Foreign Affairs Committee on Feb. 27th, 2012

[The Chair, Conservative, Dean Allison]

Pursuant to Standing Order 108(2), our study on the role of the private sector in achieving Canada's international development interests will commence.

I want to thank all of our witnesses for being here today.

We have with us Ben Chalmers, vice-president for sustainable development, and Pierre Gratton, president and chief executive officer, from the Mining Association of Canada. I want to thank you gentlemen for being here.

We also have with us Lucien Royer, national director, and Ken Georgetti, president, from the Canadian Labour Congress. Welcome, gentlemen. Thank you very much.

We also have with us Karin Lissakers, who is with the Revenue Watch Institute.

I thank all of you for being here today.

We will get all of your opening statements, and then we'll follow up with some questions over the next couple of hours. Thank you.

Why don't we start with the Mining Association of Canada? I will turn the floor over to Mr. Gratton.

[Pierre Gratton, President and Chief Executive Officer, Mining Association of Canada]

Thank you very much.

It's a pleasure to be here. Thank you to the committee for inviting us to speak to you today.

I am here with my colleague, Ben Chalmers, vice-president of sustainability, who is also responsible for MAC's new international social responsibility committee.

I just want to apologize at the outset. I have to leave about 15 minutes before the end to go to Rideau Hall. Some of our members are getting an NSERC award today, and I'm expected to be there, but Ben will stay through to the duration for any questions you may have.

The Mining Association of Canada represents the majority of major mining producers in Canada. We mine a diversity of minerals and metals, including base metals, gold and precious metals, steel-making coal, diamonds, iron ore, uranium, and oil from the oil sands.

All of our members subscribe to MAC's award-winning corporate responsibility initiative called “Towards Sustainable Mining”, or TSM. TSM is a condition of membership for Canadian operations, and includes annual public reporting against a range of comprehensive performance metrics, subject to external verification at the mine-site level. It is the only system of its kind in the world in our sector and has been recognized as best in class by groups such as Canadian Business for Social Responsibility.

TSM is applied to the international operations of several of our member companies on a voluntary basis. As well, I would like to share with you a table—I believe it's been circulated—that we now publish that shows the level of MAC member company application of 19 different international standards and programs.

As you know, rising commodity prices, driven by China and other emerging economies, are creating opportunities not seen in decades for the mining sector. We have estimated that there is as much as $140 billion in new private sector investment to be spent across Canada in the next decade or less. At the same time, this global commodities boom will spur increasing investments by Canadian companies overseas.

Canada's mining sector is one of the country's most significant outside investors, responsible for about 10% of Canadian direct investment abroad, while the total value of Canadian mining assets abroad is valued at $109 billion. Two-thirds of these assets are in the western hemisphere, just under 50% of which is in just three countries: Mexico, Chile, and the United States.

It's important to underscore that Canadian mining firms investing abroad bring direct returns to Canada and Canadians. As the Conference Board of Canada showed in a 2011 report, Canadian direct investment abroad translates into overall long-term benefits for Canada and its regions by improving productivity, jobs, trade, investment, tax revenues, and worker skill levels. This report also noted that Canada's mining sector is a leader in this regard.

Canada has the second-most top 100 mining companies in the world, trailing only China, which may raise a number of questions for you as well.

All of these statistics I'm mentioning underscore the important role Canadian mining can play in assisting development outcomes in the developing world.

As you may have read in Embassy, MAC strongly supports the decision CIDA took to invest in three mining NGO partnerships in Africa and Latin America. All three partnerships will help address the most fundamental obstacle to ensuring that benefits from large-scale private sector investment in the developing world are optimized, that obstacle being lack of capacity.

The World Vision and Barrick project in Peru will help local economies diversify, building supply chains to service the mining sector and other parts of the domestic economy, not unlike what we have created and achieved here with many aboriginal communities across the country.

In Burkina Faso, the project between Plan Canada and IAMGOLD will help youth receive skills training that matches labour market needs in a variety of sectors.

In Ghana, the WUSC and Rio Tinto project will support the capacity of local government to implement development plans and diversify the economy.

