Finance Committee on May 2nd, 2013

[Ross Ezzeddin]

I guess the only thing I can say is that when you have a large number of complex projects for which the federal government doesn't control the timelines, particularly for the execution of those projects, it's not surprising that you would see amounts at that scale. A lot of them may be dependent on a small number of large projects being delayed, and so forth.

Certainly, I think every dollar that's ever been committed by the federal government that has been allocated through those programs eventually has been spent.

[The Chair, Conservative, James Rajotte]

Okay. Thank you.

Thank you, Mr. Caron.

Mr. Hoback, go ahead, please.

[Randy Hoback, Conservative, Prince Albert, SK]

Welcome, witnesses. It's great to see you here this morning.

I'm going to ask you about some of our international funding that's included in these estimates. You stated that there's a $10-million increase for the World Bank, which is to help private investment in agricultural research.

I'm curious. Could you give us some details of what that research may be and basically how the taxpayer can make sure that money is being used properly?

[Nicholas Leswick, Director, International Finance and Development Division, International Trade and Finance, Department of Finance]

Thanks for the question.

I had this question at the Senate last night. I don't know if I hit a home run, so I'll try to explain it a little bit better.

This is a payment to the World Bank, so the International Bank for Reconstruction and Development. Essentially we're calling it a pull mechanism. We're working with other governments, specifically the U.K. and Australian governments, essentially to create a prize structure to incent the private sector to play a part in addressing some of the agricultural productivity challenges in the developing world.

I have a good example for you. Right now we're working with these partners to structure a prize to incent private sector players to come up with a new drought-resistant seed variety for east Africa. Where a normal push mechanism would put money into research and development and we would hope these researchers and developers would come up with a solution, this essentially is going a priori a prize structure and then crowding in private sector investment to come up with a solution to essentially unlock or unleash the prize in the event they come up with such a solution.

So, in the example, if they do come up with a seed variety that works and has a demonstration effect, then the prize would effectively unleash itself.

[Randy Hoback, Conservative, Prince Albert, SK]

How do you go about deciding who wins the prize? Is a set of criteria laid out?

[Nicholas Leswick]

We're working with experts like the UN Food and Agriculture Organization, essentially global experts in this space, to construct the prize, to go through a design phase. Right now were in that indicative period. That will be put out for tender globally, and with set criteria and benchmarks and certain adoption benchmarks to be able to demonstrate the effectiveness of the product.

[Randy Hoback, Conservative, Prince Albert, SK]

Is it too early to see what the uptake is from the private sector in looking at this type of program?

[Nicholas Leswick]

Yes, generally, right now we're in a fundraising period. We're trying to compel other donors to participate, and right now we're working with the Government of the U.K. and the Australian government and the World Bank and other UN institutions to essentially go through a fundraising period. So it's a little too early; we're still in a pilot phase and constructing these different program proposals.

[Randy Hoback, Conservative, Prince Albert, SK]

If I understand this right, then you'll lay out the criteria of what you want to see for a result.

[Nicholas Leswick]

Exactly.

[Randy Hoback, Conservative, Prince Albert, SK]

Then you'll lay that criteria out there and say that if X, Y, Z can go about doing the research to meet that criteria, whoever gets there first, there's a monetary reward for doing that. Is that the way to sum it up?

[Nicholas Leswick]

Exactly. The tangible example, again, with this seed variety technology is that we're looking for so many hectares of planted seed varieties in east Africa—so it's Sudan and Somalia-type geography—that would actually demonstrate effectiveness, and then we would pay out the prize based on some independent assessment that this actually worked.

[Randy Hoback, Conservative, Prince Albert, SK]

That's really bright. It's a great idea.

[Nicholas Leswick]

Yes, it's innovative financing in the official development space. So, again, contradictory to the general pull mechanism, this is actually trying to crowd in private sector financing to leverage its innovation and expertise.

[Randy Hoback, Conservative, Prince Albert, SK]

That's excellent. That's really good.

The main estimates have a reference to statutory payments to the IDB for reconstruction and development. I'm curious about what that includes and what that's going to be used for.

[Nicholas Leswick]

Thank you again for the question.

The Minister of Finance is the Governor of the World Bank and by virtue of that, we're going to a general capital increase of that institution. All 180 contributing members to the World Bank are now asked to contribute share capital to grow the size of the bank.

The current portfolio of lending of the bank is about $200 billion, and that will be growing to nearly $300 billion over the next five years.

[Randy Hoback, Conservative, Prince Albert, SK]

That growth is based on requirements for just having a bigger capital pool to distribute, or inflation, or....

[Nicholas Leswick]

Exactly. This is the World Bank. It acts as a banking institution. We contribute share capital. It's able to leverage that share capital with a triple-A standing in capital markets, raise more money, and on-lend to developing world countries at favourable rates.

Canada is the eighth largest donor in the World Bank, so we're doing our share to contribute this capital base.

[Randy Hoback, Conservative, Prince Albert, SK]

Do you have any examples of programs it would do, just to give us an example?

[Nicholas Leswick]

Well, World Bank programming is very diverse—

[Randy Hoback, Conservative, Prince Albert, SK]

I guess maybe I'll leave that there.

[Nicholas Leswick]

Well, in a continent like Africa, sometimes it can compose up to 90% of a sovereign's budget, and that's across infrastructure, health care, and education. The World Bank programming is exceptionally diverse and important.

[Randy Hoback, Conservative, Prince Albert, SK]

Okay, I think I'll leave it there, Chair.

[The Chair, Conservative, James Rajotte]

Okay, thank you, Mr. Hoback.

Mr. Côté, you have the floor.

[Raymond Côté, NDP, Beauport—Limoilou, QC]

Thank you very much, Mr. Chair.

I would like to thank our witnesses today for answering our questions.

It is deplorable that it has been nearly a year since the Minister of Finance appeared before the committee. Last time he was here was on May 15, 2012, discussing Bill C-38. That is really deplorable. That was an omnibus bill and now we are faced with another omnibus bill. It is not as broad, but it is still headed in the same unfortunate direction that the government has taken.

Let me repeat. I would have liked to see the Minister of Finance or at least the Minister of State for Finance here with us because, after all, those individuals are accountable to Canadians.

For your part, you must account for the more technical aspects. You clearly cannot be accountable for the government's motivations. That is completely normal.

First, could you tell me what kind of latitude you have to discuss the figures in the main estimates? Ultimately, how much can you disclose?