Natural Resources Committee on Nov. 20th, 2014

[The Chair, Conservative, Leon Benoit]

Good morning, everyone.

We're here to continue our study of the parts of the budget implementation act that were referred to us by the chair of the finance committee.

Just before we get to that and get to the introductions, we have a budget for costs for this committee meeting. You all have it in front of you. The total amount requested is $4,000. I'm just looking for approval of up to that amount for budget for these two meetings. It's for witnesses travelling in some cases and that kind of thing.

Is there agreement on the budget?

[Some hon. members]

Agreed.

[The Chair, Conservative, Leon Benoit]

It is agreed. Thank you.

I have one more reminder, which is just that next Tuesday's meeting is in 1 Wellington, so don't end up here, because apparently there's another meeting scheduled for this room. It's in 1 Wellington. You'll see it in the notice. It could be televised. It's up to someone to request that.

[Chris Charlton, NDP, Hamilton Mountain, ON]

I don't think you indicated at the last meeting whether the minister would be with us for one hour or both.

[The Chair, Conservative, Leon Benoit]

The minister will be with us for an hour, and then we'll have the officials for the second hour.

I want to welcome Mr. Lauzon to our committee. It's good to see you, Guy. I think most of you know who he is, but we certainly welcome him officially as a member of this committee now. I understand the committee will probably will be meeting regularly from now on. I think things have been dealt with. That's my understanding. I hope I'm not jumping the gun.

Today we're dealing with the extractive sector transparency measures act portion of the budget implementation act. We have a list of witnesses. Some are here in person, and some are here by video conference.

We have, first, from the Mining Association of Canada, Ben Chalmers, vice-president of sustainable development. From Publish What You Pay Canada, we have Claire Woodside, director. We have Andrew Bauer-Gador, economic analyst from Natural Resource Governance Institute. From Oxfam Canada, we have Lina Holguin, policy director for Oxfam Quebec.

Welcome to all of you.

By video conference from Edmonton from the Canadian Association of Petroleum Producers we have Ben Brunnen, who is the manager of fiscal and economic policy and Alex Ferguson, who is vice-president of policy and performance.

Welcome.

Again, thank you all very much for coming on relatively short notice. For presentations we will follow the order on the agenda today, starting with the Mining Association of Canada for up to seven minutes.

[Ben Chalmers, Vice-President, Sustainable Development, Mining Association of Canada]

Thank you very much, Mr. Chair, for the opportunity to speak before you on an issue that has been very important to the Mining Association.

For the last two years, we've spent an enormous amount of effort and resources in working with our partners here, Publish What You Pay, to design what we feel is an appropriate approach to implementing mandatory disclosure for payments to governments from extractive companies in Canada.

As you're aware, the resource revenue transparency working group published the framework that we feel played an enormous role in bringing us all to the point where we are today. We're able to discuss a piece of federal legislation to see that this is implemented and lives up to the Prime Minister's commitment that he made at the G-8.

By and large, we think that the act is very true to the recommendations that were made by the resource revenue transparency working group, and we support that. When we envisioned this, we first designed our recommendations to fit in with security regulation, and now we're discussing a piece of federal legislation.

There are a few areas that our framework didn't quite address in the same way that this act, under criminal law, addresses some of the issues. I specifically want to speak to a couple of areas, one being the way in which fines and penalties are addressed in the act, and then I want to talk quickly about the equivalency provision, if I have time.

When we envisioned this, it was under security regulation. Securities regulation is a venue that is very used to dealing with this kind of disclosure, and it has enforcement mechanisms that the industry is very comfortable in dealing with. We believe that the purpose of this act is about companies providing greater transparency around the legitimate payments that they make to communities, to help communities hold their governments to account for the best use of that revenue. As such, this is an opportunity for companies to help out in the accountability area.

We want to suggest some amendments to some of the ways in which the fines and penalties are dealt with. We prepared a note that we weren't able to get translated in time, so you don't have it in front of you today. I have English copies that I can share afterwards. We will get it translated as quickly as we can and provide it. However, I want to read through some of the changes that are most important to us to get them on the record, if you'll bear with me.

