[Recorded by Electronic Apparatus]
Tuesday, November 28, 1995
.0918 
[English]
The Chairman: Order. We're pleased to have Mr. Gordon Smith with us, accompanied by officials from the department, to discuss departmental estimates and program priorities and expenditures. Mr. Smith has advised me that he intends to be very brief. Then we'll move right away to questions.
Without further ado...Mr. Smith.
Mr. Gordon Smith (Deputy Minister, Department of Foreign Affairs and International Trade): Thank you very much, Mr. Chairman. I apologize for keeping members of this committee. I thought I'd left enough time to make it here through the snow, but I was wrong. I do apologize.
The Chairman: You need some snowshoes over there on Sussex Drive, at the Pearson Building.
Mr. G. Smith: I have with me Marc Brault, who's responsible for export development policy. Perhaps we should have had our snowshoes on this morning and improved exports around the world, with the photographers catching this.
[Translation]
I am delighted to be here today and to have the opportunity to present to you for the first time the department's perspective as part of the program priorities and expenditures review process.
I am accompanied here today by Marc Brault, Assistant Deputy Minister, International Business Division, and Ron Halpin, Director General, Resource Planning and Management.
As outlined in the department's position on program priorities and expenditures, the department has undergone numerous reviews in recent years with regard to its foreign policy, its export market development programs and its role in the area of international academic and cultural relations.
In addition, there has been the government-wide program review. The new expenditures management system, which has been in effect since 1984-1985, has given rise to new responsibilities such as the need to establish departmental plans.
These reviews have also led to the development of specific foreign policy and international trade objectives.
There are three main objectives: prosperity and employment, the security and protection of our interests and the projection of Canadian values and culture outside Canada.
With respect to international trade, the achievement of these objectives will call for specific efforts to support small and medium-sized Canadian businesses in their efforts to develop new export markets.
In pursuing these objectives, we cannot forget Canada's relations with the United States. They are at the core of our foreign policy and go far beyond bilateral issues such as the resolution of disputes such as the one involving lumber.
Canada's relations with its southern neighbour have an impact on a whole range of global issues such as peace efforts in Bosnia and Canada's strategies within international organizations such as the World Trade Organization and the United Nations.
Canada-U.S. relations will play a fundamental role in the implementation and expansion of NAFTA.
In the context of the globalization of markets, these relations will also be front and centre in discussions on possible hemispheric free trade.
[English]
The globalization of business and communications and worldwide access to information have increased the pressures on Canada vis-à-vis its position in the world. The regionalization of economic and trade relations represents both challenges and opportunities for Canada. Canada has to find innovative ways to ensure Canadian businesses have access to these new and regional markets. In the interest of Canadians, small and medium-size enterprises must be taken into consideration. The government, in partnership with provincial and other levels of government, has a role to play in helping SMEs develop markets outside North America.
.0920
The Team Canada approach is an example of initiatives that will assist Canadian firms of all sizes to penetrate new markets and further develop existing ones. By hosting the 1997 APEX Summit, Canada will increase its profile as an Asia-Pacific country. This event will benefit Canadian companies and give a push to the small and medium-sized enterprises that are starting to seek business across the Pacific.
The international system and the world's nations are in continuous transition. The international trading and investment system must keep pace with this situation.
Priorities such as the consolidation of the WTO will ensure our interests are preserved. Canada is working hard to help countries like Russia and China in their transition toward economic and political systems that are in line with our global security and trade interests.
[Translation]
The current situation favours an increase in international activities. For example, increasing numbers of summits and international events require the Prime Minister's presence. The emergence of new countries and the global village is creating demand for an increased Canadian presence outside Canada.
[English]
There are many more reasons why demands on the Department of Foreign Affairs and International Trade are increasing, such as increased international instability, increased migration, the growing number of multilateral agreements and trade disputes, and the growing number of business and leisure travellers.
While demands and challenges in all aspects of international activities are increasing, the fiscal realities in Canada have forced the department and the government as a whole to reconsider their priorities and the way they operate.
