Foreign Affairs Committee on March 26th, 2012

[Dominic LeBlanc, Liberal, Beauséjour, NB]

Thank you, Mr. Chairman.

Thank you, Mr. Dade. It has certainly been very informative, from my own perspective. The passion you have, the knowledge you have, and the experience you have certainly make me imagine a scenario where it's not an either/or prospect of having public funds for development projects or working with the private sector in the broadest sense of the term.

What struck me in your opening comments is we tend to think about company X building a school near project Y as private sector work in development, but if you look at it much more broadly, there is a whole host of possibilities that aren't necessarily contradictory with other development objectives, or don't necessarily get substituted for other development objectives.

I want to pick up on a question Ms. Brown had. The diaspora involvement is an interesting way to view private sector participation in development. You mentioned the example of the Indian diaspora in California, and you ran out of time. I want to give you a chance to pick up on that.

In Canada we don't have research or accurate information on these remittances and on the level or the precise nature of them. What would you suggest the government or some other group could do? How would we get better information? Who typically funds this kind of research? How would we get this information? It certainly appears to be very valuable.

I found your example of the Haitian community in Miami or Brooklyn or even Montreal very interesting. Are there other examples in Canada, looking at the Canadian context, where diaspora communities might, in your view, be good partners for development and where Canada, the Government of Canada, has development priorities? In other words, is there a match with an effective diaspora community? The Haitian one in Quebec certainly is an obvious one, but are there others that come to mind specifically with which the government or CIDA or other private sector developers could work in terms of trying to leverage some of that participation?

[Carlo Dade]

Sure.

The best example is actually with the Haitian diaspora. CIDA has the longest-running contribution agreement of any development agency with the diaspora group Regroupement des organismes canado-haïtiens pour le développement--ROCAHD. When I was working the Haiti beat and the U.S. mission in Haiti first started working on diasporas, the ambassador came to the post, Dean Curran, with a list of priorities, and so did the USAID mission director. I had been working on the issue for a couple of years, and there was great synergy.

We found out about the project that CIDA had been running and we tried to get information about it. Dean Curran, the ambassador, wrote to his counterpart, the Canadian ambassador in Haiti, asking for information. The head of USAID for Latin America wrote to his counterpart in CIDA, asking for CIDA to send a group to Washington, to send a group to New York for meetings. We never could get any information out of CIDA about this. I finally had a PhD student who was interning for me interview the group. To get the information from CIDA, I actually came up on a house-finding trip—a longer story—and I took the afternoon off, went over to Gatineau, walked in to CIDA, tracked down the guy who was in charge of the project, and got him to pull the project files down.

So there has been some work done by Canada, but it's mostly hidden. There have been remittance corridor studies funded by Finance Canada. That's a source for information on remittances that should be coming out of the Department of Finance. In the U.S. it's being funded by foundations—Ford, Rockefeller. We don't have an equivalent in Canada. The Gordon Foundation has done some work on this, but they can afford $5,000 or $15,000, and Rockefeller will spend that on coffee in a year for meetings on diasporas. So we don't have the resources from that sector. It will have to come from the government.

In terms of diasporas, for the white paper I wrote for USAID on remittances I looked at groups in Africa, Europe, and elsewhere. Every community is different, so you really have to inventory your development priorities in groups, and this is what we did back at USAID a long time ago. But every country in Latin America and the Caribbean has a “Minister of the Diaspora”. The importance of these groups is recognized by the host country--not just the World Bank, it's the sending countries. Haiti's had a diaspora minister for ages. Mexico is doing so many things to leverage their input and to work with them. It's unbelievable. In Uruguay and Argentina, you wouldn't think of them, but they're focusing on the scientific diaspora and how to get them back home. So if you want to do something, it's not just development agencies and not just the diaspora groups, but ministries and countries back home.

We've had meetings of diaspora ministers. The Indian diaspora minister has been over to Mexico and we've helped organize and run meetings between them. The Philippines have joined in. So there are these great networks. It's low-cost and easy to tap into, but it requires a change in culture; it requires a change in thinking about development. You really have to change the people on the official development side to become more flexible, more creative, and more entrepreneurial in their thinking. It requires a huge leap of faith, to some degree, by the development community to be able to work with these groups, and that's been a major obstacle. It's been overcome at the IDB. It's been overcome at USAID. It's been overcome in Europe. Canada, as the honourable Minister of International Cooperation noted, is late to the table on this. I think even CIDA recognizes that they're the odd man out in the international development community.

There's a reason why every other development agency is doing this. There's a reason why development agencies are working on their second generation of public-private partnerships. They're not throwing it out; they're not saying it didn't work. They're working on their second generation because it works, because it's effective. It's not just bilateral agencies, it's multilateral too. Canada stands out as the one that's not doing it.

[The Chair, Conservative, Dean Allison]

That's all the time we have.

We're going to start our third round.

Five minutes, Mr. Dechert.

[Bob Dechert, Conservative, Mississauga—Erindale, ON]

Thank you, Mr. Chair.

Thank you, Mr. Dade, for your very important information today.

You've talked a lot about diaspora remittances. We all know that Canadians contribute a lot of these remittances around the world. We should find out the exact numbers.