The first thing we want to do is under proposed section 24 of the extractive sector transparency measures act. There are a number of fines proposed for different offences related to the non-reporting, to reporting in error, and then organizing your payments to avoid reporting. We actually want to propose that these fines be increased. They're currently set at $250,000. For proposed subsections 1 and 3, the offences of non-reporting, and the section related to organizing payments to avoid reporting, we believe that these should be increased to a maximum of $1 million, and the reporting in error should be doubled, to $500,000.

Consequently, we are asking that the committee consider removing wording in the fourth proposed subsection, which states, “under this section is committed or continued on more than one day, it constitutes a separate offence for each day on which the offence is committed..”. We'd like to see that deleted. We'd like to see the following proposed section 25 related to personal liability to officers and directors deleted too.

The closest analogy we can come to in terms of the daily offence is that there's not a lot of precedent for disclosure obligations in criminal law. The government has drawn from safety and environmental regulations, which often have continuing harm every day that an offence is in process. This does not have that continuing harm. When you report an error or fail to report, the harm is done at the time the offence is committed. We don't believe the harm continues day after day, so we are suggesting that a one-time fine is appropriate here.

We draw a comparison to the Lobbying Act, which is also a transparency-related and disclosure-related legislation and doesn't contain similar provisions around daily offences.

We'd also like to add a third paragraph to proposed section 26, a paragraph (c) that would read “no person or entity is to be found guilty of the offence relating to a breach of section 9”—this is the section that requires entities to report on their payments—“if the payments reported by the person or entity are reasonably accurate in the context of the total amount paid by the person or entity to the applicable payee in a given reporting period”. This just sets a reasonableness test in terms of the accuracy of the reporting.

The way the legislation is written now, companies are obligated to report down to the dollar in terms of accuracy and to be accountable for that. There's a due diligence defence contained in the act, however, the typical due diligence process that a company would have in this area is around their audit practices. Company audit practices are calibrated to address a material level of significance and that is a very different level from what we're talking about here where you need to be accurate down to the dollar. So our typical audit practices are not equipped to provide that due diligence approach in this particular case.

The other area that we wanted to address is around the equivalency provision. When we first started working with Publish What You Pay, a foundational principle was a strong equivalency element that would allow companies to avoid duplicate reporting in different jurisdictions such as reporting the same data in Europe or under the Dodd-Frank Act in the U.S.

Our belief in the way proposed section 10 of this act is written is that it enables the minister to enact equivalency at the minister's discretion. It says the minister may determine that requirements of other jurisdictions are acceptable. We would like to see that amended to the minister “must determine”. There are some conditions contained in this clause so it's not an absolute obligation, but it would go a long way to giving us comfort that this regime will remain consistent with the global standard that is emerging around the reporting of payments.

The precedent for that we believe is found in CEAA 2012, the Canadian Environmental Assessment Act, where there's an equivalency provision that finds that at the request of a province that has a comparable environment assessment regime the minister must find equivalent.

I'm hoping that you will take those under consideration, and given the amount of work that we've put into this over the last two years and how we've contributed to being very constructive and getting Canada to a point that it can show leadership we hope that will carry some weight in causing you to consider our suggestions here today.

[The Chair, Conservative, Leon Benoit]

Thank you very much for your presentation.

We have an hour and a half for this section before we go in camera to discuss the letter that will be sent to the chair of the finance committee.

We have the second presenter today, Claire Woodside, director, from Publish What You Pay.

Go ahead with your presentation up to seven minutes, please.

[Claire Woodside, Director, Publish What You Pay Canada]

Thank you.

Good morning, members of Parliament. Thank you for the opportunity to participate in today's hearing.

Publish What You Pay Canada is part of an international coalition of more than 800 civil society organizations working to increase transparency and accountability in the resource sector. The disclosure of payments by mining, oil, and gas companies to government is critical in the global fight against corruption, as it allows citizens to hold their governments accountable for the revenues they receive from resource extraction.

Publish What You Pay Canada would like to commend the Canadian government and the Canadian mining industry for their leadership on this issue. The extractive sector transparency measures act is a welcome step forward in the global transparency movement.