This review has led to a series of budgetary reductions that have a direct impact on activities and operations. Over the period 1990-91 to 1997-98 the department will have contributed $250 million in permanent budgetary cuts toward deficit reduction efforts. The department's $1.2 billion reference level for 1997-98 reflects a 20% cut over its 1994-95 expenditures.
Only 55% of the department's budget is used for its own programs and operations. Cuts in the other 45% would entail withdrawal from some international organizations and have a direct impact on the overseas operations of other government departments.
At the present time, 52% of program personnel abroad belong to other government departments and 16% of the department's budget is spent on supporting the policies and programs of other government departments.
The department's program review objectives were met mainly by cutting administration and programs to the tune of $81 million. The introduction of cost-recovery for consular services and import/export permit fees will generate additional savings of $40 million.
In addition to the cuts mentioned earlier, the department has to deal with foreign inflation and a weak dollar. Inflation abroad and the weakness of the Canadian dollar increase our operating and program costs. They also raise the cost of membership in international organizations.
Despite these constraints the department managed to meet new demands. In line with its commitments, following the foreign policy review, the department reallocated its resources to create a global affairs and international culture branch.
The department, with other federal departments, provinces and the private sector, developed an international business strategy for Canada. This will increase the effectiveness of the trade program delivery. This initiative will also ensure that the department activities meet the modern needs of Canadian industry.
The department completed the installation of SIGNET, a desktop communications system that links Canadian embassies around the world to Ottawa headquarters. This new technology facilitates the exchange of information and dissemination of political reports and market intelligence. It also enables savings through the repatriation of other functions abroad.
In 1995-96 the department inaugurated eight new missions. This increased Canadian presence abroad means a greater exposure for Canada and more services for the Canadian public, including Canadian firms. These new missions will develop new relations and open up new markets for Canadian goods and services.
.0925
Canada's presence abroad is still modest when compared to the presence of other OECD countries. To contain its presence abroad while maintaining a high level of service, the department developed the following approaches: an increased use of locally engaged personnel in countries where security, values, and program effectiveness allow it; the use of technology to reduce administrative requirements, facilitate timely communications, and reduce costs; and a shift toward smaller missions, including mini-missions, that rely on a central hub for administrative support. When all missions are taken into account, 62% have less than five Foreign Affairs and International Trade staff.
[Translation]
By the year 2000, the department expects to see financial pressures in the order of $50 million, in addition to the cuts planned as part of the program review. The challenge facing the department and the government is to reconcile the numerous requests and priorities in the international area with their basic foreign policy objectives and the fiscal restraints they are facing.
[English]
In closing, Mr. Chairman, I would just repeat what the minister, Mr. Ouellet, said the last time he met with this committee. We welcome an opportunity to discuss with the committee your views on where our priorities should be going as we develop our own internal financial plans. I look forward to hearing questions and comments this morning.
Thank you very much.
The Chairman: Thank you very much, Mr. Smith.
Mr. Morrison.
Mr. Morrison (Swift Current - Maple Creek - Assiniboia): Mr. Smith, you have gone to some length describing to us the budgetary cutbacks in DFAIT. I have before me the supplementary estimates and I note that three votes, votes 1a, 5a, and 10a, call for increases of over $110 million in DFAIT's budget. I'm just wondering if you would like to give us a little bit of insight into why these new appropriations are being requested when you've been telling us about how you're cutting and slashing within the department.
Mr. G. Smith: I can, Mr. Chairman.
The first reason increases were necessary was our contribution to peacekeeping, particularly peacekeeping in the former Yugoslavia. Basically, what happens there is that the United Nations sends us a bill and we can't know in advance what that bill is going to be with any degree of certainty. Canada pays its bills, unlike some countries in the UN system, and within the way our own budgetary system works in the Government of Canada - requiring parliamentary appropriation - we therefore have to go back to Parliament to find the money for peacekeeping operations.
The second reason is - and again this happens on an annual basis - to compensate for foreign inflation, which is running well above Canadian inflation in most cases, and also to compensate for currency losses. As I say, this is something that has been done regularly in the past.