Canada is late to the idea of public-private partnerships in the field of international aid. The U.S., Britain, Germany, the Netherlands, and many other countries have been doing this for years. By aligning ourselves with the private sector, CIDA is tying itself to the market economy, and therefore to far more likelihood of enduring success.

Some have labelled CIDA's contribution as a subsidy, but this is not correct. As I and others have pointed out, including Carlo Dade, senior fellow at the School of International Development and Global Studies at the University of Ottawa and the former executive director of the Foundation for the Americas,

Co-funding has never meant subsidizing; it means both sides investing money or other resources in win-win projects that benefit the public. Given the resources that the private sector brings to these projects, this is almost always a better deal for taxpayers.

What this means, in my view, is that we should be encouraging more projects like the three pilots I mentioned. We should be encouraging our sector to think beyond the mine gate and to work with NGO partners to optimize outcomes in host communities. We certainly should not be criticizing firms that show leadership by doing the right thing, in the right way, with the right partners.

In our brief we also rebut some erroneous statements made to this committee by MiningWatch back in November. I won't belabour these, but would just like to draw your attention to how Ms. Coumans misrepresented the findings and purposes of the work of Dan Haglund, whose work was commissioned by the International Council on Mining and Metals. The ICMM, with Dan Haglund, have undertaken important policy work precisely to help the mining industry ensure its investments avoid the potential risks of the so-called “resource curse” and instead optimize the potentially enormous benefits from multi-billion-dollar capital investments.

Thank you very much.

[The Chair, Conservative, Dean Allison]

Thank you very much.

We'll now move to the Canadian Labour Congress.

[Kenneth V. Georgetti, President, Canadian Labour Congress]

Thank you very much.

By way of opening comment, let me say that the Canadian Labour Congress has a long history of working with trade unions and non-governmental organizations throughout the world. We've managed projects in over 30 countries, many of which were funded by CIDA, the Canadian International Development Agency.

The CLC does not agree with the government that partnering with the private sector to fund foreign-aid projects is the best way to improve the lives of the world's poor. It's unconscionable that our government wants to achieve this by making Canadian profit-driven extractive, agriculture, manufacturing, tourism, and other companies collaborators to foreign aid.

Already some $531 million in 2009 and $336 million in 2010 were spent by CIDA on NGOs and others doing so-called private sector development to support the likes of micro-credit, credit union capacity-building, value-chain developments, and support for small and medium-sized businesses. We have concerns about the facts that these often exceed expenditures of many of CIDA's other categories. In 2010, spending on education, health, environment, and governance were all declining relative to 2009, while private sector development increased. We don't know about 2011 because last year the government stopped reporting its spending on this.

Now CIDA is funding NGOs to implement corporate social responsibility projects--CSR--projects with contributing companies such as Rio Tinto Alcan, IAMGOLD, and Barrick Gold, whose clear mandate is to maximize profits for their shareholders—that's what they do. CIDA is poised to continue along this vein.

Please understand, we don't object to Canadian investments abroad for the purposes of making profit; that's what they do. However, trade unions from throughout the world are involved with multinational companies, and we know how their self-interest can conflict with the public interest. This is what we're worried about. Regrettably, NGOs with good reputation and credibility are being drawn into collaborating, no matter how laudable the results of their work might be. The approach will certainly ease Canadian investors' access to local resources and soothe the waters with communities that have already suffered or would oppose mining and other operations. The whole approach will also invariably reduce their costs of doing business. But a point of contention is about enabling companies to protect their profits back in Canada, companies that are already reaping tremendous benefits from tax breaks right here at home.

We worry about the impacts of Canadian companies competing among themselves and others within a developing country context. Yet Canadian taxpayers have been led to believe that funding these corporate social responsibility projects in connection to large corporations will somehow yield some form of company accountability or corporate responsibility. We don't believe that. We think it's nonsense, frankly. The CSR projects do not in any way implement company accountability principles as understood by the international community dealing with these issues. We're worried that these projects will serve instead to gloss over local conflicts that have already emerged or will arise as a result of any investment project.