Many key elements of the proposed legislation reflect the global standard and align very well with the EU transparency and accounting directives and section 1504 of the Dodd-Frank Act in the United States, which are two comparable pieces of legislation.

Mr. Chalmers raised several amendments that I hope we will have time to discuss during the question period. However, I would like to focus here on one critical aspect of the legislation that differs from the global standard. To address this concern, we are proposing an amendment detailed on page 1 of our formal submission, which I believe you have in front of you in French and English.

I would like to refer you to subclause 9(5) of the act. This specifies the form and manner of reporting and states that:

The Minister may specify...the way in which payments are to be organized or broken down in the report — including on a project basis....

There are three problems with the lack of clarity and specificity in this subclause. First, the lack of clarity in subclause 9(5) suggests that the form and manner of reporting is not a critical aspect of this legislation. This is untrue. It is critical that payments be reported on a disaggregated basis, broken down by the government to which the payment was made, the country in which that government is located, the payment category—such as royalties or bonus payments—and the project with which that payment is associated.

The purpose of the act, as stated in clause 6, is to deter and detect corruption. To achieve this purpose, the act relies upon citizens, parliamentarians, community groups, and journalists, using company reports. Without disaggregated, project-level disclosure, end users would be unable to conduct this oversight, thereby defeating the purpose of the act.

Second, the lack of clarity in subclause 9(5) is not in line with the legislation in other jurisdictions. In the United States, section 1504 of the Dodd-Frank Act, which passed into law in 2010, includes considerable detail regarding the form and manner of reporting, with a clear requirement that payments be reported on a disaggregated, project-level basis. Similarly, in 2013 the European Union passed two legal acts that unambiguously require disaggregated, project-level reporting. Please see pages 2 and 3 of our submission for excerpts of those acts.

In both the EU and the U.S., legislators specified that payments are to be reported on a disaggregated, project-level basis due to the clear recognition that this type of disclosure is essential for mandatory payment reporting laws to have an impact. If Canadian legislation is to be broadly aligned with other jurisdictions, as has been stated as a goal of the Government of Canada in the recently released CSR strategy, disaggregated, project-level reporting must be a mandatory requirement of the act.

Third, the lack of clarity in subclause 9(5) creates considerable uncertainty. Because the minister has the sole discretion to determine, and hence change, the form and manner of reporting, it would be relatively easy for changes to be made that dramatically impact company reports and availability of information. This uncertainty can make it challenging for companies to begin to prepare their internal systems and controls to collect, report, and provide assurance for the data included in their reports. It can also make it challenging for the end users of the information, who need to be able to view Canada's reporting standard as a reliable source of accurate, timely, consistent, and trustworthy information.

The Government of Canada has repeatedly clarified its intention to require disaggregated, project-level reporting. We heard this clearly at this committee hearing on Tuesday. We have also heard that the form and manner of reporting is best clarified through an administrative process that is at the discretion of the minister.

In this case, the flexibility and ministerial discretion in the legislation come at the expense of achieving the purpose of the act, aligning with international standards, and create uncertainty for companies and citizens. For Canada's payment disclosure law to positively impact resource governance and arm the fight against corruption with a critical new source of information, disaggregated payment disclosure is a must.

On page 1 of our submission we propose an amendment to proposed subsection 9(5) in the bill. This amendment will not remove the flexibility accorded to the minister, nor the need for an administrative guidance document. However, by adopting this amendment, committee members ensure that the legislation can achieve its purpose, that Canada's legislation is aligned with other jurisdictions, and that the legislation provides direction to the administrative process that will ensure a stable, consistent reporting standard.

With this amendment, the act will satisfy the needs of citizens, industry, and government, thereby ensuring that Canada will continue its global leadership on extractives transparency.

Thank you.

[The Chair, Conservative, Leon Benoit]

Thank you very much for your presentation.

Before I go to the next presenter, I want to point out that Pierre Gratton, the president and CEO of the Mining Association of Canada, is at the table with Mr. Chalmers.

We go now to Andrew Bauer-Gador, economic analyst with the Natural Resource Governance Institute.

Go ahead with your presentation, please.

[Andrew Bauer-Gador, Economic Analyst, Natural Resource Governance Institute]

Thank you, Mr. Chairman.