So for currency losses and peacekeeping, it's an arrangement by which our department - and other departments that operate abroad, I suppose - is compensated by Treasury Board for currency losses as a result of foreign exchange and for peacekeeping. If the Canadian dollar was going in the other direction, a certain amount of money would be taken back. It is therefore a mechanical formula that is applied.
Mr. Halpin, do you have anything to add to that?
Mr. Ron Halpin (Director General, Resource Planning and Management Secretariat, Department of Foreign Affairs and International Trade): No. The major component of the increase to the supplementary estimates was the Bosnian peacekeeping mission. Total peacekeeping, I believe, ran around $62 million in terms of the supplementary estimates.
Mr. Morrison: That covers vote 10a, which I believe is primarily directed toward peacekeeping, as you say.
What is 1a? I haven't been able to figure that out. I think I'm reasonably good at reading financial statements, but I can't make head nor tail out of this stuff. I'd like to know what 1a, the $45,497,000, is for.
.0930
Mr. G. Smith: This is precisely what I was describing to you earlier, which is the compensation for exchange rate losses and foreign inflation. It is simply a formula put in by the Treasury Board, and this is the way it is reflected in our estimates.
Let me be very clear. This does not in any way involve any additional activities, any additional employees, or any additional program spending. It is simply to compensate for the losses that would occur. It is, precisely, to ensure that the approved level of program activity can be maintained.
Mr. Morrison: Is there no way we could, even as in private overseas investment, foresee this sort of thing and make provision for it in your budget's contingency provisions when you first come before the House in February and March?
Mr. G. Smith: Well, an estimate is made of what foreign inflation will be, and it would be very difficult to make an estimate of what currency losses could be. This would involve the government estimating what would happen to the Canadian dollar over a period of fifteen to eighteen months, which I don't think could be done technically and probably could not be done politically. So exchange rate losses are impossible to forecast.
There is an attempt, though, to forecast differential inflation rates, which we sometimes get right. Sometimes nobody knows. But I repeat again, it is an arrangement where, if the amounts are less than forecast, the money is taken back from the department.
Mr. Morrison: Okay, I will wait for the next draft.
The Chairman: Before we go on, I just want to quickly follow up, so we are clear on that particular item.
You say that the $45,497,000 includes both the payment of $17 million to the UN for peacekeeping and the foreign exchange component?
Mr. G. Smith: Mr. Chairman, vote 10a is the peacekeeping.
The Chairman: Right, that's fine.
Mr. G. Smith: The peacekeeping is 10a. The other two, 1a and 5a, are to compensate for exchange rate fluctuation and higher inflation rates abroad.
The Chairman: I understand. But just on the exchange rate, to follow up on Mr. Morrison's point, $45 million over $800 million is looking pretty close to 8%. This is a large proportion. Shouldn't it be isolated out in some way indicating it is a foreign exchange risk component? It is a really big part of that number.
I presume the whole $799 million of the previous estimates wasn't for foreign exchange fluctuations. So you are burying this $45 million in $799 million. It seems to me to mix it in as part of the general operating expenditures is distorting it from your point of view. In a year like this it is difficult for you, but in some other years you might also get some big windfall gain. It might have been $45 million the other way that would have just kind of fallen in. Wouldn't that have been nice. I think it would be better if it were segregated out. Would you agree with that?
Mr. G. Smith: Generally, the reference levels for departments are set on September 1. So in fact they are set eighteen months before the end of the fiscal year to which they would apply, and what you are seeing here is the adjustment that occurs.
Now I understand what you are saying. It mixes together actual program expenditures with compensation for things effectively beyond our control, but basically what would happen is if the Canadian dollar shot up, our reference levels would then be reduced back and would be cut back in the fall. If the Canadian dollar shot up to 90¢, when the next reference levels were set for the department they would come down quite significantly.
.0935
Perhaps we can find a better way of portraying in the estimates - and I take this to be your point, Mr. Chairman - what the effects are of exchange rate losses and inflation. We certainly can try to do that with the Treasury Board.
Mr. Halpin, do you want to add to that? You're more expert in this detail than I am.
