brazil, have developed greatly but now have a double personality since on the one hand they are underdeveloped and yet on the other very industrialized.

To complicate matters, the Soviet Union fell apart with former Soviet Republics coming on the international scene as developing countries. China is one of them. And we know that OPEC has declined.

So, do you think it is possible that development issues will become matters of top international priority again?

Mr. Pettigrew: I very much appreciate your question, Mr. Dupuy, because it goes to the heart of the whole problem of cooperation and development over the coming years. What I can say is that things will certainly not be done as they were in the 1970s and 1980s. You gave a good description of the splintering that occurred across the world and which has lead to enormous needs for capital all at the same time.

However, it is encouraging to be dealing with this problem. There was a time when one could frankly expect our planet to explode from the nuclear bombs of the two main superpowers, who would have self-destructed and drawn us down into the abyss.

So there has been an improvement. I point this out because quite often, developments that occurred since 1989 have been described in terms of the problems that they have brought about for us. Of course, integration in Central Europe, in Eastern Europe, the hoped for opening up of China have all caused problems, but these are wonderful problems.

I can tell you that I'm very aware of this reality and that in that regard, I share the priority of the Prime Minister, Jean Chrétien. Last year, when the Prime Minister was the host of the G-7 meeting in Halifax, he strongly insisted that the G-7 meeting in Canada be about reforming international financial institutions.

You will recall that Mr. Chrétien had gone on a trip to meet all the members of the G-7. He also went to some developing countries to ensure that the G-7 meeting would focus on the necessity to reform the International Monetary Fund, the World Bank and the regional development banks so that the developing world's priorities would be back on the international economic agenda.

Prime Minister Chrétien succeeded in achieving significant progress but because he was the host, he couldn't go as far as he would have liked to. I state this rather freely because I wasn't a member of the government at that time, but rather a commentator on Radio-Canada, on the Le Point program about the G-7 meeting. Because I knew I was going to be appearing on Le Point, I followed this the months leading up the meeting and I also followed the activities of Prime Minister Chrétien in order to be able to speak intelligently about these developments.

Thus, I noted that Mr. Chrétien had gone on that trip. He personally would have liked to go further at that time, but because he was the host, he had to be the person to ensure compromise between the members of the G-7 countries.

Mr. Dupuy, we are lucky to have President Chirac heading the next summit. He will be the host and he will have the same priority as the Prime Minister of Canada, Mr. Chrétien, that is putting development at the forefront of the agenda. He will therefore be providing more impetus in this direction.

We have just had a very productive visit from Prime Minister Juppé. I can assure you that relations between France and Canada, and our cooperation in this area will certainly be very interesting and will, I hope, contribute to bringing developing countries back as a priority on the international economic agenda.

Mr. Dupuy: Thank you very much.

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The Chairman: Thank you, Mr. Minister. Mr. Paré.

Mr. Minister, I still have three people on my list. Would you be able to remain for a few minutes after 11:00 so that we can finish? Thank you very much. That is very kind of you.

Mr. Paré: My question is perhaps to Ms. Labelle rather than Mr. Pettigrew.

In a letter that I wrote to Mr. Pettigrew on June 10 last, I expressed my concern about, among other things, the increase in Canada's contribution to international financial institutions. I found my information in the 1996-1997 Estimates, Part III.

Therefore I was somewhat surprised earlier on when I heard your figures, Mr. Minister, that show a decrease in contributions. On page 26 of that document, there is table 7 on financial results in 1994-1995. The amount for international financial institutions was $148.5 million whereas the actual amount was $351 million, that is an increase of $202 million.

How are those figures to be interpreted if we compare them to those that Ms. Labelle passed on to you earlier on?

Ms. Labelle: What it means first of all is the fact that last year, the Minister of Finance and myself wanted to deal with the outstanding amounts that Canada owed to these institutions.

So rather than give the Consolidated Fund the unused funds back, we decided to use them to cover the outstanding amounts that had accumulated over a certain number of years. The Minister of Finance also added a certain amount to help us catch up.

The second point I would like to point out, Mr. Chairman, to emphasize what the minister just told us, is that when you hear 27% in cuts for the World Bank and 40% for regional banks, you have to put that in the context of the next fiscal year, when we top up all those funds for loans on concessional terms.

In fact, those cuts will start being felt as of next year because it is normally over a period of a few years that... For example, there's been mention of IDA 10 and now IDA 11 for the World Bank, the fund for loans on concessional terms that we contribute to.

[English]

The Chairman: Mr. Godfrey.

Mr. Godfrey (Don Valley West): Thank you.

Minister, I have a suggestion for you, and a question, which may be more pertinent for Madame Labelle. The suggestion is that I think it would be interesting for the committee to know in some detail about your travels across the country and the dates. I'm not sure if this is directed to CIDA or your office. I think it would be extremely helpful as soon as possible to let everybody know when you're going to be where, particularly if members of the committee are in the area themselves.

