Foreign Affairs Committee on Nov. 28th, 2006

[Graham Flack]

That’s a very good question.

Without the authorization of a minister, I cannot present an amendment as such. However, I could raise the question, and this might help you find a solution.

With regard to what we would like to include in the definition of what in English is called ODA, or Official Development Assistance, what we are going to consider, in terms of figures, is one thing. But the current act says that development assistance must absolutely be linked to the reduction of poverty. To my mind this is different from what we would like to regard as ODA.

Our position is that it is important to allow the government the flexibility to make expenditures in all potential areas of assistance. The method of calculation is one thing, but expenditures must not be prohibited, for example, if they are for improvements in the banking system in the Caribbean. This is an important objective. Can this assistance reduce poverty? Perhaps not, but we’d like to have the option of taking action in this area.

Whether you want to regard assistance as ODA or not is another issue, but what the act says now may prohibit us from providing funds when assistance fits the definition of development but is not aimed at reducing poverty.

[Vivian Barbot, Bloc, Papineau, QC]

Does that mean that the reduction of poverty might be something that represents a certain percentage, say of international assistance, but that other elements not directly related to the reduction of poverty would also be covered by the act. Do I understand you correctly?

[Graham Flack]

Indeed, we might consider making expenditures that are not designed to reduce poverty and we hope that the act does not inhibit our ability to make this sort of expenditure.

If we want to calculate them differently, that’s another question, but as the bill is drafted at present, our lawyers fear that we might arrive at a broad definition of development that does not include all sorts of initiatives, for example, by the Department of Foreign Affairs and the Department of Finance, that are not necessarily aimed at reducing poverty. We don’t what to prohibit the ministers from making such expenditures. How do you want to calculate them? That’s another question, but we don’t want the ability to spend to be limited only to projects that are designed to reduced poverty.

[The Chair, Conservative, Kevin Sorenson]

Thank you, Mr. Flack.

Mr. Casey.

[Bill Casey, Conservative, Cumberland—Colchester—Musquodoboit Valley, NS]

Thank you very much.

Thank you for coming, Mr. Flack and Mr. Hermosa.

I'm not a lawyer, but when I read subclause 4(1), it looks pretty simple and clear-cut to me. It says:

Development assistance may be provided only if the competent minister is of the opinion that it

(a) contributes to poverty reduction;

(b) takes into account the perspectives of the poor;

I don't see any room in there for debt relief or money laundering efforts or land mines exercises or efforts to encourage peace talks in the Sudan or anything else. I know this was not the intent of the proponent, but perhaps we can move an amendment on that and broaden it a little bit with the support of the committee.

But I want to move on. You were talking about confidentiality and reports. In reading clause 9, I see an awful lot of demands here for reports. There's a report for the description of any activity or initiative under the act; another report for the summary of the annual report submitted in clause 8; a report for the summary of the annual report submitted under the Bretton Woods and related agreements; a report for the summary of any representation made by Canadian representatives to the IMF and the World Bank; a summary of the departmental performance report; a report on the disbursement of development assistance within one year after the end of each fiscal year; a report for the summary of the operations under this act; another report for the summary of any representation made by the Canadian representatives; another report for the summary of the manner in which Canada's activities under the Bretton Woods and Related Agreements Act have contributed to carrying on the purpose of this act, and so on.

I just find this report-heavy, and you talked about some duplication. Could you point out where the duplication is in some of these reports?

[Graham Flack]

There's an existing case of that in legislation, the Bretton Woods and Related Agreements Act, section 13 of which obliges the Department of Finance to present a report annually on the Bretton Woods institutions, and that's the report you have in front of you.

As I indicated, we're one of very few countries that actually do this. We're proud of the report. It gets better every year. Recently, we had consultations with non-governmental organizations that made further suggestions, as they have in past years, on how to improve it.

I think one of the tests, for us, is that when Ireland, the newest addition to the world of doing these sorts of reports of only a dozen countries, looked at the other reports globally, they decided this was the best one. So this is the consolidated comprehensive report we do on the Bretton Woods institutions.

Clause 10 duplicates this existing effort, with one exception, and that's the exception around confidentiality that I pointed out. Our concern and counsel's concern is that paragraph 10(b), “a summary of any representation made by Canadian representatives”, would push us beyond the envelope with the World Bank.

I guess what we'd recommend to committee members is to examine the report that we're already providing and indicate whether that's adequate to the test that parliamentarians are seeking, before we add an additional report, which is what clause 10 requires, most of which additional report would be exactly duplicative of this report.

[Bill Casey, Conservative, Cumberland—Colchester—Musquodoboit Valley, NS]

Is that paragraph 10(b) you're talking about?