Good morning. Thank you for inviting me to speak today, Chairman and all the members of the committee.

By way of introduction, as Mr. Benoit said, I'm an economic analyst with the Natural Resource Governance Institute. I've been working with Publish What You Pay Canada, the Mining Association of Canada, and the Prospectors and Developers Association of Canada for the last few years on exactly this issue, payments transparency. My organization is a non-profit policy institute, working in over 30 countries on improving the management of oil, gas, and mineral resources. Previously I was with Finance Canada.

I'm here today to talk about division 28 of Bill C-43 and I'll be referring to the same handout Claire was referring to and will be highlighting one recommendation and two revisions that would align what's been proposed with EU and U.S. standards.

We strongly support Publish What You Pay Canada's call to include project-level reporting in the legislation. The U.S. and EU laws require disclosure of payments for each project. This is important for a few reasons.

First, in more than 30 countries, payments made on extractive projects determine fiscal transfers from the national to subnational governments. Local governments in Mongolia, Myanmar, the DRC, Ghana, the Philippines, and lndonesia each collect a share of oil, gas, or mineral revenues on their land, as prescribed by formulas. Project-level disclosure is essential for helping these local governments plan their budgets, but it can also mitigate violent conflict in resource-rich regions.

An example that I know quite well and I think is a good one is the Philippines. There, some mining communities are entitled to a minimum 1% royalty on the minerals extracted on their lands. Since they don't have access to this information, there's no way for them to determine whether they're receiving their 1%. As a result, communities usually don't receive their legally entitled benefits. The result has been that this has fuelled kidnapping, the destruction of mining company property, and a communist insurgency. The U.S. and EU laws are designed to address exactly this type of problem.

Second, knowing the payments companies are making at the project level can help investors in oil and mining companies determine the political and social risks. lnvestors managing over $5.8 trillion have written publicly that this information is critical to deter corruption and improve the overall business climate in the countries where they invest.

Both the U.S. and the EU clearly require project-level disclosure, and we recommend that Canada does the same.

I would also highlight two additional concerns that we have with the draft legislation.

Our first concern is that the current draft leaves open the possibility of exemptions from disclosure. Any exemptions would undermine the intent of the legislation, which is to improve governance in the places that need it most. I think we can all agree that we would not want to give tyrants veto power over Canadian lawmakers. The EU rules specifically rule out exemptions, and we encourage Canada to do the same. If you turn to page 3 of the joint submission from Publish What You Pay Canada and NRGI, you will see that section 23(1)(b) explicitly opens up the possibility of exemptions in possible future regulations. We recommend that this provision be removed.

Our second concern involves the public availability of information and format of disclosure. Under the current draft, there is no clear and unequivocal commitment to making the information public. Keeping this information secret defeats the purpose of the legislation. We're recommending that we remove section 23(1)(f) to ensure that no information is hidden from public view. Linked to this issue, for the law to be effective, all users must have access to it. The U.S. and EU rules require that the information be centrally provided and publicly available. Canada should align with this international standard. We agree with the Canadian mining industry that these rules serve Canada's interests well and as such the bill is welcome. But in order to achieve the stated goals, improvements are needed. A requirement to disclose information at the project level, and addressing concerns around exemptions and format of disclosure would align with the U.S. and EU standards and level the playing field globally.

Thank you.

[The Chair, Conservative, Leon Benoit]

Thank you very much for your presentation.

We go now to Lina Holguin, policy director, Oxfam-Québec and Oxfam Canada. Go ahead please with your presentation for up to seven minutes.

[Lina Holguin, Policy Director, Oxfam-Québec and Oxfam Canada, OXFAM]

Thank you.

Honourable members, thank you for inviting Oxfam to address you today. My name is Lina Holguin, and I work for both Oxfam-Québec and Oxfam Canada. We are members of a confederation of 70 organizations working in over 90 countries. We work with partner organizations to end the injustices that cause poverty.

Oxfam cares about this legislation that is in front of you today, because for 15 years we have been working with communities impacted by the mining sector, the extractive sector. We know that by keeping communities in the dark, not knowing how much the companies are paying to their local governments, it's keeping them from seeing the positive development outcomes. This is why we're here today.

