Foreign Affairs Committee on May 9th, 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 our two witnesses for being here today.

We have with us Fraser Reilly-King, who is a policy analyst for aid and international cooperation with the Canadian Council for International Co-operation.

Mr. Reilly-King, thank you very much for being here.

From Corporate Knights Inc., we have with us Toby Heaps, chief executive officer and co-founder.

We'll get a chance to hear from both of you right now.

I'm going to start with you, Mr. Reilly-King. Can I have your opening statement? We'll then move to Mr. Heaps for his and then go around the room and ask some questions back and forth.

As I said, once you're done, we will fill out the rest of the hour with questions and comments.

Mr. Reilly-King, the floor is yours for 10 minutes, sir.

[Fraser Reilly-King, Policy Analyst, Aid & International Co-operation, Canadian Council for International Co-operation]

Thank you.

Firstly, thank you for inviting me to appear before the Standing Committee on Foreign Affairs and International Development on this important issue related to aid, the private sector, and development.

As Mr. Allison mentioned, I work for the Canadian Council for International Co-operation, which is a national platform of 92 Canadian voluntary sector organizations working globally to achieve sustainable human development. I am also the vice-chair of Reality of Aid, which is a network of 172 organizations that do independent assessment of aid policy and practice globally. We have a flagship report that we produce every two years. This year it will be on aid and the private sector.

CCIC has three messages for this committee that we feel complement a number of the previous interventions you have heard so far.

Firstly, the private sector is an important player in development, but it is not the new silver bullet. Secondly, we feel that ultimately it is the development of the local private sector that must be prioritized in the context of aid. Finally, the private sector is often seen as a promising means of leveraging additional resources for development, but the committee should not lose sight of other substantial sources of development finance.

On my first point, the private sector is without a doubt essential, but it is not the new silver bullet for development, nor, we would argue, is it the engine of growth—at least not of equitable and inclusive growth. Rather, the private sector is one of a range of players central to development, alongside multiple layers of government, elected officials like yourselves, civil society, media, and citizens. Yes, the private sector contributes a lot through investments, loans, and production and job creation, but to contribute to truly sustainable development, country-specific checks and balances are also key.

In this vein, let us not forget the role of the state in promoting growth. The 2008 Commission on Growth and Development, which looked at 13 countries with sustained periods of growth over 25 years, put a number of key state functions at heart of this success: political leadership, industrial policies, managed exchange rates and capital controls, effective institutions and governance structures, a talented public service, strong domestic savings, public investment in infrastructure, health, and education, job creation, and social protection. Each country context is different, of course, but in all cases the state was the primary engine and the driver of growth, and the private sector merely the fuel, if you will.

But what kind of growth? The Africa Progress Panel report, which came out two weeks ago, noted that several countries in Africa—Ghana, Ethiopia, Uganda, and Tanzania, among them—are outpacing many of the emerging economies.

While this is very slowly helping to create a middle class, disparities are also growing. Still, half of Africa—386 million people—lives below the poverty line, so it's the equitable redistribution of growth and job creation that is the real challenge, and government, elected officials, the media, and citizens are all key to this, not just the private sector. In this vein, we would urge the committee to encourage CIDA to put equitable growth and job creation at the heart of its own growth strategy, in particular for smallholder farmers and for the 74 million young Africans who will need jobs in the next decade.

A second key message that we want to underscore is the notion of which private sector. This committee has heard from a number of individuals who have talked about different types of private capital flows and private enterprises.

For us, the private sector in the context of aid and international development should address two key issues. The first is using public resources like aid to stimulate growth and development of the local private sector, and more specifically, a diverse range of enterprises and producers in the informal and formal economies, as well as small and medium-sized enterprises and co-operatives engaged in market activities—all with a view to creating jobs and sustainable livelihoods. In fact, this what CIDA's own 2003 private sector development strategy proposes. We fully agree with this vision.

Secondly, aid must promote financial and developmental additionality. In other words, it must ensure that what aid resources bring is something that is otherwise not available through commercial lending practices. Aid needs to fill a financial and development gap. It also requires a robust framework to anticipate, track, monitor, and evaluate expected positive development outcomes in terms of private sector development—as some donors already do, but most do not.

Ultimately, then, it is about integrating the local private sector into a sustainable development framework, and it should not solely be about promoting the interests of Canadian companies overseas. Why? We need to separate Canadian self-interest in promoting Canada's economy from what is in the interests of developing economies. The two may not necessarily be mutually exclusive, but they are often very different.

