Thank you very much, Chair.
Thank you for inviting me to appear before your committee. It is an honour for me to provide you with some of our observations on Bill C-293.
There are four basic points I would like to make today about the potential implications of draft Bill Under each point I will try to highlight for you the complications that could arise, depending on the final version of the bill, and complications that members may not have intended or have not yet had a chance to discuss or consider among yourselves.
First of all, in speaking about the “competent minister,” the bill needs to be sensitive to the diverse accountabilities involved in spending Canada's official development assistance—ODA, the shorthand term I'll use. The term “ODA” is a policy tool, negotiated among members of the OECD's development assistance committee to assist them in determining what kinds of international assistance should be counted as aid, and to give them, therefore, a basis for comparison of country-by-country aid statistics. It is not a definition that is established by legal statute.
For more than twenty years, and under different Governments, at least three different ministerial portfolios have been accountable for expenditure of Canadian ODA: the Minister of International Co-operation, who is responsible for the majority but not the totality of Canadian aid, through the Canadian International Development Agency; the Minister of Finance, who is responsible for Canada’s participation in the Bretton Woods institutions, the world’s largest providers of multilateral ODA; and the Minister of Foreign Affairs, who is responsible for payment of most of Canada’s assessed contributions to international organizations, a percentage of which is counted as ODA; and increasingly various kinds of peace- and security-related development assistance, some of which also count as ODA.
While the amounts of ODA allocated to each of these three portfolios that I've just referred to will vary over time, this basic division of labour between ministers is likely to endure. Thus, there is no one minister at present, or likely to be in the future, with an overarching responsibility for the management of all Canadian official development assistance.
In addition, a significant percentage of Canada’s ODA flows, currently about 3% or $130 million, are disbursed by the International Development Research Centre, or IDRC. While IDRC reports to Parliament through the Minister of Foreign Affairs, it is an autonomous decision-making body accountable to its independent board, as constituted by the IDRC Act. As IDRC has pointed out in its own written submission to this committee, there is a risk that Bill may conflict with these important provisions of the IDRC Act.
My second point is that committee members may wish to examine more carefully the implications of the language relating to human rights in the draft bill in paragraph 4(1)(c), specifically the call for Canadian ODA to be “consistent with Canada's international human rights obligations”. I specifically wish to focus your attention on the implications of the word “obligations” in this context.
Canada's human rights obligations derive from the international human rights treaties and conventions we have signed and ratified. These treaty obligations relate to the promotion and protection of human rights by the Government of Canada within the jurisdiction of Canada. Thus, the current reference to Canada's human rights obligations would have the effect of focusing the draft bill on the human rights of Canadians. It does not underline the role of ODA in promoting and protecting human rights internationally. Language to the effect that ODA activities should be “consistent with international human rights standards” would be in line with Canada's policy to promote and protect human rights internationally. Canada uses various review mechanisms, as specified by the human rights conventions that we have signed, to hold other governments accountable for their obligations for the human rights of their citizens. There is a risk that the reference to “Canada’s human rights obligations” in the bill might go beyond current state-to-state obligations that exist in international human rights law. It could also implicitly reduce the emphasis on recipient countries’ obligations towards their own citizens.
Thirdly, and turning to the specific responsibilities of the Minister of Foreign Affairs, it's important to point out that the poverty reduction test proposed in the act could affect the government's ability to fund core activities of a number of international organizations. That is because Canada's assessed contributions to different international organizations can, in varying degree, be counted as ODA, ranging from--and I'll give you a few examples--3% of our contribution for the World Intellectual Property Organization, WIPO, to 18% for the International Telecommunications Union, ITU, to 80% for the World Health Organization, and 100% for the Organization of American States, OAS.
I picked those to give you a sense of the range of the organizations. Those percentages, by the way, apply to all donor countries that claim official development assistance as part of their contributions.
The objectives of these organizations are varied, hence the different percentages of the contributions that can be counted as ODA. Canada is, of course, only one country among many that belongs to each of these organizations, and the programs and priorities of these international organizations are determined by their entire membership. Thus, the committee may wish to avoid asking the minister responsible for these contributions to certify that each of these international organizations observe a Canadian-legislated standard for how it spends the ODA portion of its budget.
