Evidence of meeting #39 for Natural Resources in the 41st Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was payments.
A recording is available from Parliament.
Conservative
The Chair Conservative Leon Benoit
Is there any particular witness you would like to start with, Mr. Regan?
President and Chief Executive Officer, Mining Association of Canada
I'll just comment on the issue of payments to aboriginal entities.
This was not part of our work together. It was a deliberate decision. It wasn't an oversight. We felt that this would be an undertaking that would require a lot more time, and it's not really the thrust behind the international movement behind transparency. No other jurisdiction in the world goes to that level, so it's a unique kind of feature of this particular act.
We are pleased that the government listened to us and delayed implementation for two years to allow further consultation with aboriginal governments, which we think is really important. We've been having many conversations with aboriginal groups and entities about this ourselves.
In the end, I think transparency is always valuable, and the more transparency the better. While I think at our board table there would be broad support in principle for including that, it's how we get there that I think is also very critical for our industry. We wouldn't want to be finding ourselves in any way in conflict with aboriginal governments with whom we deal on a daily basis, so taking more time is critical.
Director, Publish What You Pay Canada
With regard to your comments, thank you for the support on the amendment we've put forward to subclause 9(5). It's very much appreciated.
I can only echo what Mr. Gratton said. Our process did not cover aboriginal payments and so that is something new to this movement. We were very supportive of the two-year delay and of further consultation. I would reiterate that this consultative process will be incredibly important moving forward.
That said, I think that the anti-corruption benefits of this legislation will extend to communities, and I don't think we can exclude Canada from that. I'm not implying there are wide swaths of corruption, but we have, over the last year, witnessed significant incidents of municipal-level corruption, for example, in Canada. I think we do need to keep in mind that this type of accountability and transparency can have positive impacts on the ground wherever there are communities that are looking to increase the benefits they receive from the resources in their region. That's the only comment I would make.
Economic Analyst, Natural Resource Governance Institute
I would support what's just been said, both from the Mining Association and Publish What You Pay Canada.
The issue I wanted to raise, using this opportunity, was on something that CAPP mentioned earlier. First, we're obviously quite pleased to hear that CAPP would like to align with the U.K. The rules there are fairly strong, but I did want to raise this issue of confidentiality and exemptions.
It's a bit of a red-herring issue. Quite simply, the information that we're requesting, or that this legislation will make available, is not the stuff of trade secrets. There are things that are found in contracts or in legislation that are trade secrets—geological information, sometimes information about future deals—but payments information isn't. There's not a single example that any companies in the United States or in Europe have come up with to show that a foreign jurisdiction does not allow this type of information to be made public.
Two examples were brought up—China and Angola—in various submissions, say, to the SEC and elsewhere. Petrobras in Brazil provides payments information in both those countries.
Conservative
The Chair Conservative Leon Benoit
Actually, I'm sorry, the time is up for the answer so we'll have to leave it at that.
We'll go to the five-minute round now, starting with Mr. Trost, then going to Ms. Block, and then Mr. Gravelle and Mr. Leef.
Go ahead, please, Mr. Trost, up to five minutes.
Conservative
Bradley Trost Conservative Saskatoon—Humboldt, SK
Mr. Chair, since my line of questioning was going to be fairly similar to that, I guess I'll start with CAPP and basically ask what is your response to that? The argument from another witness was that your arguments about confidentiality were a red herring. Give a response, give an example, something concrete whereby the members on the committee can say, okay, this makes sense, the other gentleman was well-intentioned, but here's something he didn't understand. What would be your response?
Vice-President, Policy and Performance, Canadian Association of Petroleum Producers
We've made it pretty clear in our consultation with government that this is a rare occurrence, and what we've suggested is that when it does occur and we could rationalize that, to come with the right evidence and proof of that, then there should be an avenue for us to have that discussion.
We have not asked for a blanket exemption. In fact, we've suggested to the federal government, in our somewhat more limited engagements than others have had, that what's important for us is to ensure you have a piece of legislation that is not relying on exemptions to work to its effect. If you do that, then there is obviously a problem. But we do look at our sector being fairly more complex than the mining sector, certainly domestically in particular.
Conservative
Bradley Trost Conservative Saskatoon—Humboldt, SK
So to a certain degree, you're asking for this adjusting case on a very rare circumstance. Is that what I'm getting?
Vice-President, Policy and Performance, Canadian Association of Petroleum Producers
It would have to be justified, and rationalized, and proved, yes, no question about it.
Conservative
Bradley Trost Conservative Saskatoon—Humboldt, SK
Then let me ask this question following up.