Furthermore, putting Canadian private sector interests front and centre of Canada's development strategy contravenes the Paris Declaration on Aid Effectiveness, something that Canada prides itself on meeting. It also runs the risk of tying Canadian aid to development, just as Canada has ended this practice. Untying aid is a good thing, and we should not backtrack on this.

The Canadian public also believes this. In an Angus Reid survey that came out last week, while Canadians agreed that both the private sector and NGOs had an equally important role to play in development, 76% of Canadians in the poll felt that large multinationals should not be getting government funding for this.

This does not preclude the private sector from partnering with organizations where the core main mandate of both partners coincide, and you've heard from a number of organizations that do that. Desjardins' international development fund to support local credit unions is a good example, as is Teck Resources' project with the micronutrient initiative, or—I'm not sure if you've heard of this one—CARE Canada's initiative in Peru to promote small and medium-sized enterprises by working with Export Development Canada and using its expertise. These are all efforts that help advance long-term development outcomes and demonstrate the additionality I referred to above.

The difference between these projects and typical corporate social responsibility initiatives is good practice versus good intentions. CSR initiatives, as many have concluded—including the OECD and John Ruggie, the special rapporteur on business and human rights—are at best limited, in particular when they respond to corporate dynamics rather than development dynamics, as several witnesses have already noted.

Finally, donors have been quick to recognize the potential of the private sector for leveraging additional resources for development, but other sources of finance offer just as much potential. Using the private sector to leverage resources may work well when it fills real gaps in a market. For example, Canada's advanced market commitment for the pneumococcal virus is largely seen as having created an affordable market for vaccines in the developing world that would have not otherwise been filled. This is not the only way to leverage further finance for development, and we would argue that it too has its limits.

A few presenters have already talked about domestic resource mobilization, or generating revenue through progressive taxation, royalties, and tariffs. To illustrate this point, while aid in Africa rose from $12 billion in 2000 to $36 billion in 2008, natural resource rents rose from roughly $40 billion in 2000 to $240 billion over the same time period. Such resource rents are a logical and substantial source of revenue. In December of last year, roughly half of Africa's mining ministers met in Addis Ababa and declared their intention to assert greater control over private sector mining operations and transfer the revenue to weaker areas of their economy.

Equally, addressing capital flight could seriously enhance the amount of revenue that stays in the continent and is put to use for sustainable development outcomes. In Africa alone, the continent has lost $1.2 trillion to capital flight over the past four decades. In a 2008 report, Christian Aid estimated that the developing world loses approximately $160 billion every year in corporate taxes through transfer mispricing and false invoicing—one and a third times more than global aid for that year.

At home the government could also formalize its matching arrangements around humanitarian assistance, or leverage the Canadian public's support for development through Imagine Canada's suggestion of a stretch tax credit. If donors are serious about ending the aid dependence of countries, in particular as aid budgets decline, then building effective institutions, promoting local private sector development, and addressing domestic resource mobilization and capital flight should be priorities.

Thank you.

[The Chair, Conservative, Dean Allison]

Thank you very much, Mr. Reilly-King.

We're going to move over to Mr. Heaps. The floor is yours for 10 minutes, sir.

[Toby A.A. Heaps, Chief Executive Officer and Co-Founder, Corporate Knights Inc.]

Thank you, Mr. Chairman.

It's an honour to be here today. I'm representing Corporate Knights. Corporate Knights is a Canadian-based media and financial products company. We're best known for a magazine we publish on sustainable business that's circulated in the Globe and Mail, and now we have a U.S. version in The Washington Post.

Globally, we rank companies. We presently have 2,000 large companies in our database, and we rank them on things ranging from safety to the per cent of their tax obligations met, to their carbon and energy productivity.

In our financial products purview, we have a suite of equity products and fixed-income products that are premised on bringing a new balance sheet into the 21st century, where you can take into account a company's social and environmental performance in quantifiable ways and then integrate that into your investment propositions.

We also are working with some leading Canadian businesses from the resource, financial services, and manufacturing sectors to create a council for clean capitalism. We define clean capitalism as an economic system in which the prices fully reflect social, ecological, and economic benefits and costs, and actors are fully aware of their impacts.

As far as my presentation here today goes, I have a fairly simple message and it comes back to first principles.

If we take a step back and we ask where we are strong in Canada economically and what we are strong at, we come away with a pretty resounding focus on the resource sector and on financial firms. Within the TSX 60, our main blue chip composite index, 63% of the firms are either financial firms, material-orientated firms, or energy firms. If you look around the world, you see where Canada is strong and plays a pivotal role in the development of many emerging economies.

