Evidence of meeting #184 for Finance in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was proposed.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Manuel Dussault  Senior Director, Framework Policy, Financial Sector Policy Branch, Department of Finance
Justin Brown  Director, Financial Stability, Financial Sector Policy Branch, Department of Finance
Peter Fragiskatos  London North Centre, Lib.
Yuki Bourdeau  Senior Advisor, Capital Markets Division, Financial Sector Policy Branch, Department of Finance
Eleanor Ryan  Director General, Financial Institutions Division, Financial Sector Policy Branch, Department of Finance
Jean-François Girard  Director, Consumer Affairs, Financial Institutions Division, Financial Sector Policy Branch, Department of Finance
Brigitte Goulard  Deputy Commissionner, Financial Consumer Agency of Canada
Kim Rudd  Northumberland—Peterborough South, Lib.
Mark Schaan  Director General, Marketplace Framework Policy Branch, Innovation, Science and Economic Development Canada
Ian Wright  Director, Financial Crimes Governance and Operations, Department of Finance
Darryl C. Patterson  Director, Corporate, Insolvency and Competition Policy Directorate, Marketplace Framework Policy Branch, Department of Industry
Martin Simard  Director, Copyright and Trademark Policy, Marketplace Framework Policy Branch, Department of Industry
Andrea Flewelling  Senior Policy Advisor, Marketplace Framework Policy Branch, Department of Industry
Patrick Blanar  Senior Policy Analyst, Patent Policy Directorate, Department of Industry
Dale MacMillan  Vice-President, Corporate Services and Chief Financial Officer, National Research Council of Canada
Christopher Johnstone  Director General, National Programs and Business Services, National Research Council of Canada
Eric Grant  Director, Community Lands Development, Lands and Environmental Management, Lands and Economic Development, Department of Indian Affairs and Northern Development
Leane Walsh  Director, Fiscal Policy and Investment Readiness, Economic Policy Development, Lands and Economic Development, Department of Indian Affairs and Northern Development
Susan Waters  Director General, Lands and Environmental Management Branch, Lands and Economic Development, Department of Indian Affairs and Northern Development
Michèle Govier  Senior Director, Trade Rules, International Trade and Finance Branch, Department of Finance
Katharine Funtek  Executive Director, Trade Controls Policy, Department of Foreign Affairs, Trade and Development
Bev Shipley  Lambton—Kent—Middlesex, CPC
Nicole Giles  Director, International Trade and Finance, Assistant Deputy Minister's Office, Department of Finance
Deirdre Kent  Director General, International Assistance Policy, Department of Foreign Affairs, Trade and Development
Mark Lusignan  Director General, Grants and contributions Management, Department of Foreign Affairs and International Trade (International Trade)
Michelle Kaminski  Director, Office of Innovative Finance, Grants and Contributions Management, Department of Foreign Affairs, Trade and Development
Chantal Larocque  Deputy Director, Development Finance, Grants and Contributions Financial Policy, Foreign Affairs Canada
Danielle Bélanger  Director, Gender-Based Analysis Plus and Strategic Policy, Policy and External Relations Directorate, Status of Women Canada
Alison McDermott  General Director, Economic and Fiscal Policy Branch, Department of Finance
Derek Armstrong  Executive Director, Results Division, Expenditure Management Sector, Treasury Board Secretariat
Lori Straznicky  Executive Director, Pay Equity Task Team, Strategic Policy, Analysis and Workplace Information, Labour Program, Department of Employment and Social Development
Don Graham  Senior Advisor to the Assistant Deputy Minister, Compensation and Labour Relations Sector, Treasury Board Secretariat
Bruce Kennedy  Manager, Pay Equity Task Team, Labour Program, Department of Employment and Social Development
Richard Stuart  Executive Director, Expenditure Analysis and Compensation Planning, Expenditure Management Sector, Treasury Board Secretariat
Colin Spencer James  Senior Director, Social Development Policy, Strategic and Service Policy Branch, Department of Employment and Social Development
Andrew Brown  Director General, Employment Insurance Policy Directorate, Skills and Employment Branch, Department of Employment and Social Development
Barbara Moran  Director General, Strategic Policy, Analysis and Workplace, Labour Program, Department of Employment and Social Development
Rutha Astravas  Director, Employment Insurance Policy, Special Benefits Policy, Department of Employment and Social Development
Charles Philippe Rochon  Senior Policy Analyst, Labour Standards and Wage Earner Protection Program, Workplace Directorate, Department of Employment and Social Development

6:50 p.m.

Nicole Giles Director, International Trade and Finance, Assistant Deputy Minister's Office, Department of Finance

Thank you very much, Mr. Chair.

We'll first speak to the reporting and amendments to certain acts, which deals with clauses 654 to 658 in division 17. Budget 2018 announced that Canada would be enhancing its international assistance reporting, which is currently based on different historical and legislative requirements that result in Canada's reporting on its international assistance levels through several different means—multiple reports at different dates with different scopes.