My final and most important point reflects on how tightly and how precisely the committee, and in future a government bound by the act, would wish to hold Canadian ODA expenditures to the goal of reducing poverty. This is a narrower focus for Canadian ODA than the OECD definition, which defines the goal of ODA as “promoting the economic development and welfare of developing countries”.
Much of Canadian development assistance contributes to the goal of poverty reduction in developing countries, but some of it does so only indirectly and over a longer period of time, through such means as increasing citizen security, encouraging better governance, improving policies and policy-making capacity, and promoting respect for human rights.
The Department of Foreign Affairs, in particular through the human security program and the global peace and security fund, spends ODA for all the purposes I have mentioned.
I'll give you some examples from the last fiscal year of program spending, which has counted as official development assistance spent by the Department of Foreign Affairs. This could include mine action and education programs, or mine awareness programs; the deployment of corrections training officers to Côte d'Ivoire; the purchase and transfer of a secure e-mail system to improve international criminal justice cooperation in the Americas; witness protection training in Brazil; seminars on crime scene investigations in Central America; assistance in border management for the Palestinian Authority; human rights training in Indonesia; and support for the Colombian peace process.
Examples of potential funding for this current fiscal year from the Department of Foreign Affairs include financial support for the peace talks in south Sudan; support for prison reforms; gang member rehabilitation; the deployment of corrections officers and anti-money laundering activities in Haiti; and support for civilian peacekeeping missions via the RCMP.
While an indirect connection can be drawn between each of these activities and poverty reduction, a direct connection cannot be made in each and every case. If these kinds of programs and projects continue to be deemed worthwhile by Parliament, it would be unfortunate if they had to be terminated in order to comply with a strict interpretation of a poverty focus for Canadian development assistance.
Depending on how strictly the poverty focus for Canadian development assistance is interpreted, the government could be placed in the awkward position of, on the one hand, being expected to report these expenditures to the OECD as official development assistance, while on the other hand not being able to report them to Parliament as development assistance because they do not meet all the legal requirements of this act.
To conclude, I'd like to repeat what all G-8 leaders highlighted at their summit this past July in St. Petersburg, and I'm quoting now from the declaration:
||Multilateral and regional organizations and states have focused significant resources on developing new tools for S&R in recent years. Individual states are trying to make better use of their national resources by integrating defense, development and diplomatic capabilities in support of joint planning and strategy for stabilization and reconstruction.
This approach has been welcomed and encouraged by the development assistance committee of the OECD, to which Canada belongs. The OECD currently has important programs under way to harmonize donor best practices in fragile states, to better understand and integrate security system reforms into development programs and to clarify how ODA in these contexts is both defined and applied by donors.
We're proud to say that Canada has been at the forefront of these activities designed to increase the coherence and transparency of donor activities in support of international peace and security.
Thank you for your time and your patience.
If you don’t mind, I’m going to answer in English, because I speak a bit slowly.
It's also easier, for me, frankly, to think through.
My fourth point was that certainly in the area in which the Department of Foreign Affairs is currently programming, which is largely peace and security, those programs have a number of objectives.
Poverty reduction is not a central objective of those programs. Some of them do contribute to poverty reduction. Many of them have an indirect connection. I think if you provide better security to citizens, or you promote human rights, or you reduce crime and help states become more efficient in using the resources they have, that will contribute, ultimately, to poverty reduction.
So in part to expand on my earlier comments to Mr. McKay, a line can be drawn back to poverty reduction, but what I want to put clearly on the table, because I think it's in the spirit of this discussion, is that the line is not going to be a direct one. It's nowhere near as direct a line as would be a project, let's say, that's meant to provide nutritional supplements to poor people or an infant care program.
Governments will have several different reasons and kinds of broad-form policy objectives that are also now recognized, and have been for some time, as being legitimate uses of official development assistance as determined by all the donor countries through the OECD. Using a poverty focus--and it depends on how strictly you want to draw it and how tightly you want to draw that line--means that in Canadian official development assistance, Canada would choose, under this act, to draw a connection to what it chose to consider official development assistance that is tighter than the latitude that other donors give themselves and will continue to give themselves, regardless of whichever direction the Parliament of Canada chooses to go.