We have just initiated a study and we've uncovered over 20 countries around the world where a Canadian-based company is the number one private foreign investor in that economy. That's a pretty staggering statistic considering we're only a few per cent of the global GDP. We're making a comprehensive assessment of that, and we'll have a better idea at the end of the summer of exactly how many countries we're the number one foreign investor in. We play a pivotal role.

To my colleague's comments around corporate social responsibility, that's not really where the action is. Where the action is, and what the world needs from an international development perspective, is finance, specifically finance for infrastructure and for energy, and resilient forms of energy at that. The various agencies, whether it be the International Energy Agency or the OECD, estimate that over a trillion dollars of extra finance is needed each year for renewable energy in order to avoid catastrophic climate change scenarios and also to meet the energy security needs of economies around the world, including developing economies.

Presently, emerging markets have a key problem. The best forms of energy, in many cases for them, are renewable forms of energy, but often the capital costs are prohibitive. The cost curve when you want to make an investment in energy infrastructure is much more pronounced at the front end of the cycle, if you're going to invest in renewable energy, than it is if you're going to invest in fossil fuel energy. With fossil fuel energy, you have to keep paying variable costs for inputs like coal, oil, or gas, whereas with renewable energy, it's mostly at the front end.

The trouble is that most developing economies cannot get cheap credit. They pay exorbitant rates of interest on the international markets, and this is where Canadian companies and the public sector can play a really pivotal role. There are trillions of dollars of finance, there is a new emerging field called green bonds, which HSBC classifies now as a $174 billion market globally. TD Bank is a leading player in this field.

If you marry up our financial capacity with our resource penetration—so you map out all of the economies around the world where Canadian companies play a major role, then you look at those economies and you see what their infrastructure needs are—what they're asking for in terms of the finances they need to develop their infrastructure and use the EDC, which is interested in ramping up their activities in this base to provide more finance to credit enhance some of these propositions so that instead of paying really high rates of interest they are paying rates of interest that are on the AAA tranche, would make the capital costs much more affordable and make these projects much more doable.

There is a national economic benefit that would accrue to our country from doing this is. Sometimes development advocates proclaim against tied aid. There are a lot of cases to suggest against it, but the Export Development Corporation of Canada is a former tied-aid, and has been a remarkably successful form of tied aid for generating jobs and prosperity for our economy.

When you look at where the world economy is going now, more and more capital is being invested in renewable energy infrastructure and water infrastructure. The western markets are often not at the front end of this. The Asian Development Bank and China are doing a bunch of stuff here. The U.S. is starting to do some things. Canada has a huge opportunity to ramp up our portfolio of credit enhancement products, specifically out of EDC, from less than 1% to the 5% or 10% range. That would really position us well in those economies. There's massive potential to marry up EDC with the strength and interest of our pension funds to also invest in these areas.

I would encourage the committee to look at options. A paper came out today from HSBC on these types of financial products. It is a good reference point and provides many examples for marrying up EDC credit enhancement activities with catalyzing infrastructure investments in developing countries where Canadian resource companies are prevalent.

We can look at home, right here in Newfoundland and Labrador, to find an example to apply elsewhere. With the fishery collapse, their economy has experienced the trauma that can happen when you run up against the wall as a single development. They put in place the really interesting approach of resource conversion. Resource conversion has become a popular concept internationally as of late, and I expect it will stay there.

Newfoundland and Labrador is taking their fossil fuel assets and generating cash from them. They're using that to invest in renewable energy—transmission and generation projects that will last for hundreds of years, long beyond when their fossil fuel assets are gone. They're doing this at a much more accelerated rate with the support of credit enhancement from the federal government. The federal government is helping to backstop the billion dollar loans Newfoundland is getting to build their infrastructure.

Using that model of resource conversion and applying it internationally for development purposes is not a silver bullet by any stretch, but it would have the most impact in catalyzing enhanced prosperity for countries around the world. It would also be good for Canadian businesses.

Thank you kindly.

[The Chair, Conservative, Dean Allison]

Thank you very much.

We're going to start with the opposition.

Mr. Saganash, the floor is yours for seven minutes.

[Romeo Saganash, NDP, Abitibi—Baie-James—Nunavik—Eeyou, QC]

Thank you, Mr. Chair.

Thank you to both witnesses today. I truly appreciate your contribution to the work of this committee.