The first component of division 17 proposes legislative amendments to three existing acts in order to align reporting timelines. The first is the Bretton Woods and Related Agreements Act, which falls under the responsibility of the Minister of Finance. The second is the European Bank for Reconstruction and Development Agreement Act, also under the Minister of Finance. The third is the Official Development Assistance Accountability Act, which falls under the responsibility of the Minister of International Development.

The goal is to establish timelines to allow for one consolidated report explaining international assistance activities to Parliament and to Canadians

This report will relay in an effective and transparent way the efforts deployed by Canada in the area of international aid.

The amendments to the Official Development Assistance Accountability Act, or ODAAA, seek to repeal the outdated definition of official development assistance currently in the act. These amendments allow for official development assistance to be defined and updated in regulations so that it can be kept consistent with the internationally agreed definition.

I'll now turn it over to my Global Affairs colleague for any additional comments.

6:55 p.m.

Deirdre Kent Director General, International Assistance Policy, Department of Foreign Affairs, Trade and Development

We have nothing else to add. We're ready to take your questions.

6:55 p.m.

Liberal

The Chair Liberal Wayne Easter

Tom.

6:55 p.m.

Conservative

Tom Kmiec Conservative Calgary Shepard, AB

How is the definition outdated?

6:55 p.m.

Director General, International Assistance Policy, Department of Foreign Affairs, Trade and Development

Deirdre Kent

The act was originally created in 2008, and in the interim time the OECD has worked to update the act. The updated definition is based on the same elements that are in the ODAAA: the main objective is to promote the economic development and welfare of developing countries; and the assistance must be concessional in character.

The main change came about due to negotiations at the OECD and consensus agreement. It relates to a minimum grant element required for assistance to be considered as ODA. This is traditionally applied to concessional sovereign loans to ensure that donors are giving sufficiently generous loan terms to count as ODA.

More precisely, just to be concrete, the old definition had a grant element of 25%, and now the updated definition has a graduated scale going from 45% down to 10%. This encourages more concessional funding to the least developed countries.

6:55 p.m.

Conservative

Tom Kmiec Conservative Calgary Shepard, AB

You're using the OECD new definition. Thank you for that. What you're doing here, however, is giving the Governor in Council...so that the cabinet can make a regulation to change the definition, whereas before it was a statutory definition. Why didn't we just update it to whatever the OECD decided was the reasonable new definition?

6:55 p.m.

Director General, International Assistance Policy, Department of Foreign Affairs, Trade and Development

Deirdre Kent

In fact, the OECD is still undergoing discussions on modernizing the definition of ODA to reflect the evolving global context. For example, now there are discussions regarding private sector instruments, and those discussions are ongoing. We expect the definition to be changing again in future. The move to have the definition in the regulations versus in the legislation will allow the updates of the definition to be made more easily than if every update required a change in legislation.

6:55 p.m.

Conservative

Tom Kmiec Conservative Calgary Shepard, AB

This would be easier than changing the law every time it changes.

6:55 p.m.

Director General, International Assistance Policy, Department of Foreign Affairs, Trade and Development

Deirdre Kent

That's right.

6:55 p.m.

Conservative

Tom Kmiec Conservative Calgary Shepard, AB

What are the financial implications of leaving it as it was before? Are there any implications for Canada if we just leave it as it is?

6:55 p.m.

Director General, International Assistance Policy, Department of Foreign Affairs, Trade and Development

Deirdre Kent

It would mean our reporting wouldn't be aligned with the now internationally agreed definitions of ODA, and some of our ODA, which would come under the new tools that will be in part B of our discussions, may not be able to be counted.

6:55 p.m.

Conservative

Tom Kmiec Conservative Calgary Shepard, AB

Okay.

6:55 p.m.

Liberal

The Chair Liberal Wayne Easter

Are there any other questions?

Mr. Julian.

6:55 p.m.

NDP

Peter Julian NDP New Westminster—Burnaby, BC

We're moving from a definition of 25% grants to a sliding scale, a gradual scale from 45% to 10%. Are there definitions in the regulations for a 45% grant-based development assistance program and a 10% ODA?

6:55 p.m.

Director General, International Assistance Policy, Department of Foreign Affairs, Trade and Development

Deirdre Kent

Again, this sliding scale and the definition is based on what has been agreed within the OECD development assistance committee, so it wouldn't be based on anything that Canada would be developing independently. The 45% case would be for the least developed countries and some other low-income countries. A 15% rate would be used for lower to middle income countries, and then down to 10% for upper to middle income countries. You can see that there would be an incentive in there for loans and concessional financing to the least developed countries.

7 p.m.

NDP

Peter Julian NDP New Westminster—Burnaby, BC

Now, you have that list. Is that something you could provide to the committee? I think that would help us to understand it.