[Graham Flack]

Yes. Paragraph 10(d) is actually almost word for word the same language as in section 13 of the Bretton Woods and Related Agreements Act. So we have two pieces of legislation mandating the Minister of Finance to provide two reports, the bulk of which would be absolutely identical.

I guess our plea is to improve the quality of reporting as opposed to the quantity of reporting. We have an existing report. Where we are concerned is in taking this report to a level where we're actually breaching the confidences of the executive directors of the board. That, we think, would make their jobs impossible; it would also be in breach of other obligations Canada has. So that would be our request.

[Bill Casey, Conservative, Cumberland—Colchester—Musquodoboit Valley, NS]

Paragraph 9(1)(d) is almost the same wording as paragraph 10(b), except for the World Bank and the IMF versus the Bretton Woods institutions. Is that a duplication? Is the same information in both, or—?

[Graham Flack]

I guess there's a question here of how many times we want the same information to appear in how many reports. So we have an existing report that's comprehensive. Do we want an addition to that, a second report by the Department of Finance that's duplicative, and, in addition to that, as part of the new minister of CIDA's report, a section in that report that duplicates significant elements of this report as well? I guess that's something for parliamentarians to describe.

We can hire more people to churn out the same information in different forms, but I guess it's for you to determine whether that's a more effective use of the money we're spending in this area than actually providing development assistance.

[Bill Casey, Conservative, Cumberland—Colchester—Musquodoboit Valley, NS]

The confidentiality issue...I didn't follow that exactly. We could have a report on some of the activities and the representations made by Canada, but we can't have what actually happened in the meetings. Would that be an infraction or—?

[Graham Flack]

At the level of a governor, which is the Minister of Finance who participates at the governors' meetings, all the decisions that are taken are public decisions, and we release summaries of those public decisions. Other countries can as well.

The way the IMF and the World Bank operate, though, at the executive director level--about which the closest analogy I can draw is the cabinet level--it was set up with a view to ensuring a full and frank exchange of views among members. And Canada was a founder of these institutions.

For example, at the IMF, when a country comes up for review, other countries are making hard-hitting assessments of where their economy is heading, what they need to do and where they need to go. That sort of exchange, if it were made public, would be damaging to the relations between the two countries because it would be seen as publicly attacking the other country, as opposed to the way it's done within the committee, in which there's a full and frank exchange within the committee of how we do.

Confidentiality requirements have been created by the two institutions around the employees of the institution, and the employees include our two executive directors. To require them to provide us with summaries of each representation they make would cause them to breach their confidentiality requirements and make it impossible for them to do their jobs.

Again, what we've done with our report, along with DFID, the U.K. agency, is to push the limits of how much we can publicly report and still be consistent with this broad principle of cabinet confidence. What we're signalling is that counsel has concerns, as do we from a policy perspective, that the language in paragraphs 9(1)(d) and 10(b), which are identical, would both force us to move beyond what is potentially accommodated by the confidentiality requirements of these institutions.

[The Chair, Conservative, Kevin Sorenson]

Thank you, Mr. Flack, and thank you, Mr. Casey.

Madam McDonough.

[Alexa McDonough, NDP, Halifax, NS]

Thank you very much for your presentation.

I have to say I haven't had an opportunity to fully review the report you presented to the committee today, and I appreciate the opportunity to quickly look through it. It is clear there are some sections of this report that do speak to the issue of poverty reduction, for sure; if not, I don't know what on earth we're doing participating in these organizations at all.

At the same time, for us to be consumed with the issue of confidentiality and for that to be used as an argument against what we're trying to achieve here is to ignore what is a huge problem in the international development world, the black box of the IMF and the World Bank, which I think leads us more and more to be concerned about whether many of the policies of the Bretton Woods institutions aren't driving and deepening poverty, instead of actually preventing, reducing, and alleviating poverty. Forgive us if we're not overly consumed with the issue of confidentiality. I won't speak for anyone else, but I would say a lot of the progressive community wants to see the lid pried off some of that confidentiality.

Having said that, I don't think anybody would advocate that we should thumb our nose at agreements we've entered into in protecting confidentiality. So the real issue is, what is the information from our participation in the Bretton Woods institutions that is the business of Canada? Surely, at a minimum, the information is the business of the commitments that Canada undertakes.

I guess I should be asking you for recommendations on how to amend this, but I can see we could certainly amend very directly the provision in the bill to simply say that no violation of our confidentiality commitments can be made in the reporting on our Bretton Woods institutions. Is that not a reasonable proposition to set that out as an amendment? I'm not a legal drafter, but in some way it seems to me that this should be possible to achieve.

[Graham Flack]

As the honourable member knows, I'm not authorized to provide a suggestion on an amendment. I know this puts me in an uncomfortable position.