The government is well aware of the degree of opposition to Canadian company projects in quite a number of countries. In 2005 this awareness led to a ground-breaking parliamentary report calling for strong norms to deal with corporate misbehaviour, such as environment and human rights violations, which are now on the rise. Instead, the government created a weak-kneed extractive sector CSR counsellor, who's already proved to be ineffective in handling a number of recent complaints, leaving a total vacuum for available tools to ensure company accountability.

The CIDA corporate social responsibility projects cannot be a substitute for corporate accountability. Moreover, it's very misleading to suggest that these CSR projects will do much, if anything, to reduce poverty.

Business leaders have already appeared before this committee, but their testimony raises a number of questions. They may be justified in saying that specific projects would benefit training, work experience, or could result in economic effects for jobs and improved incomes. It's what they're not saying that we think is a problem. Their statements have to be measured against a more complete picture of costs and benefits, both positive and negative. They have to be seen in light of social and environmental costs beyond the lifetime of those projects compared to other scenarios that could yield better scenarios.

Evidence submitted by MiningWatch to this committee convinces me that company operations do far more in the long term to exacerbate income gaps than to reduce poverty. The committee cannot turn a blind eye to these realities. At the core of any analysis about poverty is the question of jobs.

I remind this committee that Canada joined the G-20 and other countries last year to support a decent work agenda put forward by the International Labour Organization. So where's the analysis to show the impacts of company operations on full-time and part-time jobs that will be created or lost, and what is the quality of those jobs, and what are the conditions of the work environment and the human rights in the workplace? What about the livelihood issues for community well-being? What other scenarios for investment or for CIDA expenditures would create more jobs than the paltry few that have been talked about here? I repeat, where is the analysis on all of this?

Witnesses have also argued that company operations contribute to the tax base and thus strengthen the autonomy of local and national governments. There is strong evidence to show that company activities do quite the opposite, and we've provided that to the committee in our formal brief.

In many countries, the very presence of extractive companies in rural areas also jeopardizes the integrity of indigenous communities. I would like to suggest that the committee follow up by encouraging our government to perform an analysis of both the negative and positive impacts of these company operations before venturing further on CSR exercises that blindly support or justify them. The government should also report annually to Parliament detailing the full picture of all aspects of private sector funding.

You should follow through with the commitments to implement the 2011 Busan high-level forum, which emphasizes the importance of ensuring strong country ownership of development, accountability, and of course transparency through a new global partnership for effective development.

You should establish a Canadian legal framework for private sector accountability based on internationally agreed ILO standards, the Organisation for Economic Cooperation and Development guidelines on multinational enterprises, and the United Nations guiding principles on business and human rights.

The government should be guided by the outcomes of the Canadian Westray mining disaster in instituting criminal penalties for egregious activities abroad.

These corporate accountability measurements are important for stemming any drive to lower the occupational and other standards due to competition.

Lastly, we'd like to say that you should promote the G-20 commitments to implement the ILO decent work agenda as a direct means for eradicating poverty in the world.

Thank you.

[The Chair, Conservative, Dean Allison]

Thank you, Mr. Georgetti.

We're going to move over to Revenue Watch Institute. Ms. Lissakers, welcome.

[Karin Lissakers, Director, Revenue Watch Institute]

Thank you very much.

I'm Karin Lissakers. I'm the director of the Revenue Watch Institute. We're a non-profit organization that works in resource-rich, mineral-rich countries around the world. Our focus is on seeing that the mineral wealth of developing countries is transformed into social and economic benefits for the countries producing those minerals.

I think we're the only organization devoted specifically to the oil, gas, and mining sectors and development. We focus on these sectors because if you look at the numbers and the investment flows, you can see that these mineral resources have the potential to transform positively the many poor countries that have a lot of wealth in the ground.

Sub-Saharan Africa in 2009 exported some $250 billion worth of minerals. Aid inflows to sub-Saharan Africa was about $45 billion. You can see that the numbers would argue that these countries should in fact be able to finance their own development, but they have not. As the previous testimony suggested, in many cases minerals have actually been adverse to economic development and social and economic equity.

While companies are often blamed, we think a partnership and an agreed governance structure that addresses the underlying institutional weaknesses in the resource-rich countries can change the trajectory for the better in a way that benefits both the investors and the resource-producing countries.