7 p.m.

Director General, International Assistance Policy, Department of Foreign Affairs, Trade and Development

Deirdre Kent

Yes, it is all available on the OECD-DAC website, so we can share the link and that information.

7 p.m.

NDP

Peter Julian NDP New Westminster—Burnaby, BC

Is the change in definition also giving more scope—potentially—to the private sector or for-profit operations within overseas development assistance?

7 p.m.

Director General, International Assistance Policy, Department of Foreign Affairs, Trade and Development

Deirdre Kent

You will probably find some of that expertise in the next group of my colleagues to come, but in fact it recognizes that some of the new private sector instruments would have ODA reported through this mechanism. I don't know if others want to add to that.

7 p.m.

Liberal

The Chair Liberal Wayne Easter

We can follow up on that with the next group as well, Peter. Next is the international financial assistance act, and we'll have Global Affairs as well.

7 p.m.

Director, International Trade and Finance, Assistant Deputy Minister's Office, Department of Finance

Nicole Giles

As Ms. Kent has just explained, this section pertains to the reporting-out component of this and not to the internal Government of Canada decision-making process regarding the allocations, which is a little more the part B component. That might help to clarify.

7 p.m.

NDP

Peter Julian NDP New Westminster—Burnaby, BC

I'll ask the question again in a few minutes, then. Thank you.

7 p.m.

Liberal

The Chair Liberal Wayne Easter

Okay. Are there any further questions on part A? Thank you very much, folks.

We'll turn to subdivision B, part B, the international financial assistance act. Dr. Giles, you're remaining here. Ms. Pang is staying. Mr. Edwards is staying.

Coming up from Global Affairs, we Mr. Lusignan, Ms. Kaminski and Ms. Larocque. Who's leading off?

Go ahead.

November 5th, 2018 / 7 p.m.

Director, International Trade and Finance, Assistant Deputy Minister's Office, Department of Finance

Nicole Giles

The second component, part B of division 17, is new legislation. It's the international financial assistance act, referred to in clauses 659 to 660. This is to implement a budget 2018 commitment to provide $1.5 billion over five years to support innovation in Canada's international assistance through the creation of two new programs. First is the international assistance innovation program, the IAIP, and the second is the sovereign loans program.

To provide a bit more context, there is an international consensus that global development needs overwhelmingly exceed the amount of official development assistance that is available. To help fill this financing gap, the international community needs to invest in mobilizing new sources of financing, particularly private sector resources. Other G7 countries and international development partners have been using a variety of tools including development finance institutions, sovereign loans and guarantees as part of their development tool kit.

That is why in 2015 the government created a new funding and development institution, FinDev Canada, which encourages investments in developing countries.

The creation of FinDev Canada was an important first step to modernize the tools deployed by the Government of Canada. The authorities of Global Affairs were designed at a time when the focus was almost exclusively a grants and contributions approach. Other development aid partners have expanded beyond this mindset, and it is proposed that Canada do so as well. While these tools are tried and true in other countries, their deployment as consolidated programs will be new for the Government of Canada. For this reason, a pilot approach is being taken to enable an assessment of the effectiveness of the programs after five years. The legislation includes high-level authorities being sought, whereas regulations will be developed to provide more precision on the boundaries of the program, including eligibility criteria and terms and conditions that will be used amongst others.

The Minister of Finance, as per the Financial Administration Act, is tasked with ensuring prudent fiscal management for the Government of Canada. As outlined in the legislation, the regulations that will be developed will provide that certain transactions or classes of transactions will require consultation with or the approval of the Minister of Finance.

I'll turn to my Global Affairs colleagues.

7:05 p.m.

Mark Lusignan Director General, Grants and contributions Management, Department of Foreign Affairs and International Trade (International Trade)

Thank you.

In order to support the execution of the two new programs, the Minister of Foreign Affairs and the Minister of International Development need new legislative powers, notably: the power to grant sovereign loans to eligible developing countries, to any order of government, as well as to entities or persons, on condition that those loans be guaranteed by the government of the foreign state that will benefit from the loan; the power to provide financial guarantees to ensure the partial execution of an agreement in case the principal contracting party does not do so, which would allow the related investments to proceed;

the authority to acquire, hold, and dispose of equity, ownership in a stock, or any other security representing an ownership interest to catalyze investments, and/or preserve the value of Canada's interest; and the authority to charge fees and to issue guarantees and interest on loans they make in the context of the two new programs.

The IFIA Act also provides the authority for equity to be acquired, held and sold in the context of Global Affairs' climate change repayable contributions programming to preserve the value of the government's assets. Overall, by supporting innovation and enabling a broader range of development partnerships including with the private sector, these new financial tools will enable Global Affairs Canada to use Canadian official development assistance more strategically to mobilize additional resources in support of sustainable development.

I'd be happy to take your questions.