[Alexa McDonough, NDP, Halifax, NS]

I'm proposing a possible amendment.

[The Chair, Conservative, Kevin Sorenson]

On that point, you aren't allowed to provide us with an amendment, but suggestions as to how we can fix this are what we're looking for.

[Graham Flack]

Maybe I can try to do this at a level of principle that I hope gets us to the same place but doesn't cause me to get in trouble back at the office.

In terms of the confidentiality requirement and the black box, the point would be that Canada signed up to this institution, and we signed up under a set of rules. Within that institution, we have pushed, along with the British and others, to increase the transparency of the operation of the institution, and we have had some success. The two reports that are provided are the outer edge of transparency in terms of what the countries can report under the current initiatives, but that doesn't mean we can't push the institution to go forward. The plea I was making was that, were we to do this unilaterally by simply doing the equivalent of revealing cabinet confidences, we'd find ourselves outside cabinet pretty quickly, because we would have put the executive directors in an impossible position, in that they would be breaching their own rules.

We share the view that making the institution more transparent in how it operates is important, and over successive governments, continual efforts have been made to do that, most notably by the Minister of Finance at the recent Singapore meetings, in terms of an anti-corruption agenda that was designed to improve the transparency of the bank and the funds' operations in that area.

In terms of what Canada undertakes, there is a lot of scope to report on that, and you'll see that in the report. In terms of how we contribute to the IMF and the World Bank, if we provide special funding for initiatives like multilateral debt relief, we're very transparent about what that is, how we do that, and what's happening. There's scope for that because we're making a contribution into a very public initiative that's going forward.

The concern is around the discussions at the executive director level. Those discussions are the most confidential and the most protected. If a particular project is coming forward, that's the area where these confidentiality roles are extremely clear. As I indicated, we have pushed as far as we can on that, in the sense that every time we say no or we abstain, we are reporting in that report that we have said no or abstained on that project, with a very brief description. We have tried to disentangle the soup that is the fact that the Canadian representative isn't just the Canadian representative.

Going further and providing more detail, while I appreciate many would welcome that detail, would fundamentally change the nature of the institution, which we can't do unilaterally. The plea is really around that. If going as far as saying a summary of any representation made by a Canadian representative is an extremely detailed, deep obligation that potentially puts us in an impossible position, anything you could do in terms of an amendment that would allow our executive directors to continue to fulfill their legal obligations to the institution, but which would further improve on reporting—which we've pushed as far as we think we can take it—would be welcomed, of course.

[Alexa McDonough, NDP, Halifax, NS]

Just as a final brief question, I know you're aware that this committee, a year and a half ago, unanimously passed a motion that was subsequently supported unanimously in Parliament, really expressing the will that we move in this direction. We're now dealing with the actual bill. Given that this same piece of legislation has been in the public domain all this time, has a detailed analysis been done, prior to the invitation to be here today, with proposed recommendations that could deal with the concerns you have? Or are we in the situation where this comes as a revelation in the last week?

[The Chair, Conservative, Kevin Sorenson]

I'm not certain the question really is in order. It's probably asking you to disclose something.

[Graham Flack]

Here's what I can say. I'm not trying to avoid the question.

[Alexa McDonough, NDP, Halifax, NS]

No, fair enough. I understand your point. We just want to figure out how to get on with this year-and-a-half project, which some would say is long overdue.

[Graham Flack]

We take transparency and openness very seriously, and that's one of the reasons we have a report that Ireland considered as the best model to go with and that pushes the limits of transparency and accountability. That's why we try every year to improve that report in terms of the information it provides to Canadians, not only to educate them about the institutions, but also to provide as much understanding as we can of what's actually happening within the institutions.

This is a process that's ongoing, independent of any legislative review; that is, we want to try to improve our reporting each and every year, and if there are better models for how to do that, we'll try to do that.

With respect to some of the provisions that are put forward, for example, the broad definition of development assistance, married with a limitation that anything within it that isn't poverty reduction arguably can't be done--I hadn't seen that language in previous versions. And that's the language that caused our counsel to raise red flags.

Again, I'm not suggesting that this was the intent of the committee, but I don't think we want to be in a position, if the legislation ultimately succeeds, where an intervenor is allowed to take the government to court and stop funding in a whole range of activities--not just stopping the funding from being called development assistance, but actually stopping the funding, the ODA, on the grounds that we've done that. And that's, to my understanding, a new development.

[Alexa McDonough, NDP, Halifax, NS]

Thank you.

[The Chair, Conservative, Kevin Sorenson]

Thank you, Ms. McDonough.

Thank you very much, Mr. Flack.

We are going to suspend very briefly. We're going to go into a committee business meeting.

Do we have an agreement that we'll do the motions as the next committee business? Do we have that?