I would also extend that suggestion to the Senate committee, which is often overlooked in these enterprises, simply to make them comfortable that they would be present at the meeting. They may even have suggestions for names and institutions that would be helpful to you.

Finally, you may wish to extend the invitation more generally to parliamentarians, both deputies and senators, from the area of whatever political party, so they are at least alerted to the fact that you're going to be there. I think that would help spread the word.

My question arises from the famous report of the Auditor General of 1993, which caused CIDA, I know, to rethink its mandate and its operating procedures. The second lesson the Auditor General drew was this - and I'm talking about 1992:

CIDA is an over-extended Agency. Activities are dispersed over numbers of countries, projects, delivery channels and funded institutions. A lack of strategic focus leads to a reduced program impact. Furthermore, Canada's influence with recipient governments is diluted, given our relatively low ranking among donors in terms of volume of aid to any given country.

My question is, can Madame Labelle perhaps give us concrete examples of things we've dropped since 1993, places we're out of, programs we don't do any more? How have we become more focused, not in procedural terms but in actual terms?

Mr. Pettigrew: Perhaps I'll take the question, John, and Madame Labelle can complement it later.

I read that report. I remember it very well. I know some countries - and we discussed this not too long ago - such as Norway, for instance, will concentrate their assistance to eight or nine countries and then will be present in only thirty countries. They share that burden with some other Scandinavian countries.

The situation for Canada is a very different one. I know this is very often a discussion we have here in town. Canada happens to be a far more active country in world affairs than are countries such as Norway. I don't always think there is a direct relevance between the level at which you are a donor in a specific country and the influence you can actually have. I have not seen one study linking those things that clearly as much as the report had at that time.

I for one will recognize that a country like Canada, which is a G-7.... We are both members of the Commonwealth, for which we have a certain number of historic priorities that are extremely important to us as Canadians. We are also members of

[Translation]

la Francophonie. We have been very active as members of la Francophonie over the last generation. It is inevitable that Canada's international presence cannot be as focused as those of other countries because we have a unique role in world affairs that I was trying to describe in my introductory remarks. That is to be a bridge between the G-7 countries and developing countries, a role that other countries cannot play.

I wanted to provide that answer to a theoretical question because I do not see a direct link between our position

[English]

at which we are a donor and the influence we can actually exert.

Madame Labelle might want to add to that.

Mr. Godfrey: I just want to make sure, though; in a sense, was that premise of the Auditor General then rejected by the agency?

Ms Labelle: This committee will probably remember the first meeting it had with the previous foreign affairs and international development minister, at which he rejected that premise at the time. Then, of course, we conducted our business accordingly.

I think it would be interesting to remember that if I exclude eastern and central Europe, about 70% of CIDA's program resources would be in about 28 countries. When I say ``about'' I don't mean 28.5 or something like that, because there are fluctuations from year to year. There might be a bigger project in one country one year. So it is 70% in roughly 28 countries.

Somebody may say it would be greater magic if it were in 20 countries. I think this is the type of thing the minister wants to really look at with our partners, with members of this committee, over the next number of weeks.

The Chairman: Thank you.

Mr. Mills.

Mr. Mills (Red Deer): Mr. Chairman, I guess Mr. Speller was throwing a lobbed ball, Mr. Bergeron and my colleague Mr. Morrison possibly were throwing hard balls, so I guess I become the clean-up hitter, if we follow baseball terminology.

I have just a couple of comments and then a question. I think it's important that, from what I've heard here today, you are concerned about CIDA's reputation. Madame Labelle and I have talked from day one, over I guess the last three years, about the importance of Canadians being convinced they're getting value for their dollars, and I heard you say that.

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I think that often CIDA is considered to be a Quebec industry. That needs to be broken down and needs to include all Canadians as part of this organization, if they're going to contribute their tax dollars to it.

So I applaud you for travelling across the country and trying to involve as many people as you can, not keeping it to the select old-timers who have always been part of it.

Following up on Mr. Godfrey's question, we've heard the figures of 28 countries and 70% and so on. It seems to me, from the countries I've been in and the experience I've had, that often we have NGOs and aid agencies falling over each other in terms of what they're going to do. It doesn't appear as if the UN or anybody else is there to coordinate the activities.

It seems very obvious to me that if we had these contributors doing this in that country, these NGOs specializing in this area, then we would be much more efficient in our delivery of the limited aid we have.

I just wonder what we can do to push that agenda, to get that on. I think that's more or less what the question was, but I didn't hear a really concrete answer.

Mr. Pettigrew: I am looking into such possibilities of more concentration. I haven't ruled it out.