One of the things you talked about was the cellphone payment method. I wonder if you've done a study generally on the costs of transferring funds from Canada, the U.S., and other countries to these diaspora groups. I know in my riding, in Mississauga, there are probably at least a hundred different diaspora groups. You see these Western Union shops everywhere. I don't want to just dwell on one company; there are many companies who are in this business. My sense is that they charge a significant amount of money, a significant percentage of the cost of transferring funds. I wonder if you could tell us if you've done a study on that. How can those costs be lowered so that greater amounts can actually get to the people who need the assistance in their home countries?

[Carlo Dade]

The remittance corridor studies that Finance Canada did through or in partnership with the World Bank looked at those issues to some degree. Alan Simmons at York University did a very brief bit and I did a survey of recipients in Jamaica and that gives some ideas on ways to look at the cost. But again, in terms of not reinventing the wheel, this work has been done extensively in the United States. The markets do not differ so significantly or to any degree that the work there would be not be applicable here.

A lot of the work in reducing costs has already been done. The systems set up by the Inter-American Development Bank and by groups like Fonkoze are already in place and are being used in Canada. It's simply a matter of making sure that groups here have access to these systems.

[Bob Dechert, Conservative, Mississauga—Erindale, ON]

Do you have information on the percentage charged by companies that fund transfers to particular countries?

[Carlo Dade]

At one point in time I did—

[Bob Dechert, Conservative, Mississauga—Erindale, ON]

If you have that kind of information, I think the committee would be pleased to receive it.

[Carlo Dade]

—and I can pass it on.

[Bob Dechert, Conservative, Mississauga—Erindale, ON]

What are your views on temporary foreign worker programs? Canada, as you know, has some significant ones, and they get criticized by various groups for various reasons.

Are these important for development assistance? Should they be increased? What are your general comments on those types of programs?

[Carlo Dade]

They're hugely important. You hear of people who live in countries where the labour market does not perform. It does not offer a decent return on investment. Allowing people to move has significant impacts on poverty alleviation.

The Canadian program, while not perfect, is better than much of what's out there. The criticisms, while important.... I would never denigrate the criticisms, as they can make the programs better, but to some degree it's a matter of letting the search for the perfect destroy the good. Having lived in the United States and having at one time been American, I can tell you that if you want to, you can spend a little while with the U.S. system of bringing in temporary workers, and you'll begin to appreciate how good the system is that we have here in Canada.

I think it's unfortunate that Canadians really don't realize globally just how good this is. Even compared to Europe, on the treatment here.... Again, it's not perfect, but my God, you look around and you go, “Thank God there's Canada and thank God we have this as an example of how to do things right”.

Increasing the numbers of course is a good idea, and so is increasing the oversight and other things that are needed to go along with it. Temporary workers are hugely important. It's a great way to help communities.

One of the interesting ideas, which is something you'll see in a few weeks, is the idea of creating charter cities. Paul Romer, one of the leading economists on growth theory—at Stanford, NYU, and Chicago—has a concept for creating cities that are run according to outside norms and outside institutions. He's talking about creating a city in Honduras that functions like this. Rather than having the millions of Hondurans who have voted to leave Honduras and go to the United States, they can actually work in Honduras in a system that allows them to remain home and allows that talent to remain in Honduras.

A lot of countries in the Caribbean are promoting a similar idea, basically for having retirement homes and facilities in the Caribbean. It's cheaper. The Ontario health care system would be solvent if you could move people in retirement to the Caribbean and have them treated there, as opposed to in the higher-cost environment. Also, instead of taking nurses and doctors that are desperately needed in the Caribbean and flying them up to a high-cost environment in Ontario, you can actually have them remain in their communities, where they can continue to make a contribution.

Let's face it: where do you want to fly in the middle of winter? Winnipeg, or Jamaica or Cuba? It's an idea that's already taking place in the United States.

[Bob Dechert, Conservative, Mississauga—Erindale, ON]

Can I ask you about working with diaspora chambers of commerce? In my private sector days, I was a member of a number of different diaspora chambers of commerce. How can the government support diaspora chambers of commerce here in Canada and help them take their business experience back to those home countries to do some good?

[The Chair, Conservative, Dean Allison]

Just a quick response, please. We're out of time.

[Carlo Dade]

You have a great example. The Trade Facilitation Office of Canada did some work with the Jeune Chambre de Commerce Haïtienne de Montréal. You have groups in Canada that have expertise and experience. It doesn't cost a lot, but the return on investment is huge.

[The Chair, Conservative, Dean Allison]

Thank you very much.

We're going to move back to Ms. Sims for five minutes.

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

Thank you very much.

I want to make one thing clear. We're not saying there is no role for the private sector, but I definitely don't see a role for the for-profit private sector.

You wrote an article that was published recently in Embassy. You wrote that “Traditional development actors like CIDA and NGOs play critical roles in immediate poverty alleviation and building enabling environments for development...”.

You also praised the U.K. for the stance it has taken on its international development. As you know, Prime Minister Cameron recently said that despite the economic state they are in, they're going to continue to live up to their commitment. He sees development as the right thing to do in moral terms and profoundly in the national interest.

