Mr. Speaker, I am pleased to speak today in support of the principle of Bill C-474. It would require Canadian mining, oil and gas corporations to submit annual transparency reports that disclose all payments provided by them or their subsidiaries to a foreign government for the purpose of furthering mining, oil or gas industry activities.
Under the bill, any corporation that fails to comply with this requirement is guilty of an offence and is liable to a fine of anywhere between $20,000 and $5 million.
This is essentially about ensuring that Canadian corporations are held accountable for any payments made for doing business abroad and that foreign governments can be held accountable, in the court of public opinion, for the money they receive.
In the late 1990s, a number of economists and observers focused on the resource curse phenomenon. They tried to understand the paradox of why two-thirds of the world's poorest people live in countries that are rich in natural resources.
For example, Jeffrey Sachs, Joseph Stiglitz, Terry Lynn Karl and Paul Collier, to name a few, noted that many countries with an abundance of natural resources, oil, gas and mines, were not realizing their full potential. There are a few exceptions, but many countries rich in energy resources are very corrupt and lack transparency.
These researchers noted that the revenues from extractive industries are often managed by a few elites, a small minority of individuals who control the country's resources.
The multinational companies that are competing for access to natural resources are often complicit in maintaining the rules established by these elites and help them to stay in power. They are reluctant to give information on their profits and the share they give to the elites. If people knew how much their government got from the extraction of their country's natural resources, it would be easier to monitor how that revenue is being spent.
The researchers I mentioned earlier proposed a series of complex and sometimes contradictory measures to ensure that local populations benefit as much as possible from natural resources. However, they all agreed that transparency is needed to put an end to what is called the resource curse.
The writings of these researchers resulted in an array of initiatives. Just think about the work that Oxfam and Human Rights Watch have done in this regard. There is also the initiative on the Caspian region's petrodollars and the Publish What You Pay campaign on the poor management of oil in Angola, led by George Soros' Revenue Watch Institute.
Then, in October 2002, at the world summit on sustainable development in Johannesburg, Tony Blair spoke about these campaigns by civil society. The next year, the extractive industries transparency initiative was born to ensure transparency of payments made and revenues generated by extractive industries and to make that information accessible to civil society and the general public, thereby promoting the proper use of these resources. For now, the standard is voluntary, but it is garnering more and more support.
Calls for greater transparency began just over a decade ago, and existing initiatives are part of a global trend fuelled by the global financial crisis and the need to manage the corporate world's conduct, particularly when it comes to fiscal agreements and the fight against corruption.
In 2012, the Securities and Exchange Commission in the United States introduced new rules under the Dodd-Frank Act requiring American companies to disclose payments made to a foreign government for mining, oil and gas development activities.
The European Parliament and many other democracies subsequently implemented similar rules. Unfortunately, Canada is lagging behind.
The question is, why target resource extraction companies? First, as I explained earlier, natural resource royalties are easier for corrupt governments to divert than fiscal revenues, which are overseen by a large number of public officials.
Second, according to Transparency International's 2011 Bribe Payers Index, oil and gas and mining companies rank fourth and fifth, respectively, as the most likely industries to pay bribes. Companies in the mining and oil and gas sectors are second and third most likely to engage in grand corruption targeting high-level public officials and politicians.
It remains to be seen whether the new disclosure requirements will affect Canadian companies' ability to compete with companies that are not required to disclose. Opponents to mandatory reporting, including the Conservative members of the House, have complained about the effect of releasing what they consider to be sensitive information to rivals, making competition one of the cornerstones of their arguments against implementing new standards.
However, since the United States and the European Union are pursuing mandatory disclosure, about 90% of the world's largest mining and oil companies will be covered, according to Transparency International. This includes companies such as U.S.-listed PetroChina, London-listed Russian company Rosneft, and Brazilian mining company Vale, also listed on a U.S. stock exchange.
Furthermore, most of the Canadian giants, like Barrick Gold, will have to comply with the American rules. It will be hard for them to argue that the Canadian rules cause them more problems than the American rules. Furthermore, the executive director of the Prospectors and Developers Association of Canada does not expect any new legislation to erode the competitive environment for Canadian firms abroad, given the large number of companies that will have to reveal payments:
The biggest problem is going to be setting up and adjusting to any new accounting system. The challenge is to develop a framework where resource companies don’t have to duplicate information for various jurisdictions.
However, beyond the issue of competition, I think Canadians expect Canadian companies to have impeccable business practices and to lead by example.
In June 2013, in London, the Prime Minister announced that the Government of Canada was establishing new mandatory reporting standards for Canadian extractive companies in order to increase transparency regarding the payments that these companies make to foreign governments.
I must say, I am somewhat skeptical, because this government is always reluctant to regulate private companies. The Conservatives prefer to champion self-regulation and deregulation. Let us not forget, for instance, how they axed environmental assessments to please the big oil companies.
The government has announced consultations with the industry and the provinces. I hope the government will open up those consultations to the public. How ironic it would be, to say the least, if those consultations on transparency were to take place behind closed doors.
In closing, I am pleased to support Bill C-474, which has three objectives: first, to ensure transparency around the payments made and revenues generated by the extractive industries; second, to make this information available to civil society and the general public; and third, to promote the proper use of this wealth. Some people will say that the bill does not go far enough, but at least it is a step in the right direction.
I urge all of my colleagues in the House to support this bill so that it can be studied in committee.