I'd like to invite my colleague, Monsieur Tellier, who's been sitting here patiently, to also respond.
Thank you very much for appearing this afternoon, gentlemen.
I just want to move very quickly through your points. On the first one, I don't see a single person in the room who doesn't fully acknowledge that there are several ministers who can have responsibilities. Accountability is required in relation to all of them, so whatever word change is needed, it's a simple matter to reflect what it is we agree upon here.
Secondly, with respect to the concerns raised about IDRC --I did appreciate receiving a brief from them, and I know you've made some comments--I think the fact that it really is an autonomous body accountable to a separately constituted board really doesn't bring them within the purview of what we're trying to do here, although I have to say that as a result of the recent trip of this committee to Europe, one of the things we came back appreciating is that we don't know and understand as much as we need to about what IDRC does. That's our responsibility, and I look forward to our doing more. We are hearing more about some of IDRC's initiatives from international contacts with whom we're meeting than we actually hear at home. So I think by bringing this to light, it's helpful. It reinforces our interest in doing that, but I don't see that this encroaches on that legislation. Nothing you've said here suggests otherwise. So unless you have some further comment about that, I'm satisfied that that's not a problem with the current draft.
Thirdly, again, I want to agree with my colleague, John McKay, that a change to international human rights standards would deal with the problem you've identified with the term “obligation”, so I would hope we could come to some consensus about that.
I want to move quickly to the cluster of comments you've made that have to do with what is considered ODA-able. I know we don't have time to fully discuss this the way we would like, but I just want to ask you flat out.... You've identified a number of things, starting with the World Intellectual Property Organization, the International Telecommunication Union, and so on, and then a number of program items--mine action, deployment of corrections training officers, and so on. Can I just clearly understand from you that those things are now ODA-able in terms of the definition that is being used under the OECD, with which we are complying? Now, I know not in their entirety; you explained that in some cases it's a percentage. But all of those items you've put before us are now ODA-able in some portion or in full. Is that the case?
Thank you for the invitation to come here. I'm hoping to provide information, and I know there were some questions in the previous committee meetings about the Department of Finance's role in the Bretton Woods institutions in particular and in development assistance.
As you're aware, most of the activities of the Department of Finance don't deal with development assistance. We're responsible or draw authority from over 143 statutes, one of which is the Bretton Woods and Related Agreements Act, which is clearly the most relevant in terms of development assistance, and I understand that's reflected in clauses 9 and 10 of the bill.
The Bretton Woods act lays out the minister's authority with respect to contributions to the World Bank and to the IMF. There are three main development assistance payments made by the Minister of Finance: first, contributions to the interest-free lending window of the World Bank, called the International Development Association; second, contributions to the low-interest lending window of the International Monetary Fund, called the poverty reduction and growth facility; and third, payments under the multilateral debt relief initiative, under which donors are financing 100% relief for eligible countries from their debt with the IMF, the World Bank's IDA, and the African Development Fund. This year, the department will make payments totalling $367 million for those three items. This is out of a total international assistance budget for Canada of about $3.8 billion.
Along with the authority to make payments, the Bretton Woods act also sets out reporting requirements for the Minister of Finance that are statutory and require us to report to Parliament on an annual basis. I've quoted section 13 of our act, and I believe that was distributed to you along with the report that the Department of Finance submits each year in this area. Section 13 requires us to submit
||a report containing a general summary of operations under this Act and details of all those operations that directly affect Canada, including the resources and lending of the World Bank Group, the funds subscribed or contributed by Canada, borrowings in Canada and procurement of Canadian goods and services.
I note that this particular language in section 13 is echoed in clause 10 of the bill.
Finally, the Bretton Woods act also sets out the Minister of Finance's role as Canada's representative on the board of governors of the World Bank and the IMF. As governor, the Minister of Finance exerts his influence through exchanges of views at the annual meetings of the board of governors of these institutions.