I'll ask my first question to Mr. Reilly-King. Earlier this month we had an official from CIDA before the committee to testify. I asked him what CIDA's approach to implementing the ODA Accountability Act was, given the three criteria we have under the act.

His reply to that question was the following, and I quote:So at CIDA, in our approach to this act, this is job one.... This is integral to everything we do.

Given your experience, Mr. Reilly-King, and the work you have done over the years, would you agree with that statement?

[Fraser Reilly-King]

I would like to think that the ODA Accountability Act is integral to everything that CIDA does, but we've done a number of access to information requests over the past three years to get a better sense of how CIDA has both interpreted the act and implemented it. It's unfortunate that we had to use access to information, but it has been very difficult to get a sense from bureaucrats in the government of how it's being implemented.

I think CIDA has interpreted the act by saying, “We already do this. We already promote poverty eradication. We already promote human rights. We already consult with the poor”, but they haven't actually developed any mechanisms to evaluate or really translate that into its core practice.

For example, at the end of CIDA's sustainable economic growth strategy it says that all program activities within this strategy are compliant with the ODA Accountability Act. We submitted an access to information request to establish how CIDA had come to this conclusion. The access to information request turned up no documentation, meaning that while CIDA asserted it was compliant with the act, it actually hadn't developed any tools to evaluate or assess this, or determine how programs were truly going to be compliant with the act.

I think the principles of the act are maybe integral to CIDA's practice, but it's hard to get officials to even talk about the act these days.

[Romeo Saganash, NDP, Abitibi—Baie-James—Nunavik—Eeyou, QC]

Is it your view that the third review to Parliament and the Government of Canada official development assistance...? The point is driven home in your report that it falls short of the spirit and intent—and I would add “letter” to that—of the ODA Act. Can you expand on that a bit?

[Fraser Reilly-King]

It's similar to my previous intervention that through access to information we looked at what different tools CIDA might have developed to implement the act. While early access to information talked about the possibility of developing various tools, as far as we know nothing was ever concretely developed. I guess it's neither in the spirit nor the letter of the act.

[Romeo Saganash, NDP, Abitibi—Baie-James—Nunavik—Eeyou, QC]

You've also recently completed the analysis of the program cuts by country, made by CIDA, that showed three of the CIDA countries of focus: Colombia, Peru, and Ukraine, which rank in the top half of the human development index, remain completely unaffected. Whereas 10 of the 13 countries affected lie in the bottom quarter of the HDI ranking. Have you been able to determine why this move was made?

[Fraser Reilly-King]

The government hasn't yet put out its official cuts to this. This is just based on media reports or leaks on what the government is supposedly going to cut. I think probably the government would argue that it's an attempt to be more focused and effective, and also to respond to development needs and Canada's own foreign policy and development objectives.

Our biggest concern, and this is not a trend that's unique to Canada, is that in the context of aid cuts an increasing number of donors are moving away from low-income countries to middle-income countries. Especially in the context of the Africa Progress Panel report Canada would be ideally situated to respond to some of Africa's needs. We have a focus on growth as one of our strategies, on children and youth, and on food security. Where the most number of jobs need to be created in Africa is among the youth population. As I mentioned 74 million young people are expected to be looking for work in the next decade. CIDA already has a focus on smallholder farmers, and the report also identified addressing the needs of smallholder farmers as a key priority.

I already mentioned the youth population. Canada has a children and youth approach. It's difficult to know why Canada is moving away from low-income countries toward middle-income countries especially when a number of the countries were in Africa, as I mentioned, and Canada seems very well placed to address those needs.

[The Chair, Conservative, Dean Allison]

Thank you very much, Mr. Saganash.

We're going to move to Ms. Brown for seven minutes, please.

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

Thank you very much, Mr. Chair.

Thank you to our witnesses for being here today.

This has been a most interesting study for our committee, and I think it would be fair to say that every one of us on this committee wants to see progress on emerging economies and how Canada can best help in getting emerging economies up and running. I think all of us share that same sentiment; it's a matter of how we get there.

It was interesting to hear some of the things you've said today. I was particularly interested in your comment, Mr. Reilly-King, that CIDA's doing some good things. Certainly our objective is to help and to be there in times of need.

You know, Canada is the only country that is current with all of its payments to the global fund. We made a contribution of $50 million last year to GAVI Alliance, over and above our other contributions. Canadians also made a contribution in east Africa last year to a desperate humanitarian need—$142 million went into the east Africa drought relief fund. Currently we have about $42 million that has gone into the Sahel region. Canadians respond with tremendous generosity when we are called upon to assist.