If you look at the pathology of the so-called resource curse, you could see a number of underlying issues. One is that you have very weak institutions, overall, in the management of these countries.

Second, you have often a lot of corruption focused on the resource capturing so that individuals can capture a share of the mineral windfall, the money windfall that these industries generate. You get a battle for control over the government, over the state, which can then capture a piece of the revenue not for the public benefit but for the individual gain.

Third, as part of this pathology, many countries have entered into bad deals. They get very little revenue out of their minerals. Cameroon gets maybe 12 cents on the dollar per barrel of oil it produces. Norway, by comparison, gets 78 cents on the dollar. Tanzania, where there are large Canadian mining interests, produces about a billion dollars worth of gold each year but only gets roughly $100 million of tax revenue out of it.

A rebalancing is critical. It is good for the investors, to attract investors, because it's the investors who have the technology and the capital to develop these resources, and it also generates a fair share of the economic grants for the governments. That means these governments must have the technical capacity to negotiate effectively, to oversee the concessions, and to manage the revenues.

However, many governments have been very happy with the kinds of deals they've gotten because individuals have been able to enrich themselves. Transparent and accountable government is the other major component that is going to transform these resources into development. Here, I think that it's not just industries, but governments outside the resource-rich countries that have to contribute, by creating a strong international global standard for transparency, especially concerning money, because that's where the battles and the flaws emerge.

Having strong transparency rules around payment streams, contracting, and social and environmental practices is absolutely critical. If you have a global standard, then countries not meeting that standard will have a very hard time attracting investment. Their own people, who are in the end the enforcers of good policies, their own citizens, will have enough information in hand and the international support to press their own governments and demand proper governance, not only of the investment path itself but also of what the governments do with the money, and of whether the revenues that are generated are actually used for the public good to finance development and positive social outcomes.

There are several international initiatives that are beginning to create such a global standard. One is the extractive industries transparency initiative, EITI, which Canada has recently begun to support, which has governments, companies, and civil society together setting a reporting regime for company payments and government revenues from oil, gas, and mining resources. A second initiative is disclosure by companies of the payments they make to governments. We are strong supporters of both, first, because EITI gives civil society a seat at the table, and that strengthens the accountability mechanisms internally in developing countries, and second, because EITI is a vehicle for governments to disclose their revenues.

We are also strongly in favour of mandatory disclosure of company payments. The U.S. passed such a law in 2010. The Securities Exchange Commission is just completing its rule-making. Under this law in the U.S., all listed companies—and that includes a lot of Canadian companies—will have to disclose their payments to governments country by country and project by project, as well as according to the type of payment. That will shine a light. It will provide information to every affected country on exactly what payment streams are actually coming in to their own government's hands. They are then in a better position to ask what's happening to the money.

The EU is moving ahead to replicate this type of legislation. The commission has just issued draft directives, an accounting directive and a transparency directive, which will be debated in the European Parliament in the next few months. There's strong government and commission support for going ahead. So the EU and the U.S. will have these mandatory disclosure requirements.

As noted, many Canadian companies will already be covered. Many other Canadian oil and mining companies will probably not be covered unless Canada also moves ahead to adopt similar reporting requirements.

As a matter of levelling the playing field for companies, we think it's important that major jurisdictions like Canada adopt similar legislation or regulatory requirements through their provincial regulators. We think Australia should also follow suit. We would like to see Brazil and South Africa do so as well. But Canada is particularly important, because, as you know, more than half the world's mining companies list in Canada. Canada, a major mining and oil country itself, should lead by example. We hope your government will support such legislative requirements.

We're very happy to see that CIDA, in its technical assistance and development policies, is focusing more on extractive resources because of their potential to fund development. I think corporate social responsibility projects are good. The problem is that they have very limited impact. They don't really get at the systemic problems. We think that CIDA, like Norway and Australia, could do more on the broad capacity-building, and that the Canadian government could do more to support a broad transparency and accountability agenda around extractives. Then you would have a package whereby you would really greatly increase the chances that these resource-rich countries would become self-sustaining, self-funding, successful economies.

Thank you.

[The Chair, Conservative, Dean Allison]

Thank you, Ms. Lissakers.