So these are the discussions that deal with the World Bank and IMF's broad policy agendas. The day-to-day decisions are actually delegated to a 24-member executive or board. These executive directors on the board are nominated by the governors of the constituencies they represent, but I'd point out that they're employees of the bank and fund. They're not employees of their home governments.
Another important point is that our executive directors at those two institutions don't represent Canada alone. There is not a Canadian executive director. The executive director represents Canada, Ireland, and a number of the Caribbean constituencies. So there's not a uniquely Canadian individual who just represents Canada at those institutions—and that's relevant, as you're going to see later.
I'll move on with some comments on . There are three areas I'd like to highlight. The first is the potential impact on the Minister of Finance's legal powers in non-development-related areas. I assume from the testimony I heard earlier and the comments of committee members that this is unintended, but our legal counsel raises serious concerns that this may be an unintended effect of the legislation, the way it's currently worded. The second is the potential blurring of accountabilities set out under the Bretton Woods act with regard to reporting. The third is the disclosure limitations due to the confidentiality rules imposed on the World Bank and IMF executive boards.
In terms of the Minister of Finance's powers, I'll divide it into two layers. This discussion already began in the earlier hearings. It's a question of the scope of the definition of “development assistance”, as contrasted with what can be spent under clause 4. I'll give three examples of how it's potentially problematic.
The contribution Canada makes to reduce money laundering in a developing country would likely fall under the development assistance definition Mr. McKay has put forward to the committee. They would be funds provided to a developing country that advance the economic development of that country by having a better banking system. But one could make a strong argument that the primary focus of anti-money-laundering funds is not poverty reduction. The concern about how the bill is written right now, and any activity that falls under that definition of development assistance, is that the government would be stopped from spending money in any of those areas of that broad definition of development assistance that don't have poverty reduction as the primary goal. It's not that we couldn't just count it as ODA; we actually couldn't spend money in that area.
That's the primary concern we're putting forward--areas of spending of the Department of Finance like anti-money-laundering. Another area is unilateral tariff relief. It may have a positive impact on the economic development of developing countries, but its primary objective is not poverty reduction.
I don't think that was the intention of the bill, but counsel are very concerned that this is the effect of the existing legislation. Activities that would fall under a broad definition of development assistance, including anti-money-laundering, unilateral tariff relief, and even bilateral debt relief in countries like the former Yugoslavia, would be subjected to the test of poverty reduction. If they failed that test, the government would not be allowed to provide funds in that area.
On bilateral debt relief, for example, you will recall that the government provided such relief in the former Yugoslavia following the Balkan conflicts. This type of assistance easily fits under the definition of development assistance; however, the driver for providing the relief was not the underlying prevalence of poverty in those countries. It was a recognition of the financial reality that in light of the particular challenging economic and financial situation, the country did not have the capacity to make its debt service payments over the coming years. Had Bill C-293 been in place, the minister might not have been able to deliver this type of assistance, as it would have been difficult to establish a direct causal link between the debt cancellation and poverty reduction, as required under clause 4.
Even within the Bretton Woods institutions, and particularly the World Bank, there are areas where we would potentially not be able to provide funding because it would fall under the broad definition of development assistance but not meet the poverty test.
If I could cite one example here of the World Bank private sector development agencies--the International Finance Corporation and the Multilateral Investment Guarantee Agency--the primary vehicle through which they provide assistance is funding to private sector organizations in those countries. Over the long term, the hope is that funding will eventually improve the state of the economy in those countries, which will help all citizens, including the most poor.
But when payments are made at the front end, it's difficult to make a direct link between a grant or risk insurance provided to a small company and poverty reduction. The concern is that with the broad definition of development assistance and the limiting factor that only those things that reduce poverty are allowed to be funded, the government would be prevented from contributing to these important World Bank agencies, to which most other countries in the world contribute.
The second point is around blurred accountabilities. As I mentioned earlier, the reporting requirements of Bretton Woods make it clear that the Minister of Finance is accountable for operations under the act. Indeed, it sets out a clear reporting requirement for the Minister of Finance that results in an annual report to Parliament.