Unfortunately for us here, our funding has essentially been frozen. The ODA envelope has been frozen. This freeze means that by 2014 our aid budget will have fallen to 0.28% of GDP, which will be the lowest in the 22 OECD countries—and shame on us.

We feel that despite the fact that maybe we have been buffered the most from the economic woes and that we're one of the wealthiest countries on earth, Canada is increasingly abandoning the world's poorest people and countries.

As you know, we have a federal budget coming up this week. I think a few people know that. A coalition of groups came to Parliament Hill last week to urge this government not to fight the deficit on the backs of the poor, a very heart-moving lobby. In light of your comments in Embassy about the critical role CIDA can play in alleviating poverty, do you share the view of this coalition that the budget must not slash foreign-aid funding?

I'd like a very brief answer, because I have another question, please.

[Carlo Dade]

I never would presume to tell the government or the opposition what it should or shouldn't do. I can offer ideas on cost-benefits and what the impacts would be.

If aid money is going to be decreased, then these sorts of partnerships will become all the more important. Getting the maximum efficiency from every aid dollar spent becomes more important.

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

Okay.

[The Chair, Conservative, Dean Allison]

Madame Groguhé, you have two minutes.

[Sadia Groguhé, NDP, Saint-Lambert, QC]

I would like to ask you many questions, Mr. Dade, but I'll make do with just one.

First, let's talk about the diaspora, the presence of which is important in various countries. Originally, the diaspora always sent money. In developing countries, the extended family is a cultural reality and is very important. The diaspora has always supported the families that stayed behind, whether in terms of upbringing, schooling, health or just for food.

To promote development, it is quite interested in the survival of people, and sometimes in the acquisition of goods. With respect to the infrastructures, education, training and health, I think the diaspora will not be able to take over on its own. On the other hand, the role of the public sector seems essential to me. I think the participation of CIDA and the NGOs is essential. Who will lead this development?

If the private sector takes a larger and larger role, how will control and evaluation work? How can we know concretely, how these various actors will improve the development issues in those countries?

I await your response.

[Carlo Dade]

Okay.

I will answer in English.

On the question of diaspora contributions, first, education, health, housing, yes; but as I mentioned, depending on the country, 5% to 15% of remittances go back for collective projects. Take ROCAHD in Montreal and the projects they finance: building schools, building health clinics, building roads, putting in libraries, sending back medical personnel. The diaspora in the collective projects are involved in these sorts of things.

The Mexicans have a project called “Tres por uno”, now “Cuatro por uno”—quatre pour un—and this basically takes contributions that diasporas are making for roads, for hospitals, and matching four to one with Mexican government money. They bring in local actors such as the state or the municipality to work on projects together. So as diasporas are brought into the development process, by partnering with development agencies, by working with the state, you get this coordination the same way that you have with NGOs.

In terms of the larger coordination for diasporas in the private sector, again, as you develop partnerships between the private sector and aid agencies, this coordination results. You have an exchange of expertise, of knowledge. The private sector is already involved. By working with them, you're not subsidizing them. You're not giving them money. Just like working with the diaspora, you're helping to make them better development actors. Likewise, they help make CIDA a better development actor.

So there's this cross-fertilization, not subsidization. It's a complete misunderstanding of the situation to think of this as subsidy. I can tell you that everyone who works on the issue would agree on that point.

[The Chair, Conservative, Dean Allison]

Thank you very much. That's all the time we have.

Mr. Dade, I have one quick question before you leave. Daniel Runde talked about financial tools used by the International Finance Corporation, and said that if Canada could develop some of these tools, it would be effective. Are you familiar with that testimony at all? Or have you any thoughts on what those financial tools would look like, just very quickly?

[Carlo Dade]

Sure.

In terms of encouraging private sector investment, putting tools in place for increasing flows of money, tools in place for working with diasporas, there are a number of things that the IFC has developed. I would pull Dan back here, because he helped to create many of these. I wouldn't want to speak for him on that issue.

One last point is that in terms of evaluations, there have been some questions in front of the committee on whether or not this works, and on how we know that public-private partnerships work. Every year USAID has to submit a Congressional Budget Office justification, which is the equivalent of a Treasury Board request up here. You have 15 years of these, written in your language, using your terminology as legislatures, about the effectiveness of aid programs. You can look at this. And it's the same thing for the Germans.

My former agency, the Inter-American Foundation, has books—books—on our experience with public-private partnerships and working with corporations. This isn't something that development agencies have adopted out of faith. There are evaluations and analyses, with decades' worth of evidence. The changes in programs are designed to respond to this.

Again, Canada's late to the table, and a lot of this has simply missed us up here. But it's out there. I could fill this room with evaluations of public-private partnerships showing how development agencies have gotten maximum returns, and also where mistakes have been made, where we screwed up. There have been lots of those too. But if you don't make mistakes, if you don't fail, it simply means you're not trying hard enough, and that's an issue, I would say, with CIDA.

[The Chair, Conservative, Dean Allison]

Thank you very much, Mr. Dade.

With that, I'm going to adjourn the meeting.

Thank you very much.