I'm sorry; I just wanted to explain that our situation is a very different one. I lived it in South Africa just a few weeks ago. Honestly, I heard the ministers from two northern countries - two developed countries - speak, and frankly, when I heard them I couldn't believe what they were saying to the face of 33 developing nations that were there. So I completely changed my speech.

I say that Canada is in a unique position and that we need to be very careful not to jeopardize that. That's what I mean to say.

I am open to more concentration; there is no doubt about that. It's important for us to analyse whether that would be the best way for us both to serve the needs of the developing countries and to reflect our Canadian values in places where we want to do so.

If we are able to bring in more coordination with other donor countries, who would share our way of looking at things, who would share our values and who would want to project the same kind of approach - and Mr. Godfrey rightly points maybe to the Scandinavian countries and the conversation we had a week or two ago - then I would be very open to that suggestion, concretely.

Mr. Jackson (Bruce - Grey): Mr. Minister, I have a comment and then maybe a suggestion.

Canadians do a lot overseas, whether they're putting in outhouses or they clarify water where there have been chemical spills, arsenic, or they capture water from rain clouds, and whether you have an NGO or a university participating. Is there any way in which you recognize them and highlight them so that it shows some of the things that your department is doing - with an award of excellence or something like that?

My suggestion is some kind of a trade fair. In my riding of Bruce - Grey I have a company that's just designed a building that has satellite communication and could have hook-ups for satellite and you could do anything, maybe an operation from a remote doctor someplace or training of people in South Africa for building homes. I wonder if there is some environment where these things could be displayed so we could have partnerships evolve from them. You don't have to reinvent it and spend a lot of money; you may be able to do it collaboratively with somebody else.

Mr. Pettigrew: We already reward and recognize the great contribution of some of our CIDA partners. Actually, just a few weeks ago we had an evening - in the private sector we already do it - with the Canadian Exporters Association and we gave rewards to the five best Canadian exporters who are partners of CIDA. That was a great evening.

Some of you participated in that evening, and I thank you for it.

I take your suggestion very nicely. Probably we should try to find a way of also acknowledging the contribution of NGOs or individuals who are superb CIDA partners and contributors to international development.

So I thank you for your suggestion. We'll look into it.

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Mr. Jackson: I'm glad there's a trade fair, because there are a lot of people who have ideas and who want to get into the system. I know you're trying to broaden that. Is there an existing system that does that?

Mr. Pettigrew: Actually, there is. In South Africa CIDA was part of it. I led the delegation. CIDA was a partner. We had many people, from both Canadian universities and private sector companies, who were part of it. We had a booth there at the ISAD conference in South Africa. It will be the same thing. CIDA, with some of its partners, will have a booth at the AIDS conference in Vancouver next month. I will be going myself. I will be attending the AIDS conference in Vancouver myself. We will be there, with some of our partners.

Mr. Jackson: You are travelling around the country. It may be an idea that when you get there interveners give you some of their presentations.

Mr. Pettigrew: Thank you.

[Translation]

The Chairman: Mr. Minister, thank you for remaining a little longer with us and thank you also for the quality and frankness of your comments and answers to our questions.

We have had a very enriching discussion and I thank you on behalf of the members of this committee.

[English]

I'd like to leave one final thought with Madame Labelle.

The committee, as you may know, is conducting an in-depth study into developments in the Arctic - international cooperation and Canada's role in the emerging issues of the Arctic, of which the environment is clearly one. I see CIDA has recently granted $1 million to a Russian institute for studies of environmental degradation problems in the Soviet Union. In the committee Mr. Mills has often pointed out the degree of environmental degradation that's being produced by rivers draining into the Arctic Ocean in Russia, etc.

I hope therefore that when this committee travels to Russia, Madame Labelle, you could perhaps arrange a briefing on behalf of CIDA on what projects you are conducting in eastern Europe, and perhaps as part of our trip in the Arctic we could also see the sorts of projects you're currently conducting. That would be a good way for us to familiarize ourselves on the ground with some of CIDA's activities. We'll be back to you before the fall to do that.

Ms Labelle: We would be very pleased to do that. I think the briefing before would be very useful for all of us, and I'm sure we can let you know what we are doing in the parts you will be visiting if you want to visit any of our projects and make that happen.

The Chairman: I know also, from having met with our European and American counterparts, everybody's very concerned with environmental issues in the Soviet Union, so I think we would all like to congratulate you for this initiative. It's very significant.

Again, Minister, thank you very much for coming.

This session is now terminated. We will take a two-minute break and then we will come back in camera to continue our discussions on procedural issues relating to the SME report.

I'm sorry. The minister wants to make a closing comment.

Mr. Pettigrew: I want the last word.

I simply want to thank you very much for your warm welcome this morning, and I want you to know I am at your disposal. Whenever you feel like meeting me I'll be delighted to come to see you, because you've been so nice with me this morning.

The Chairman: This meeting is adjourned.

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