Mr. Halpin: Basically, the system is, sir, that on September 1 the Treasury Board requires us to set a level for the Canadian dollar, at which we will forecast our operating against all the currencies in the world.
This includes both the currencies we pay our assessed contributions in, the currencies we operate in at the foreign embassies. This is provided for in the annual resource level update in September and this is the figure we use. So by the time the budget year actually starts, the figure is already out of date and we are then moving towards recapturing some of these where we can during the supplementary estimates.
The Chairman: I understand what the problem is. You're operating in 180 different currencies and you have embassies with expenses all over the world. The Irish pound goes up or the French franc goes down, so the estimates for every one of those embassies is going up and down in relation to it. It must be an extraordinarily complex provision.
I'm not being critical, but I think it would be helpful, both to the department and maybe to the Canadian public, to understand better the difference between your real expenses and unforeseen or unforeseeable expenses that impact on the department. I think Mr. Smith put it very well. Obviously these get to be very big numbers if you're talking about hundreds of millions of dollars in peacekeeping fees, which will go up and down. Basically, it would be very significant.
Unless somebody else had a point on this, we could move on.
Mr. G. Smith: Mr. Chairman, we will endeavour to find a better way to portray those for this committee and for the paying public. I take your point that the way in which the estimates are now set up masks some of these important factors. They're different, obviously. There are peacekeeping and currency changes on the one hand and inflation on the other. But we will find a better way of bringing this to your attention.
The Chairman: Mr. Volpe.
Mr. Volpe (Eglinton - Lawrence): What was the average value of the dollar you submitted to Treasury Board for September 1?
Mr. Halpin: I don't remember the value we had on September 1, but we can check it and inform the committee through the clerk. I can't remember the exact total, but it was the value of the dollar on that day.
Mr. G. Smith: In other words, we wouldn't estimate where the dollar was going to go, and it would be done to the U.S. dollar. It would be at 73.5¢, and that's where it was. But, of course, while we haven't moved to the U.S. dollar, the U.S. dollar has generally fallen globally and therefore our dollar has also fallen in relation to most currencies.
Mr. Volpe: This exercise on the outlook documents was initially seen as something that would engage committees in a much more productive fashion. We were looking forward to having some of these documents, I guess initially some time around April.
Yours came in June. Are these just the first pains of growth, or do we anticipate getting a little closer to the target date so committees are a little bit better instructed?
Mr. G. Smith: I anticipate hitting the target date, not getting closer to it. I am sorry this one was late. We aren't the latest in the system, by a long stretch.
Mr. Volpe: No.
Mr. Smith: But we should be getting them in on time, and we will get them on time the next time.
Mr. Volpe: Just a couple of questions, more for an instructive purpose than for any other.
You have 180 points of reference, and you made reference to the political situation changing worldwide. I suppose the most noticeable one is the collapse of the former Republic of Yugoslavia, which presumably could result in having six or more points of reference in a country instead of one. There are more and more such situations around the world.
.0940
There must be a set of parameters established by the department for minimum staff requirements in new or emerging countries. Do you have that for us?
Mr. G. Smith: The other collapse, of course, was of an even bigger country, the former Soviet Union. With a bit of experimentation, we are endeavouring to see how small a mission we can establish in the capitals of these newly emerging countries.
I've also talked about this to my British and French colleagues, because we're all facing the same kind of problem. The general view is that to have one Canadian in an office is a problem because he might get sick or go on holidays, and once you are established you can't really close the office. So I think we are concluding the minimum size is two.
The French don't think two is enough and if you're going to be somewhere it's not worthwhile unless you have six people there. We're not as large a country as France, and if we took that approach we would have to come out of a number of places we are in now.
We are developing ways of operating, which I think might interest you, that are really pretty bare bones. For example, in Zagreb, which I have personally visited in the last year, our mission operates out of a couple of hotel rooms in Hotel Esplanade, if I recall correctly. There are two Canada-based officers there. There is no Canada-based support staff at all, which means, in terms of our secure communication, staff has to unlock it and make it work. There is also a supplementary communications system with Canada. This is a minimal operation.