Oxfam-Québec and Oxfam Canada are both members of Publish What You Pay, and we welcome the proposed extractive sector transparency measures act. However, the point I want to make here today is that for this act to be effective and deter corruption, it must require disaggregated, company-by-company, project-level payment disclosure. I'm asking you to seriously consider the amendments put forward by Publish What You Pay Canada today, which have the full support of Oxfam.

Here are four reasons why Oxfam considers disaggregated, project-level reporting to be critical.

First, communities must know how much each company is paying their governments for each mining or oil and gas project so that they can hold their governments to account for the responsible management and use of those scarce resources. Allow me to present you with the example of Peru. It is a priority country for Canadian foreign policy and mining investment. The district of San Marcos, where the Antamina mine is located, receives large royalty transfers from the national government. The Antamina project sponsors are said to have spent $314 million between 2007 and 2013 on infrastructure and social projects in the region. But poor communities in San Marcos are not seeing the results. The district has no hospitals, no water treatment plants, and no paved highways. Nearly one third of toddlers suffer from chronic malnutrition.

If citizens in San Marcos knew specifically how much this project generated each year in payments to the government, they would be able to demand investment in their community and determine whether the amounts of transfers to the local government were actually what was legally due.

Second, we all know that corruption is not inevitable. If citizens, parliaments, and oversight institutions were empowered with project-level information, prosecutions for corruption could proceed. The transparency would serve as a powerful and cost-effective deterrent to malfeasance.

Allow me to present a second example. This is Burkina Faso, the fourth-largest producer of gold in Africa. It also ranks among the ten poorest countries in the world. With the recent overthrow of the government, transparency around the lucrative mining industry will be crucial to contribute to stability in the country during this transition. Today the people of Burkina Faso are asking their parliament to double the country's contribution of mining revenues to communities. This contribution will pay for health, for education, for clean water.

Members of Parliament, by amending the act to specifically require project-level payment disclosure, you will demonstrate your commitment to ensuring that mining revenues are properly used to tackle poverty in countries like Burkina Faso.

Third, transparency at the project level is essential to prevent conflict with communities. Furthermore, in a recent study, the University of Queensland in Australia found that delays caused by conflict with project-affected communities can incur costs of roughly $20 million per week for larger mining projects.

Fourth, Canada should not be left behind. We can and should be a leader. Project reporting is explicitly required by the U.S. Dodd–Frank Act, and the EU transparency and accounting directive. This has maybe been mentioned by the industry and by my colleagues here. Also, it is required by the global standard of the Extractive Industries Transparency Initiative and by the World Bank. It is also considered a best practice by the International Monetary Fund.

Members, you have an historic opportunity to make a low-cost contribution to fighting corruption and improving the lives of thousands of communities around the world. Our legislation should clearly require disaggregated company-by-company project-level payment disclosure now. It will establish a practical tool to tackle corruption and improve governance in the extractive sector.

Thank you.

[The Chair, Conservative, Leon Benoit]

Thank you very much for your presentation.

We go now to Edmonton by video conference to the Canadian Association of Petroleum Producers. We have as witnesses Ben Brunnen, manager, fiscal and economic policy; and Alex Ferguson, vice-president of policy and performance.

Go ahead with your presentation for up to seven minutes.

[Ben Brunnen, Manager, Fiscal and Economic Policy, Canadian Association of Petroleum Producers]

Thank you, Mr. Chair and committee members, for the invitation to speak today on the proposed extractive sector transparency measures act.

As you know, CAPP represents companies large and small that develop and produce natural gas and crude oil throughout Canada, representing approximately 90% of Canada's natural gas and crude oil production.

CAPP commends the Government of Canada for its leadership in undertaking this initiative. Our members recognize the importance that this act will have in the fight against international corruption through enhanced disclosure of payments by companies doing business in Canada to all levels of government both domestically and abroad.

While our members are broadly supportive of this legislation and the potential role we can play, we are also cognizant of the need to ensure that this legislation is effective at achieving its outcomes while minimizing the administrative burden on business. In this regard we offer our commentary today based on three key principles.

