Finance Committee on Nov. 6th, 2017

[Greg Fergus, Liberal, Hull—Aylmer, QC]

Very good. I think a lot of smaller countries actually turn toward Canada to play that role, and look to Canada to have that kind of influence to help gather other players around a set of values, and to bring that to the table.

[Nicole Giles]

Our executive director at the Inter-American Development Bank is seen as one of the leaders at the board, even with our 2.6% share.

[Greg Fergus, Liberal, Hull—Aylmer, QC]

I think we have the right frame here. Let's take a look at some other multilateral organizations that we're part of and leadership roles Canada has played, or has come to play. Could you provide us with examples of where other countries have asked Canada to join so that we can help bring people together and to play that leadership role because, frankly, that's a role in which we are seen as an honest broker? Are there any other examples where we've played that role?

[Nicole Giles]

That's an interesting question. For the vast majority of the other multilateral development banks, Canada was a founding member and the request was for Canada to be a founding member, and it was considered at the time. I can ask Neil to speak to an example of where we were not, in one portion of the World Bank, and how that played out.

[Neil Saravanamuttoo]

If we can come back to the Inter-American Development Bank example, we were a founding member of the bank itself, but the bank then went on to create a private sector focused wing of the bank that was capitalized differently. They were a one-bank group but two separate organizations. We did not join that second Inter-American Investment Corporation from the start. We were asked to, and a number of countries in the region asked us to join and were keen for our voice at that table.

That's one example. In fact, looking beyond multilateral development banks, I started to say that was the case with the Organization of the American States also and we were not a founding member of that. That's one where Canada's absence at the table was noticed and is one we were actively asked to join.

[Greg Fergus, Liberal, Hull—Aylmer, QC]

Thank you very much for those answers. I guess fundamentally this seems to be consistent. Would it be seen consistent for Canada to join the AIIB to play this role of leadership of middle powers, or perhaps larger smaller powers, to help bring a certain set of values to the table and a certain expertise to the table as well?

[Nicole Giles]

It's consistent with the renewed commitment of this government to multilateralism. It's also consistent with this government's desire to have renewed engagement with the Asia-Pacific region.

[Greg Fergus, Liberal, Hull—Aylmer, QC]

We seem to have a long history over the 20th century, and certainly into the 21st, of playing a similar role in multilateral organizations.

[Nicole Giles]

Canada has traditionally been a leader in multilateral organizations and in punching above its weight.

[Greg Fergus, Liberal, Hull—Aylmer, QC]

Thank you very much for your very informed testimony.

It was a real pleasure to listen to you folks today.

[Nicole Giles]

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you.

Our list seems to be getting longer again.

We'll have Mr. Albas, and then Mr. Sorbara.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

I won't be asking such kind leading questions.

Earlier, Mr. Boulerice had asked a question about privatization and whether or not the AIIB encouraged privatization as an outcome. I believe you said it was roughly agnostic, that it wasn't part of it.

Can you confirm that?

[Neil Saravanamuttoo]

The answer was that there is no track record to make an assessment on that. What is clear is that the bank has certainly encouraged private participation in infrastructure projects throughout Asia, but with a P3 approach, not necessarily a privatization approach.

We would need a track record to be able to ascertain that.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

If this becomes law, then Canada will join with the other 56 shareholders per se to build infrastructure. Maybe they will be more successful than the Liberal government's ability.

That being said, the question is that they won't be building it out of money. They will be building projects that will be contracted to someone. Correct? They are not going to be constructing it themselves. They will issue a public or some sort of tender.

Is it going to be a public tender? Is that the way the bank will carry it out?

[Neil Saravanamuttoo]

Yes.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Will there be any provisions for state-owned enterprises?

[Neil Saravanamuttoo]

There will. With a typical project, the country may choose to come forward and say they would prefer to do it through their state-owned enterprise. That's their sovereign right. The bank can certainly propose alternative ways of financing it, but that would then get taken to the board for discussion.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Earlier we talked about accounting principles for the conduct of the bank. I appreciate that, but obviously state-owned enterprises operate in a much different field than the liberal western democracies.

Usually when you have a state-owned enterprise like a crown corporation there are a lot of accountability mechanisms and transparency mechanisms so that people can know the state of play, so to speak, or the state of those assets. State-owned enterprises in that end of the world do not.

What assurances can we have here at this table that we are going to be contracting through this bank with state-owned enterprises that are focused on building high-quality infrastructure, because, again, there's not a lot of transparency with how these state-owned enterprises operate. You can see the Americans have a lot of concerns with many of these state-owned enterprises and have a whole host of conditions if they want to invest in their markets, the same here in Canada.

[Nicole Giles]

Again, each project would be assessed on a project-by-project basis. Regardless of whether it's being delivered through a state-owned enterprise or a private company, the project will still need to meet those safeguards and those conditions that are set out in anti-corruption practice, sanctions practice, human rights, and the environment. The criteria and the bar that will need to be met will need to be met regardless.

If we were members of the bank, we would have the opportunity early on in the project development process, if we did have concerns about transparency, to flag it and to ask for it to be addressed in the project preparation.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

With what per cent? That doesn't always mean you're going to get co-operation from others, but thank you for your answers today.

[The Chair, Liberal, Wayne Easter]

I remind members we have 11 divisions yet to go through.

Mr. Sorbara.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

I'll just make one quick comment. Forty-seven other countries have joined the bank. If I'm not mistaken we're the first one from our area.

[Nicole Giles]

There are 57 founding members. At the moment there are 80 current and prospective, so there are a number of countries that are also going through the same process that we are.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

There are, for example, the U.K., Germany, Italy, France—