Evidence of meeting #122 for Finance in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was aiib.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Gervais Coulombe  Chief, Sales Tax Division, Tax Policy Branch, Department of Finance
Antoine Brunelle-Côté  Director, International Policy and Analysis Division, International Trade and Finance Branch, Department of Finance
Nicole Giles  Director General, International Finance and Development Policy Division, International Trade and Finance Branch, Department of Finance
Neil Saravanamuttoo  Chief, Multilateral Institutions, International Finance and Development Division, International Trade and Finance Branch, Department of Finance
Anchela Nadarajah  Economist, Multilateral Institutions, International Finance and Development Division, International Trade and Finance Branch, Department of Finance
Manuel Dussault  Chief, Securities Policy Division, Department of Finance
Justin Brown  Director, Financial Stability, Financial Sector Policy Branch, Department of Finance
Christopher Graham  Principal Economist, Bank of Canada
Hugues Vaillancourt  Chief, Financial Sector Policy Branch, Department of Finance
Lorraine McKenzie Presley  Director General, Portfolio Management and Corporate Secretariat, Department of Natural Resources
Margaret Hill  Senior Director, Strategic Policy and Legislative Reform, Department of Employment and Social Development
Réal Gagnon  Senior Policy Analyst, Strategic Policy and Legislative Reform, Labour Program, Department of Employment and Social Development

4:55 p.m.

Liberal

The Chair Liberal Wayne Easter

Are you comfortable giving it right now, Nicole? If you're not, you can send it to us in writing.

4:55 p.m.

Director General, International Finance and Development Policy Division, International Trade and Finance Branch, Department of Finance

Nicole Giles

I'm comfortable to provide my assessment now, but I'm not at this point able to define for the Government of Canada our like-minded partners internationally.

4:55 p.m.

Liberal

The Chair Liberal Wayne Easter

Okay.

4:55 p.m.

Director General, International Finance and Development Policy Division, International Trade and Finance Branch, Department of Finance

Nicole Giles

I can define our assessment of like-minded partners for interests in this bank, but again, I do not have the capacity to provide like-minded partners in a foreign policy context for the Government of Canada.

4:55 p.m.

Liberal

The Chair Liberal Wayne Easter

I think you've clarified it, because you're saying that it's like-minded partners for this bank.

4:55 p.m.

Director General, International Finance and Development Policy Division, International Trade and Finance Branch, Department of Finance

Nicole Giles

That's correct.

4:55 p.m.

Liberal

The Chair Liberal Wayne Easter

Okay. Go ahead.

4:55 p.m.

Director General, International Finance and Development Policy Division, International Trade and Finance Branch, Department of Finance

Nicole Giles

In this case, I would put on that list: Germany, Korea, Australia, France, the U.K., Italy, Spain, the Netherlands, the Philippines, Poland, Hong Kong, Israel, Switzerland, Sweden, South Africa, Norway, Austria, New Zealand, Denmark, Finland, Belgium, and then there's a series of other countries as well that are G20 partners.

Continuing on the earlier list as well, there are Peru, Ireland, Hungary, Luxembourg, Portugal, Cyprus, Iceland, Malta, Chile, Greece, Brazil, Argentina, and then there is a series of other partners on here that are also G20 partners that we share many interests with, but again, I'm slightly concerned about the foreign policy implications of defining “like-minded” partners. Potentially included in that list could be Singapore, Romania, Malaysia, Nepal, Brunei, Mongolia, Armenia, the Philippines, Thailand, Turkey, and Indonesia.

We're in very good company.

4:55 p.m.

Conservative

Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC

You mentioned the Philippines twice, as well as Hong Kong, which I wouldn't say is its own sovereign country.

Let's go back to the G20 list of countries because many of these other countries I wouldn't say are ones that you would habitually pull out of a hat and associate with Canada—no offence to them. It's just that the average Canadian wouldn't say those are the ones we most often deal with. What percentage of the bank's share ownership will that list you provided comprise?

4:55 p.m.

Director General, International Finance and Development Policy Division, International Trade and Finance Branch, Department of Finance

Nicole Giles

We're very happy to provide you with a detailed list of the estimated percentage of shares.

Given that China has approximately 30% of the shares at the moment—and that could drop down to 26% if additional shares are purchased—that leaves 70% of the shares with other countries. There's a balance in terms of their proportion, just as there is with ours. For example, India is at 8.37%, Germany is at 4.48%, Korea is at 3.74%, Australia is at 3.69%, and France is at 3.68%.

We'd be very happy to provide you with a detailed list.

5 p.m.

Conservative

Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC

I would appreciate that.