The first is recognizing existing financial reporting practice and standards. Second is minimizing administrative burden while harmonizing with other jurisdictions. And the third is variations arising from competitiveness and conflict situations.

With respect to existing financial reporting practice and standards, perhaps the most substantial challenge confronting CAPP members relates to the issue of attestation under subclause 9(4). The proposed section, as currently worded, establishes a standard that is more stringent than any other major established forms of legislation on the issue of financial disclosure. By comparison, the certifications required by both the federal Income Tax Act and the Sarbanes–Oxley Act, which was introduced in response to the major corporate and accounting scandals of the early 2000s, both contemplate an element of reasonableness with respect to the attestation of the financial statements.

While there may be instances where an officer or director would be comfortable with the true, accurate, and complete language with respect to one entity that he or she is very familiar with such as a tax filing, where an officer is certifying with respect to many payments over $100,000 made by multiple entities around the world, the insertion of a knowledge and due diligence qualifier would be reasonable. This is especially important when considering the complexity of the payment categories contemplated in the act in combination with the potential penalties.

So to address this challenge CAPP recommends that subclause 9(4) be amended and the words “to the best of my knowledge and belief” be added to the end of the sentence.

Second, it's important to consider the impact of the proposed legislation on Canada's extractive sector. A core consideration in this regard is ensuring that the Canadian reporting framework aligns with established reporting frameworks in other jurisdictions. While the U.S. continues to develop its Dodd-Frank framework, the EU transparency directive and its imminent application in the U.K. is the most relevant precedent. The structure of the U.K. reporting framework is comparable to what Canada has proposed. CAPP recommends that the federal government develop an approach similar to that developed in the U.K., particularly as it pertains to the engagement of industry in the development of its industry guidance material.

Key considerations for our members include the definition of project and format of reporting, the identification and attribution of payments, whether reporting will be required for parent companies of reporting entities, and the process for determining substitutability or equivalency of other reporting frameworks. These are complex issues and it is important that the government work collaboratively with industry to achieve the policy objectives of the proposed legislation in the most effective and reasonable manner.

Finally, I'd like to speak to the issue of variations arising from competitiveness in conflict situations. Many contracts have confidentiality clauses and often foreign jurisdictions will legislate confidentiality agreements with respect to payments to government. Compliance with the proposed Canadian rules may therefore require some companies to break confidentiality provisions of contracts and will force them to choose between complying with the proposed act or complying with foreign legislation.

Another consideration is the potential disclosure of information under the act that may be commercially sensitive, at least on a temporary basis. The inability to recognize this consideration was the main focus of the successful legal challenge in the U.S. and is something Canada needs to consider. Other pieces of related Canadian legislation allow for exemptions. The most relevant example is the Canadian securities regulations, which enable a report issuer to report material changes on a confidential basis if such disclosure would be unduly detrimental to the interests of the issuer.

The proposed act contemplates this consideration by regulation and CAPP recommends that the government work with industry now to identify situations where variations to the standard reporting requirements will be warranted and develop a regulation that comes into force concurrently with the legislation.

Thank you very much for the opportunity to present today.

[The Chair, Conservative, Leon Benoit]

Thank you very much.

Again, thank you all for your presentations. They were very interesting and helpful.

We go now to questions and comments. In the seven-minute round, we have Ms. Crockatt, from the government side, followed by Ms. Duncan and Mr. Regan.

Ms. Crockatt, go ahead please, for up to seven minutes.

[Joan Crockatt, Conservative, Calgary Centre, AB]

Thank you very much.

Thank you to all of our witnesses who are here today speaking about this important piece of legislation. I was particularly interested to hear that there seems to be, sort of, agreement among all parties—even though you represent a broad range of organizations—that the thrust of the legislation is the correct one and that it does resolve a problem we all know, which can be corruption in other countries with how Canadian companies are involved with them when they're trying to do business there.

We're talking about some of the finer points of what you may or may not like to see, and I was interested in all of the suggestions that came forward. I wanted to talk to Ben Brunnen for a moment, to start.

I was interested in some of the things that we think may be solved by this piece of legislation and the difficulties for Canadian companies, which are very highly regarded in doing business in other countries, as a rule. But what do you think is the main thrust of what this kind of legislation would solve for them? Are they put in ethical dilemmas that this would help to make clearer?