But those are always the things that are urgent and the things we can't predict. So how do we help these countries get themselves to a point where they in some measure can respond to their own challenges, and how can Canada support that?

Mr. Heaps, you were talking about a council for clean capitalism, and I would like to hear more of that. We are not in any way averse to knowing what the total costs are when things are going on. Obviously that has to be part of an assessment that needs to be done whenever a company is going in, and to help countries make those assessments.

You also talked about the need for—I'm sorry, maybe it wasn't you, maybe it was Mr. Reilly-King—political leadership, effective institutions, and civil service, but you probably don't disagree, Mr. Heaps, that those things need to be in place. When you are doing this council for clean capitalism, are you helping countries make those assessments, and helping to build those institutions that can start making the assessments themselves?

[Toby A.A. Heaps]

The agenda for the council is emerging. There are two priority areas that have been identified, and one of them is dealing with unplugging financial flows toward important infrastructure—renewable energy infrastructure and transmission infrastructure. The other one is related to getting more honest accounting so we have more of a total wealth approach to how we calculate our gross domestic product here.

Then, it's also looking at the impacts that investments in our development programs have overseas, borrowing from the World Bank's methodology, which now includes taking into account the effect their investments in foreign countries have on the overall capital stocks of the economies, including the natural capital stocks and social capital stocks. That's key, because if you don't put the issue in the form of a number on the balance sheet, it gets left out of consideration when boardrooms are looking at it.

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

I've been in several African countries. I was in Bangladesh and nobody has telephones or land lines. Everybody is using a cell phone. So the infrastructure that is going to have to go in is going to be very different from what we have historically had to build in our own country. You would agree with that, I'm sure.

I look at countries in Africa where solar energy is now becoming more and more the norm. When I was in South Sudan, it was solar-powered lights for all of their street lights that are going in.

I wonder if you can talk about how that's going to impact the need for infrastructure dollars. How do we move forward with these countries in the areas of initiating their economy, because that kind of infrastructure is going to be critical?

[Toby A.A. Heaps]

What's going on within the international bond markets right now is really interesting. Just to step back, if we look at global capital markets and how they've changed in the last decade, a decade ago equity markets—stocks—were twice as big by volume as bonds. Now the international bond market is valued at $95 trillion, and it's roughly twice the size of the global equity market. There has been a shift in terms of the importance of capital flows, and bond markets are the primary vehicle.

To answer your question on how we might be able to get involved, most countries have development plans, whether it's Mexico or the Congo. The Congo, for instance, has plans to enhance its energy generation from the Congo River, which has approximately one-twelfth of the world's hydro energy capacity right there on one river. It's a massive river. It could power a substantial portion of Africa, even on its growth trajectory. They need substantial capital to properly build the hydro generators and the transmission lines to get the energy to the domestic market and to the export markets. They don't have the capital right now to do it themselves.

There are two choices available to them. One is to make a deal with the Chinese. The Chinese will say that they'll build it in exchange for mineral concessions. Then they box us out, and they get the mineral concessions on advantageous terms.

Another way is emerging. The Asian Development Bank has done this in many cases, and the World Bank has done about 20 of these deals. For example, a country could say that they need to raise $2 billion to finance all the costs of a project, and they'll make it a sovereign issue. But they have junk status in terms of their credit rating, so they'll make an arrangement whereby Canada will backstop it. If they don't pay the money back, we could be on the hook for part of it, so in return, SNC-Lavalin and Brookfield and Boralex and other large Canadian firms get front-of-the-line access to build it.

This is how the world works. I'm not saying that I'm the biggest fan of the tied-aid approach, but nations, if they're going to put their credit on the line, have to have some benefit.

In terms of the financial risk to our country, because we have a really solid financial standing in the international community and some might worry about what this might do to it, the way EDC does these things when they backstop a loan is to reinsure it out. They sell off all the risk, and it doesn't come back to bite us. You can ramp it up slowly, see how it goes, and make sure that the Canadian companies are getting the business. The deal flow in this area is the fastest-growing area of deal flow in the world on a per cent basis.

[The Chair, Conservative, Dean Allison]

Mr. Heaps, I'm going to have to cut you off. That's all the time we have. It's very interesting. Maybe someone else will pick it up.

Ms. Murray, welcome back to committee. I'll turn it over to you, for seven minutes.