Clauses 9 and 10, as I read them, will now create three reports on development assistance: one by the CIDA minister, and a second report for the Minister of Finance in clause 10, which is largely duplicative of a third report we do right now and which I believe you have; it is the Bretton Woods Act report that the Department of Finance already submits. So there's a danger here of some blurring of accountability in terms of who's accountable to Parliament to report on what. Under Bretton Woods, it's clearly the Minister of Finance who's accountable.
Perhaps I could address one particular concern, and it's a high one that is shared by the representatives of Canada at the World Bank and at IMF institutions. That regards the confidentiality rules in those institutions.
Paragraph 10(b) of the legislation, and it's echoed in paragraph 9(1)(d) of the legislation as well, requires that the minister present to Parliament:
||a summary of any representation made by Canadian representatives with respect to the priorities and policies of the Bretton Woods Institutions;
The World Bank's policy on disclosure of information and the IMF's transparency policy both require that certain items discussed by the executive director and the board of governors be confidential. To provide an analogy, the executive director meetings are not unlike cabinet. In order to encourage a full and frank exchange of members, the information that is shared between members at those meetings is kept confidential. That's enshrined in the articles of the IMF and the World Bank, which provide, in perpetuity, archival immunity for this sort of information.
As I mentioned, there's a second problem. If you're trying to decipher “Canada's position” at these agencies, the representative of Canada is not uniquely the representative of Canada. They're also the representative, in our two constituencies, of Ireland and the major Caribbean countries. So deciphering the position they ultimately took at a committee...even if we could get over the confidentiality hurdle, determining which part of that position was exactly Canada's position is just not possible given the way the institution is structured.
I'd point out that this sort of protection is also identified in our own Canadian legislation, in the Access to Information Act, which provides specific exemptions for information given in confidence from foreign governments or international organizations like the IMF and World Bank and where the disclosure of information could reasonably be expected to be injurious to the conduct of international affairs.
Given the frank nature of exchange in the meetings, were Canada to publish a detailed summary of the position it took, let's say, vis-à-vis the performance of another country's economy in the IMF proceedings, that could have a market impact in terms of what we're saying and where we think the country should go, but it could clearly have a state-to-state impact that's a potential concern.
This doesn't mean we can't report on any of the representations made by Canada. For example, as a matter of practice, though it's not required in law, we do, as part of the Department of Finance report on the Bretton Woods institutions, provide the positions adopted by the board of governors and the Canadian positions on all those resolutions taken. We're just highlighting for the committee the challenge around trying to push this to a point where our executive directors would be put in an impossible position of providing us information that would be in breach of their confidentiality requirements.
In summary, there are three essential concerns that we'd like to raise before the committee.
The first is in regard to the definition of development assistance in clause 4. If there's a broad definition of development assistance, it risks capturing activities like anti-money-laundering, which, under clause 4, we would not be allowed to fund because they don't have poverty reduction as their primary goal.
So we're raising that particularly from the Department of Finance perspective because the Minister of Finance is responsible, has ultimately the residual authority under the Financial Administration Act to spend in any area. If you restrict the Minister of Finance so that he cannot spend in a particular area, that is, development assistance that does not have poverty reduction as a goal, we're in effect preventing the Government of Canada anywhere from operating in that area. We think that's problematic.
The second is on the reporting requirements. We have an existing report on the Bretton Woods institutions. Indeed, paragraph 10(d) replicates the language of our report. I'd point out that only 12 of 185 member countries actually provide such a report. When Ireland recently added themselves to this list, they used Canada's report as a model, so we think it's a good report. We're worried that clause 10 simply duplicates that.
While I too am a friend of the pulp and paper industry in Canada, I think we should avoid anything that simply replicates the reporting so that we have the identical text in two reports.
Finally, on confidentiality, the new element in that reporting requirement, we're highlighting the difficult position we'd be putting Canada's representatives at the institutions in, to the extent that they were called upon to breach their confidentiality requirements. We would reveal, in effect, what are the equivalent of cabinet confidences.