We're going to start with Ms. Sims for seven minutes, please.

[Jinny Sims, NDP, Newton—North Delta, BC]

Thank you.

I want to thank all of you for coming to present to us. It's really nice to see good friends sitting across the table.

I want to start off by acknowledging the amazing work I think the Canadian Labour Congress and its affiliates do in the way of international development. Not only do you commit to building social justice here at home, but you also carry that mandate out internationally.

One of the things that concerns us is the increasing politicization of our aid over the last number of years. One of the high-profile cases was the cutting that occurred to Kairos's funding because they believed the organization was critical of the Conservative foreign policy. There are other cases, maybe not as high-profile, maybe not involving as large a company, that are coming to light as well. We've seen lots of news stories in the media recently about CIDA's shifting its focus to partnerships between NGOs and private firms, many of them from the extractive industries.

We hear reports from the NGO community that they feel uncomfortable with these partnerships. They feel that they are not being awarded the projects under this new competitive bidding process. Some of them are feeling under pressure to seek some of these partnerships. I know that the CLC has had a good working relationship with CIDA over the years. I've been party to many of the reports you've made. CIDA continues to fund some good projects in partnership with the CLC.

Do you share the overall concern with this new direction, and what will be the impact on labour organizations if this shift in focus continues?

[Kenneth V. Georgetti]

We are nervous about the direction. In fact, we think that things are going in the wrong direction. We continue to make promises in the international community, the G-8, the United Nations, that we're going to meet our 0.7% obligation, but we think we need to honour those promises through actions.

I'm going to ask Lucien to answer your question, because he does the direct negotiations with CIDA.

[Lucien Royer, National Director, Canadian Labour Congress]

What you're pointing to is a change of rules at CIDA, and the change of rules means two things. On the one hand, it is positive that CIDA requires projects to offer concrete evidence that they are doing something for the poor. On the other hand, the same rules become so stringent that many positive projects for the poor are filtered out. And those that tend to be filtered out are the ones that promote education, the ones that promote capacity-building, the ones that have a long-term vision for promoting the participation of the citizenry in the development of their own country, especially with respect to their governments. It's important that those not be filtered out, primarily because they are the basis of development for the future. They provide the possibility for change in the future, by allowing people to participate in decision-making.

The trade unions are capable of participating in that process through workplace action in concert with their employers. Changing attitudes and awareness in the workplace is a springboard for making changes in the communities. These new rules make it virtually impossible for us, as trade unions and NGOs, to focus on some of these aspects of development.

[Jinny Sims, NDP, Newton—North Delta, BC]

And I think you brought to light one of the key aspects of international development cooperation. That is, the need for long-term systemic change, and that only comes with long-term commitments and engaging in the kind of work that doesn't produce immediate results, that takes time to show results, as, for example, in education. And you're tracking some of those issues.

Ken, I'm really glad that you mentioned the 0.7% commitment. At the same time, we do have NGOs we've connected with who are saying that in order to get at least some projects approved they have been looking to work with private industry, because they're really feeling the pressure, because they want to carry on the work that they see as so critical. They're also telling us that the current freeze on our international aid money is really beginning to have an impact. As you know, everything goes up but our aid has been frozen and we haven't even got to our 0.7% target yet at all. There is a feeling that we are going in the wrong direction. The NDP has called for the aid freeze to be lifted for Canada and for us to commit to a practical timetable to reach our goal of 0.7%. This was a promise we made and a promise made should be a promise kept.

Can you give the perspective of the Canadian Labour Congress and the labour movement more generally on this issue? Should Canada lift the freeze on its aid budget? What might a reasonable timetable to meet our international commitments look like?

[Kenneth V. Georgetti]

Canada is a world leader in saying we need to promote more export and trade. Yet cutting back on overseas development agencies is like shooting ourselves in the foot, undermining the very foundations for economic growth to take place in reducing the capacity in the long term for workers abroad to consume and produce products, thereby contributing to the economic development.

More important, though, is the question of human justice and dignity. It's not only about economic development, and that's our argument. Millions upon millions of people suffer and die under the most horrible living conditions and neither Canada nor any other industrial nation can stand by and watch that happen. We see it ourselves in some of the work we do. Canadians historically have prided themselves in presenting a human face to the world by promoting equality and justice, and cutting back on ODA is putting forth a real ugly mask, we think.

