Finance Committee on Nov. 21st, 2017

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

I request a recorded vote.

(Amendment negatived: nays 5; yeas 4 [See Minutes of Proceedings])

[The Chair, Liberal, Wayne Easter]

Amendment CPC-2 relates to the same clause.

Mr. Kmiec.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

This second amendment specifically deals with lines 4 and 5 of clause 176, on page 239.

During testimony, the minister and the witnesses used a different number from the number available in the budget document. In Bill C-63 it is $375 million U.S., while on page 181 of the budget it says that budget 2017 proposes to invest $256 million over five years for Canada to join the Asian infrastructure bank. I'm simply trying to amend it to reduce the number to match what the budget said was the correct amount to spend. I've never quite understood the discrepancy between the two numbers. Perhaps the Liberals wanted to double down...which the numbers almost match. As my colleague Mr. Albas mentioned, this would also help the government avoid some currency exchange risk if we convert the currency to Canadian dollars instead of keeping it in U.S. dollars, because we might approve it, but since currencies are traded freely and they might change, the government might wind up paying more money than what was intended and approved.

I think we've gone over all the deficiencies of the Asian infrastructure bank. This is really just about what's on page 181 of the budget document, which is $256 million over five years. There's a discrepancy there with the $375 million U.S. in Bill C-63.

[The Chair, Liberal, Wayne Easter]

Ms. O'Connell.

[Jennifer O'Connell, Liberal, Pickering—Uxbridge, ON]

Mr. Chair, while I appreciate Mr. Kmiec's amendment to clarify the numbers, we heard testimony from the officials of where the difference in numbers was. One was that Canada is setting an upset limit of $375 million U.S., but currently there is only $199 million U.S. worth of shares available. The idea is that since Canada is not a founding member, should additional shares be available, Canada could purchase more, up to that upset limit. We heard that testimony. I thought it was made very clear, but I'm happy to clarify that the initial investment is $199 million U.S. that's available, and that it's an upset limit, should any additional shares become available after other members choose what share limit they will move forward with. That's the clarification and that's what we heard in testimony from officials.

[The Chair, Liberal, Wayne Easter]

We have officials here. If anybody wants them to come forward, make that request.

Mr. Kmiec.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Join us.

[The Chair, Liberal, Wayne Easter]

If people have questions on this issue, you're entitled to ask them.

I have Mr. Kmiec first, and then Mr. Sorbara.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Since we have the officials here, may I start with the initial $199 million that Madam O'Connell referenced. When would this future money be requested, and how would parliamentarians have a say in whether the money is disbursed or not?

[Nicole Giles, Director, International Finance and Development Division, International Trade and Finance Branch, Department of Finance]

The additional funding would be requested if there was the availability of shares. When the shares become available to purchase, if the government wanted to purchase those shares, at that point the funding would be requested and it would be returned to Parliament through the estimates process as part of the regular appropriations process.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

But the budget actually says $256 million over five years. Did the government change its intentions from back in March and now have new intentions? Would those intentions potentially change in the future? That's the issue here. Are you saying that at a future time, the government may choose to purchase extra shares if those shares become available, and it wants to keep the money that Parliament would approve on the side, in a separate bank account for future use, for potential future purchases of these shares?

[Nicole Giles]

In the budget the exact amount is being requested for the shares that are currently available for purchase. The legislation provides the up to maximum amount for Canada's possible maximum shareholding allocation based on the bank's formula. The delta and the difference would not be appropriated or set aside in budgets until the regular estimates or appropriation process had gone through. So in accordance with budget 2017, while the legislation will provide for a potential upper cap, the appropriation at this point is limited to the $199 million.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Here's the issue I have. The header says “Payments out of Consolidated Revenue Fund—Initial subscription”.

My understanding of something that says “initial subscription” would be exactly that: $256 million, or $199 million U.S., purchase initial subscription. Future subscriptions should then return here in a bill format when parliamentarians could debate and question the wisdom and whether this was the right decision or the wrong decision. I think most members know where I stand on this. We could then return here to have a secondary debate. Perhaps we could call it, “second subscription”, or “another subscription”, but this refers to “initial”. My understanding of “initial” would be that it would be $256 million, not $375 million U.S.

[Nicole Giles]

The initial subscription describes the first capital that's being put into the bank by the founding members and by the members who are joining in the second round.

When we talk about additional subscriptions down the line, that normally relates to a general capital increase, which would be seen as a subsequent subscription. The initial subscription speaks to the larger initial capitalization of the bank, and that's why that language is used. It is distinguishing that from the initial purchase from Canada to a potential subsequent purchase up to our maximum allowable share allocation.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

This sounds like I'm going out to buy a car for $10,000 and instead of getting a loan for $10,000 I get a loan for $14,000 because I might want to do some upgrades, get new tires, or fix something on the car.

What this sounds like is you're asking for more money than you need because you may want to use it in the future to invest in this bank some more. Am I misunderstanding it?

[Nicole Giles]

An important distinction is distinguishing between the legislative process and the appropriations process. The legislative process is requesting legislative authority to purchase up to the maximum allowable share that Canada could have under the allocation formula. The appropriation, which is budget 2017, is only speaking to the $199 million. If the decision was taken by the government to make additional share purchases at that point an additional appropriation would be requested by the government and that would be brought back to Parliament.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Okay.

[The Chair, Liberal, Wayne Easter]

Would it have to go through the budget process at that stage?

[Nicole Giles]

That is correct.

[The Chair, Liberal, Wayne Easter]

I have Mr. Sorbara and then Mr. Albas.

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

Thank you, Mr. Chair.

Good morning, everyone.

The question I had was answered in terms of the initial funding amount. To increase that it would have to go through the process again, so that was answered.

My understanding is that this current funding allocation will occur over a five-year period.

[Nicole Giles]

That is correct.

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

Okay. That is it.

I just wanted to add one comment on the banter that went back and forth on the earlier discussion of the Asian Infrastructure Investment Bank. My understanding is that there are obviously a number of countries, I would say dozens of countries, that are participants in the Asian Infrastructure Investment Bank.

[Nicole Giles]

That is correct.

There were 57 founding members. Currently, there are 80 current and prospective members.

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

Many of those members can be defined as countries that we do an enormous amount of trade with and obviously have growing economies with many of them located in the Asia-Pacific region.