In the legislation there's built in ministerial exemption, and the reason for the ministerial exemption would be a very rare circumstance. This seems to be ideal, built for what you're looking for. Would that be sufficient, what we have already in the legislation for the situations you're looking for—the ministerial opt-out clause, his judgment—because let's face it, the minister still has to justify whatever he does in the court of public opinion? Is it sufficient, the ministerial exemption?
Vice-President, Policy and Performance, Canadian Association of Petroleum Producers
Yes, we would think so at this point, given that ministers' orders are somewhat transparent, or we expect them to be transparent themselves. If there's a rationalization for a minister ordering or allowing a variance in one of the provisions, then that would be a way out for everybody. So the answer is yes.
Conservative
Bradley Trost Conservative Saskatoon—Humboldt, SK
Okay.
Then I'll throw the follow-up to the NGOs, because we're going a little bit back and forth on this one.
You've basically said under no circumstance whatsoever, ever—blanket—should there be flexibility. It should be in the legislation, and the minister who is, as I said, going to be publicly pressured by groups like yourself if he gives an exemption, shouldn't have this flexibility.
Can you see no circumstance where there might be an exemption, a legal conflict between two countries, etc.?
Economic Analyst, Natural Resource Governance Institute
The EU and the SEC in the U.S. looked at this issue carefully. The EU included very clear language—and I'll just read it out because it's here— to “not provide for any exemptions in cases of alleged disclosure prohibitions in foreign law or on confidentiality or commercial sensitivity grounds”. They've been unequivocal. The SEC didn't mention this either. They didn't allow exemptions in their first rule-making process.
The danger—
Conservative
Bradley Trost Conservative Saskatoon—Humboldt, SK
But you can understand why I just wouldn't accept other countries' legislation. I mean we'll look at—
Economic Analyst, Natural Resource Governance Institute
No, of course. I'm bringing those up as examples.
In the Canadian context, the danger of including a process for granting exemptions is that you create an incentive for foreign jurisdictions to pass secrecy laws. In the literature, this is called the “tyrant's veto”. What we want to do is make sure that transparency transcends any of those laws and is enforced even in the toughest places. That's where this law would work the best: not in places that are already transparent, but places that need more transparency.
Conservative
Director, Publish What You Pay Canada
Can I just add one thing?
In most contract negotiations—for example, in the oil and gas sector—there is a clause that allows companies to fulfill their home-state laws. They're allowed to furnish information in accordance with home-state laws. In Canada we wouldn't want to encourage companies to modify that clause in any way to not allow them to furnish information in accordance with their home-state laws. When we've looked at hundreds and hundreds of publicly available contracts, we consistently see that clause in every contract, regardless of jurisdiction, including Angola and China, for example.
I think that's also very important. It's just keeping best practice in industry, which is to allow that home-state disclosure.
Conservative
The Chair Conservative Leon Benoit
Thank you, Mr. Trost.
We go now to the parliamentary secretary to the Minister of Natural Resources, Ms. Block, for up to five minutes.
Conservative
Kelly Block Conservative Saskatoon—Rosetown—Biggar, SK
Thank you very much, Mr. Chair.
I join the rest of my colleagues in welcoming you all here today. It would appear that we are actually zeroing in on the issues that you are raising with us and how we reconcile the concerns of civil society and industry.
It would appear that, quite honestly, this legislation should be seen as perhaps finding a middle ground between the concerns that your groups are raising and those that industry is raising. My question really does follow on the questioning of many of my colleagues who have already been able to ask their questions around ministerial discretion.
In this act, there are no exemptions granted at this point in time. The issue is that there may be exemptions granted in the future. You read for us what was in the EU's legislation. It would appear to me that it has been prescriptive where exceptions may not be made, but it hasn't actually prescribed where exemptions may be made. My argument to you may be that they've actually left the door open to make exemptions down the road.
What I do want to ask you to comment on is that ability to make exemptions and the ability to respond to changes in other countries' legislation, the ability to respond quickly, and how regulations might fit into the discussion we're having today.
Economic Analyst, Natural Resource Governance Institute
Forgive me, I didn't read the entire EU language, because I didn't want to take up too much of your time.
But the transparency directive does evoke a principle of universality with regard to reporting payments, which states that:
no exemptions, for instance for issuers active in certain countries, should be made which have a distortive impact and allow issuers to exploit lax transparency requirements.
There is clear language eliminating exemptions.
With regard to your second point about regulations, you're right that this legislation doesn't open up exemptions, it opens up the possibility of exemptions. We're calling for that possibility to be closed off.