[The Chair, Conservative, Dean Allison]

Thank you very much.

We're now going to move over to the right side of the table and Ms. Brown, for seven minutes, please.

[Lois Brown, Conservative, Newmarket—Aurora, ON]

Thank you very much, Mr. Chair.

Thank you very much for being here today with us. This has been a most interesting study for us, one of the most engaging I've been involved with on the foreign affairs committee.

I was on the foreign affairs committee when we reviewed what was then Bill C-300, which was the CSR bill brought forward by one of our Liberal members. We also had some very interesting representations on that one.

Mr. Gratton, I wonder if I can address a couple of questions to you.

Mr. Royer just talked about workplace action, and I think this is a quote. He talked about “changing people's attitudes” toward the workplace. I've had the opportunity to spend some time in Africa. I've now visited nine countries. I have seen many of our CIDA projects, and I have had the opportunity to meet with the extractive industry in every country we've been in.

I want to particularly focus on two projects. One is the IAMGOLD project in Burkina Faso, in Essakane, and the other is the project that has developed around the De Beers facility in Botswana.

Now, Botswana has been very intentional in turning its economy around through understanding what the mineral resources can do for it. De Beers has built a phenomenal facility there that does all of the grading of the diamonds, but there are seven facilities outside of this De Beers facility that are businesses where the people who are Botswanian citizens have real jobs doing all the cutting and the polishing of the diamonds. Botswana has been able to lift itself to become what's now a middle-income country, through tax revenues that are being paid by the individuals who are employed in these facilities.

In the Essakane project that IAMGOLD is investing in, we saw a hospital facility, a primary school, a secondary school, and a skills development school that is giving the people of Burkina Faso real jobs, real opportunity to make a change for their families.

I wonder if you have any other examples, or if you would like to comment a little bit on projects you've seen where these same kinds of initiatives are taking place, where we see that the extractive industry has taken responsibility to help provide the countries with real income.

[Pierre Gratton]

There are many different things to say here, so I'll try to stay focused.

First, I'll just mention that the person heading up De Beers in Botswana is a Canadian, Jim Gowans, our former chair.

Botswana is, unfortunately, an exception within Africa: it's one of the most successful countries there. You're right: it's an example of where the resource curse hasn't happened at all. It has been a very successful country, but there are other examples of mineral-rich countries.... Chile is now part of the OECD, and it's largely because of its mineral resources that it has lifted itself up now, post-Pinochet, to become a really successful emerging economy.

So minerals do not.... I think the point was made earlier by Karin. There's tremendous wealth under the ground. Used right and implemented right, with good governance, it can help countries achieve lasting prosperity and build the kinds of governance systems and educational systems and so on that will allow this to continue in the long term and not just be something that's passing.

What I found really interesting about this whole debate over CIDA's funding on what is.... I mean, it's a shift, but let's put it into perspective. In the history of CIDA, there are three projects, I think, that have involved the private sector, or certainly the mining sector. But what this reminded me of is the programs we have here that involve aboriginal communities and job training. There are many across the country that involve our sector. On these mine training associations, there's one in B.C. that I'm very familiar with, and one in Yellowknife. There has been one associated with Voisey's Bay.

These are projects where mining companies, governments, educational institutions, and first nations communities come together around the table and design initiatives to help make first nations people job-ready. Often it includes getting them their grade 12 and providing them with the skill sets to be able to get jobs, and then providing them with a guaranteed job and getting them working.

They've been hugely successful here, and I see what IAMGOLD is doing in Burkina Faso, and I'm saying it's the same model, more or less, of what's going on here. You have partners bringing their own skill sets and their own expertise and collaborating to create opportunities for the local people in the area, who may end up going to work directly for the mines or for businesses that support the mines or that support businesses that support the businesses that support the mines. From there on, it just generates.

If you look at the Northwest Territories now, you'll see aboriginal-owned businesses there that have done well over a billion dollars in business with the diamond mines in the north. They are now servicing mines well beyond their borders and in some cases are starting to get international contracts. That is really enduring and lasting economic development. I see these projects as very much fitting in with that model.