[Ben Brunnen]

I think the key benefit of this legislation would be improved disclosure in foreign jurisdictions, frankly. Our assessment is from a domestic perspective. There is a pretty substantial level of accountability that already exists within Canada, at a municipal and provincial level and federally. However, the key opportunity here is improved disclosure from an international perspective.

[Alex Ferguson, Vice-President, Policy and Performance, Canadian Association of Petroleum Producers]

I will add to that, if I could. You're right to interpret that at least our sector, the oil and gas sector in Canada, has an outstanding reputation in terms of our contributions to the socio-economic fabric of Canada. We see some of the opportunities here domestically—to be able to bring that to the fore, in a little more structured way, among our membership—but balancing that with, certainly domestically, the need for some efficiency and effectiveness on what we're telling the people, because we have a pretty substantial fiscal footprint in Canada, much more so than our Canadian companies have outside of Canada.

[Joan Crockatt, Conservative, Calgary Centre, AB]

Maybe I'll come back to the efficiency and effectiveness in just a minute, but I wanted to ask Ben Chalmers the same question.

Can you tell us and give us a real-world example of what the problem is that some of our mining companies might be facing when they're doing business in other countries, which this will help to resolve, on the corruption point?

[Ben Chalmers]

Absolutely. Increasingly, as we look around the world at the challenges that our sector faces in terms of getting projects built and online, a lot of it has to do with social licence. One of the elements of that is that communities don't necessarily believe the benefits that our colleagues at CAPP talked about, when we tell them how much they're going to benefit from the presence of a mine. I think the example that Lina shared is very relevant. This is an opportunity for us to disclose the legitimate payments that we make to governments at all levels and allow the communities to begin to hold their governments to account for the responsible use of the financing, of the payments, to start to provide the benefits in the communities, so that they can realize the benefits associated with a mine in their area.

[Joan Crockatt, Conservative, Calgary Centre, AB]

Maybe I could just ask you to be even more specific, so the people do actually understand what the nub of the legislation is. Hypothetically, you make a payment to a local government official, in cash. Can you tell me, on the ground, how this would actually have happened in the past, and how this legislation would improve that in the future?

[Ben Chalmers]

This legislation covers all types of payments typical to government, whether they be royalty payments, tax payments, or whatnot. We track those payments; our companies track them; we know what we pay. We often, increasingly, are very transparent on our own to communities about what we pay, but the governments that are receiving them are not always transparent. This offers an opportunity, I think, to allow much more credible disclosure of these through legislation in Canada, so that this information is accurate, without question, and the communities can know exactly what we are paying in taxes and can make sure that those taxes are not only being received by the governments but being used for legitimate purposes like building schools, hospitals, infrastructure, and roads to help drive their economic well-being.

[Joan Crockatt, Conservative, Calgary Centre, AB]

Okay, thank you for that.

Now, maybe I could just come back to CAPP and talk about the efficiency and effectiveness. We, of course, want to ensure that we are lessening the ability for corrupt practices to go on, and our Canadian companies certainly support that. But you've talked about the administrative burden as well, and I wonder if either Ben or Alex Ferguson could address that issue regarding your concerns about the administrative burden and how you think this will promote the efficiency and effectiveness of disclosure.

[Ben Brunnen]

From our perspective the real key comes down to how this act will apply in practice, domestically in particular. We would want to be working quite closely with the government to establish parameters around how we would be disclosing our payments.

The industry we're in is very complex, so the types of payments are relatively comprehensive and the types of operations can be quite complex and differentiated. As a result of that, the construct or the direction of the legislation is good. The key for us will be that, on implementation, we would like to work quite closely with government to create a document that meets the reporting requirements [Technical Difficulty—Editor] our financial reporting structures in a manner that also achieves the objectives. We're a little bit more complex than the mining sector might be in this situation. From a domestic perspective particularly, we have a number of different operations and a number of different jurisdictions. The key really comes down to how we can do this in a way that's win-win.

[Joan Crockatt, Conservative, Calgary Centre, AB]

Thank you so much.