Maybe I can try to do this at a level of principle that I hope gets us to the same place but doesn't cause me to get in trouble back at the office.
In terms of the confidentiality requirement and the black box, the point would be that Canada signed up to this institution, and we signed up under a set of rules. Within that institution, we have pushed, along with the British and others, to increase the transparency of the operation of the institution, and we have had some success. The two reports that are provided are the outer edge of transparency in terms of what the countries can report under the current initiatives, but that doesn't mean we can't push the institution to go forward. The plea I was making was that, were we to do this unilaterally by simply doing the equivalent of revealing cabinet confidences, we'd find ourselves outside cabinet pretty quickly, because we would have put the executive directors in an impossible position, in that they would be breaching their own rules.
We share the view that making the institution more transparent in how it operates is important, and over successive governments, continual efforts have been made to do that, most notably by the Minister of Finance at the recent Singapore meetings, in terms of an anti-corruption agenda that was designed to improve the transparency of the bank and the funds' operations in that area.
In terms of what Canada undertakes, there is a lot of scope to report on that, and you'll see that in the report. In terms of how we contribute to the IMF and the World Bank, if we provide special funding for initiatives like multilateral debt relief, we're very transparent about what that is, how we do that, and what's happening. There's scope for that because we're making a contribution into a very public initiative that's going forward.
The concern is around the discussions at the executive director level. Those discussions are the most confidential and the most protected. If a particular project is coming forward, that's the area where these confidentiality roles are extremely clear. As I indicated, we have pushed as far as we can on that, in the sense that every time we say no or we abstain, we are reporting in that report that we have said no or abstained on that project, with a very brief description. We have tried to disentangle the soup that is the fact that the Canadian representative isn't just the Canadian representative.
Going further and providing more detail, while I appreciate many would welcome that detail, would fundamentally change the nature of the institution, which we can't do unilaterally. The plea is really around that. If going as far as saying a summary of any representation made by a Canadian representative is an extremely detailed, deep obligation that potentially puts us in an impossible position, anything you could do in terms of an amendment that would allow our executive directors to continue to fulfill their legal obligations to the institution, but which would further improve on reporting—which we've pushed as far as we think we can take it—would be welcomed, of course.
This basic report is a notice to the committee members that your subcommittee met on Thursday, November 23, to discuss committee business and agree to the following recommendations.
First of all, it was agreed that the committee discuss the draft report on Haiti during the second hour of the meeting on December 5, 2006. We are very close to completing our report. We want that report done before Christmas or asap. It may only take a maximum of one hour.
The second point is that it was agreed that the committee meet with various witnesses during the month of December on the study of democratic development, including John Williams, member of Parliament, and Kevin Deveaux, the MLA. This was a bit of a trade-off. These are two individuals who want to talk, one on the corruption side and the other I'm not certain on what side. Madam McDonough could give us more information. MLA Deveaux has a lot of experience with democratic development and development assistance and such. Those two are a bit of a trade-off, I dare say.
The third point is that it was agreed that the clerk of the committee, in consultation with the chair, prepare a draft budget—which you also have before you today—respecting the committee's proposed travel to Washington, D.C., and New York in February for consideration by the committee. This report we can talk about if anyone has questions. It is here before you today.
Fourth, and finally, is that the Right Honourable Kim Campbell of the Madrid Group be invited to appear before the committee at a future date. That has taken care of itself. She was here on Monday and we were unavailable to meet with her, but that was part of what the business of the day was.
Are there any questions with regard to the steering committee report?
Can we agree to adopt this?
Some hon. members: Agreed.
The Chair: It's agreed unanimously. Thank you.
Do we want to do this budget?
We have a travel budget, and this allows me to go to the Liaison Committee. This travel budget is for the Washington and New York trip. In all honesty, I was given a directive at that steering committee to talk to my whip and I have not yet done that.
I would remind the committee that this means we will use one of our travel points from Ottawa, or wherever in Canada, to Washington. Maybe the committee can refresh my memory. For this trip, we're going to attempt to see if another travel point can be used for Washington, New York, and then back home. Is that correct? No, that's not correct?