[Joyce Murray, Liberal, Vancouver Quadra, BC]

Thank you very much. It's great to be here. Thank you to the presenters for very interesting information and two very different but complementary perspectives on the issue.

I don't disagree with Ms. Brown that people around the table want to help these countries get to where they're on their own feet and are able to drive their own development. I would say that cutting CIDA by $377 million by 2015 isn't the primary way we do that, mind you.

In talking about the partnerships with the private sector, one concern—I would imagine—is whether that money would go toward creating corporate social responsibility or other partnerships in the countries they're investing in, which they would or should be doing anyway.

How would one ensure additionality?

[Fraser Reilly-King]

Maybe I'll come back to some of Ms. Brown's comments and what Toby has said.

I just want to pick up on this issue of tied aid and Export Development Canada. What Export Development Canada provides isn't tied aid. Export Development Canada provides loans, guarantees, etc. It has nothing to do with aid, which is grants to low-income countries.

I think there is potentially some role for EDC to play in helping to create domestic bond markets, in backstopping, and in encouraging further investments in sustainable energy or renewable energy projects, etc. That's what I was talking about. That's a market and a gap that needs filling.

How can CIDA go about doing this? I'll take the first part of your question.

[Joyce Murray, Liberal, Vancouver Quadra, BC]

I have two other questions, so please be as brief as possible.

[Fraser Reilly-King]

A key message that I also wanted to bring is about balance. Not only has CIDA cut its funding, but it's also shifted increasingly away from providing support to governments, bilateral funding, and civil society organizations, and increasingly towards multilaterals. We need support for multilateral initiatives like the ones Ms. Brown talked about, but I think it's a question of balance. When you're trying to get governments to stand on their own feet, taking away money from governments to try to do that isn't helpful. You want to be focusing on things like domestic resource mobilization. The IMF, itself, has said that Mali, for example, should increase the royalties that it should get from natural resource revenue.

In terms of CSR, I think CSR is an obligation of private companies. As I said, for the most part it comes from within their own corporate interests and it's guided by their corporate interests. Where CIDA maybe has a role to play is where it can tap into the core business model of a private-sector organization and partner it with other organizations. But when it's not core, it's not going to work.

[Joyce Murray, Liberal, Vancouver Quadra, BC]

What you just said about supporting countries is what I just heard in a speech by former Governor General Michaëlle Jean about Haiti. I visited Haiti with a multi-party delegation and saw just how much money is being poured in and how little long-term resiliency and self-responsibility is really occurring. Her key comment is that this aid has to be partnering directly with the company, walking side by side down this pathway with the country, with the national government, and not about private sector investments as the leading point.

I'd like to ask Mr. Heaps, when you're talking about financing alternative energy—under the United Nations Framework Convention on Climate Change one of the six or seven envelopes or chapters was exactly about that—how do we finance these countries in their alternative and clean energy and efficiency, so they can reduce greenhouse gas emissions and address that upfront cost of new types of energy, especially when fossil fuels are so heavily subsidized in so many countries, including Canada?

Are you suggesting that because Canada has pulled out of the Kyoto Protocol this could be something that we're trying to go it alone through CIDA as a model for helping finance this infrastructure and clean energy? If that's what you're suggesting, can you comment on whether that's effective compared with working on this in partnership with the international community through a protocol like the Kyoto Protocol?

[Toby A.A. Heaps]

Sure. There are many avenues. This is consistent with working through initiatives within the international community. What I was speaking about with the credit enhancement is a little bit different from the Kyoto Protocol clean development mechanism in that this isn't about Canada donating and paying the whole shot, it's just about us lending our balance sheet so that countries can get a lower cost of capital, and in return for that, we could get some of the business.

Where it also gets interesting is that there are some products out there now with things called “carbon kickers”. The way it works is we could do the deal with, say, Mexico, which has a $5 billion infrastructure plan to reduce carbon that involves subways and trains, and we could do a deal where we would help to backstop their bond issue for $5 billion to do it, and our companies would get some of the contracts and then we would also get some of the carbon credits that might accrue, because it's been approved under the UNFCCC framework. So it could be a kicker.

Presently, financial markets don't put any value on carbon credits, so it would have to be a kicker. I'm not suggesting that we should do this as a substitute for engaging internationally, but it's entirely consistent and complementary to that kind of approach.

[Joyce Murray, Liberal, Vancouver Quadra, BC]

Do I have time still?

[The Chair, Conservative, Dean Allison]

You have 20 seconds. Do you have a comment?