[Lois Brown, Conservative, Newmarket—Aurora, ON]

So if I come back to changing people's attitudes toward the workplace, we really only can do that when people have a workplace to go to.

[Pierre Gratton]

Yes, I think that's right.

[Lois Brown, Conservative, Newmarket—Aurora, ON]

Thank you.

[The Chair, Conservative, Dean Allison]

Thank you.

Mr. LeBlanc, sir, you have seven minutes.

[Dominic LeBlanc, Liberal, Beauséjour, NB]

Thank you, Mr. Chairman.

Thank you to our witnesses for joining us and for what I thought were three interesting presentations.

In the time I have, Ms. Lissakers, I'd like to ask you to expand on or to explain the 2010 American law requiring the disclosure of payments to foreign governments. I find that as a basis for some transparency, and requiring that of companies.... There's a jurisdictional issue in Canada, of course, where securities commissions are a provincial jurisdiction, as opposed to a national one like the SEC in the United States.

Leaving aside the constitutional problems for a minute, I find that as a policy and as an objective it's very compelling, and I'm hoping you could answer what I thought.... I was trying to imagine what would be the objection from the extractive industries to that kind of provision. One would be, presumably, added costs or contracts they may have either with other governments or other private sector partners, or some competitive disadvantage. I'm wondering if you could enlighten us a bit on the debate that might have taken place in the United States.

Then, I'm hoping that Monsieur Gratton would in fact answer, on behalf of the Mining Association, as to whether he thinks that kind of measure might meet with some support among his membership in Canada. I was interested to hear that up to 50% of these companies are listed on a Canadian exchange. To me, that's a good start in bringing in some transparency, and some reassurance to the shareholders of those businesses that they're not participating in a circumstance that in the medium term or long term can lead to some considerable chaos.

[Karin Lissakers]

There has been considerable debate about this law. Companies have certainly moved a long way in their attitudes toward transparency, in that most of the major industry participants in this debate have said they are all in favour of disclosing their payments, country by country, to governments, except when the government objects.

[Dominic LeBlanc, Liberal, Beauséjour, NB]

You mean the foreign government?

[Karin Lissakers]

Yes. The U.S. law covers payments to the U.S. government as well.

A major point of the intent of the law is to make information available to the citizens of countries where the government would prefer to withhold that information from the citizens. So in our view it's certainly not in the interest of the citizens of the countries where governments deny that information. We think it's in the long-term interest of the industry, of the investors, that countries be well governed, and transparency contributes to that.

Companies have said there's a cost issue. Companies have to keep books and records about their tax payments, so they have the information. We know it's a question of whether they're willing to disclose it. There certainly will be some cost in creating the software to meet the Securities and Exchange Commission's final determination of how that information should be reported. But in the view of the SEC and others that assess the cost, it's a one-off and not significant relative to the profitability and returns to these companies.

On the competitiveness argument that we're intruding on sovereignty, standard confidentiality clauses the governments and companies sign typically allow an out for regulatory home country requirements, so they're not violating contractual terms. The biggest fight recently has been over project by project. That's why we have suggested the SEC define a project that has a lease or concession, because that's the basis on which taxes, other payments, tax holidays, and cost recoveries are determined. Companies have to keep the books that way, so that's the lowest-cost option for requiring the disclosure.

[Dominic LeBlanc, Liberal, Beauséjour, NB]

Thank you.

Mr. Gratton, would you have any comments on this subject?

[Pierre Gratton]

There are a few things to say.

The International Council on Mining and Metals, which is the largest international group representing the mining industry, represents the world's biggest companies. It's a condition of membership to be part of the extractive industry's transparency initiative. So to your point, the bigger companies have bought into this conceptually. I know one of the members sits on the board of the EITI from Freeport-McMoran.

Our members are all companies that are dual-listed on the New York Stock Exchange, so they all fully expect to have to comply with Dodd-Frank and aren't squawking about it. They're just waiting for the rules. I think by and large it's not only seen as the right thing to do, but it's starting to be seen as actually good business to have these payments to government published.