It's just that, again, for a country like India, for example, they probably would foresee that many of the projects may end up benefiting their region or their country. I can see them wanting to play a closer role in that, but again, I'd be interested in finding out what the share ownership is for some of these smaller partners, countries like Iceland.

With regard to generally accepted accounting practices, or GAAP, is that going to be the standard for this bank?

5 p.m.

Economist, Multilateral Institutions, International Finance and Development Division, International Trade and Finance Branch, Department of Finance

Anchela Nadarajah

It's going to be the IFRS.

5 p.m.

Conservative

Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC

Okay, so it's the international equivalent.

I think that answers most of my questions.

5 p.m.

Liberal

The Chair Liberal Wayne Easter

Mr. Boulerice.

5 p.m.

NDP

Alexandre Boulerice NDP Rosemont—La Petite-Patrie, QC

Thanks.

Mr. Saravanamuttoo, a little bit earlier my colleague Mr. Poilievre asked you a question about whether, at the end, there will be some profits for Canada. Your answer was that there would be growth. Did I miss a nuance here between profits and growth?

5 p.m.

Chief, Multilateral Institutions, International Finance and Development Division, International Trade and Finance Branch, Department of Finance

Neil Saravanamuttoo

The nuance is that, yes, the bank will, hopefully, turn a profit. Again, the history of other multilateral development banks is that they quite regularly turn a profit every year. They have a positive net income.

The difference, as my colleague has mentioned, is that it hasn't been the norm to distribute these profits as dividends, but rather to keep them within the bank as retained earnings to allow the bank to have additional financial capacity to do more of what it's doing. Whether we call it profit or retained earnings that would be sitting on the bank's balance sheet, yes, that would be the case. There would be a certain percentage of these attributed to each shareholder. That's the nuance we were trying to clarify.

November 6th, 2017 / 5 p.m.

NDP

Alexandre Boulerice NDP Rosemont—La Petite-Patrie, QC

Thank you.

As I understand it, then, the main idea behind this financial transaction—which is still going to cost Canadian taxpayers a pretty penny—is not to achieve a quick, direct, or annual return. The idea, rather, is to be a partner in a region of the world where we want to see economic growth, which can spawn a host of other socio-economic and legal benefits.

Canada is writing a cheque to purchase shares, and the goal is not to turn a quick profit, but, instead, to foster economic growth in the region and, by extension, a market receptive to Canadian companies looking to do business in the region. It provides both an economic incentive and a means for us to assert our role on the world stage. Is that correct?

5 p.m.

Director General, International Finance and Development Policy Division, International Trade and Finance Branch, Department of Finance

Nicole Giles

Absolutely.

I think indicative of that is that the funding source is from the international assistance envelope, which is the portion of funding that the federal government sets aside for artificial development assistance. Most of the funding provided to the AIIB would be counted as official development assistance in terms of how it's reported through the OECD DAC.

5 p.m.

NDP

Alexandre Boulerice NDP Rosemont—La Petite-Patrie, QC

Thank you.

5 p.m.

Liberal

The Chair Liberal Wayne Easter

That last point is an important point.

I have on my list Mr. Poilievre, Mr. Kmiec, and Mr. Fergus.

5 p.m.

Conservative

Pierre Poilievre Conservative Carleton, ON

In the articles of incorporation of the Asian Infrastructure Investment Bank, chapter 1, under “Purpose”, it says, “The purpose of the Bank shall be to: (i) foster sustainable economic development, create wealth and improve infrastructure connectivity in Asia”.

In article 1.2, Asia is defined as “the geographical regions and composition classified as Asia and Oceania by the United Nations, except as otherwise decided by the Board of Governors.”

I take that to mean that any country that falls within the borders of the United Nations' definition of Asia and Oceania would be eligible to receive funds from the Asian Infrastructure Investment Bank for the purposes of construction. Is that accurate?

5:05 p.m.

Director General, International Finance and Development Policy Division, International Trade and Finance Branch, Department of Finance

Nicole Giles

Yes. They'd be able to bring projects forward to the bank for consideration.

5:05 p.m.

Conservative

Pierre Poilievre Conservative Carleton, ON

Are there any Asian countries that would be forbidden from receiving these funds?

5:05 p.m.

Chief, Multilateral Institutions, International Finance and Development Division, International Trade and Finance Branch, Department of Finance

Neil Saravanamuttoo

They would have to be members of the bank. For instance, North Korea is not a member of the bank, so they would not have access to those funds.

5:05 p.m.

Conservative

Pierre Poilievre Conservative Carleton, ON

What about Singapore, for example?