One of the challenges we face - and it's important for this committee to be aware of it - is as soon as we open in a place like Zagreb, where we are there principally because of our peacekeeping operations, because a large number of people from Croatia have settled in this country there is a demand for consular services and trade promotion, which is sometimes not easy for us to cope with. In other words, there are those in the department who feel it's a mistake to open in too many places because you create a level of demand you can't meet with just two people in a particular post. This is a dilemma I am happy to share with you this morning.
The other thing we are looking at is trying to reduce the amount of administrative burden on these small posts, or the amount of reporting back to Ottawa they have to do of a routine and often administrative character. We are also looking at a hub and spoke system, where certain services are consolidated in one place - a larger capital normally - and smaller missions don't have all the administrative services you would find in a normal embassy.
There are a variety of things we are looking at doing. We have greatly cut back our biggest embassies, and I guess the most obvious well-known example is London. We are two-thirds the size we were at the peak and maybe even less. We are cutting back a lot of the middle-sized posts. We are opening more posts that are very small, but there is a concern that if one goes too far in that direction we will just end up increasing the demands that are placed on us and not having the capacity to respond to them.
.0945
Mr. Volpe: On the trade side of those missions, what criteria do you have for keeping a presence in places like Zagreb and many other European posts, when it seems our policies for international trade are currently driven by the market demands and market explosions in both North America and the Orient?
Mr. G. Smith: I would just say one word and then ask Mr. Brault to follow up.
In the last year or so, as part of the program review, we have been reducing the level of trade promotion in the United States. That's obviously not because we think the United States isn't a good market. It's by far our best market, and the growth in the United States is of the greatest conceivable importance. It is out of a feeling that because we don't have adequate resources to do everything, businessmen are most likely to be able to make it on their own in the United States.
We have also been reducing the level of support in Europe for similar reasons. It is quite a well-developed market that is difficult to penetrate if you are not already present. In other words, we don't want to lose market share in Europe, but it's hard to increase.
We have been making increases instead in the Asia-Pacific region and Latin America where there are rapid growth rates. We feel there is more opportunity there for significant increases in participation as the markets grow, and we can really establish significant market share in an easier way than in an established market such as Europe.
[Translation]
Marc, do you want to add anything?
[English]
Mr. Marc Brault (Assistant Deputy Minister, International Business Division, and Chief Trade Commissioner, Department of Foreign Affairs and International Trade): I would just like to add that our resource locations abroad on the trade side are based mostly on extensive consultations with the private sector through Canada's international business strategy system, and also through the sector advisory groups that have been set up by the Minister of International Trade, as well as the industry advisory committees.
Someone was here before explaining how Canada's international business strategies are being developed in a Team Canada approach. Sector teams from all across Canada, which include private sector firms but mostly associations, will determine what we should be doing all over the world. In addition, when all these international business strategies are developed, we will try to focus on priority sectors and priority countries. This will be done jointly with the provinces, federal government agencies, departments and the private sector.
For the time being it is being done to some extent through these international business strategies, but also through very extensive consultations with the private sector.
The Chairman: Mr. English.
Mr. English (Kitchener): I have a report from Treasury Board on personnel for 1994-95, and it actually shows the number of Canadians working outside the country for the federal government increased during 1994-95. In fact, it was the only category that increased, except for prison guards.
We checked with Treasury Board to determine why this was the case. I don't know whether you have the same numbers, but the answer was that it was because of increased trade promotion. I was wondering if you could comment on that, and also why, in your outlook here, the numbers of people abroad are not given in very great detail.
Mr. G. Smith: We can certainly provide the number of people in as much detail as you would like. I am looking to see if I have before me the number of personnel abroad over time because I am not sure -
.0950
Mr. English: It could be just a blip in the pattern for 1994-95. That's what they seem to indicate. I thought it interesting that it's the one area that did go up, and I'm surprised to see the figure.
Mr. G. Smith: In fact, the number of Foreign Affairs people abroad is going down. The number of people abroad from other government departments has gone up. I suspect the numbers that you have include immigration officers abroad. That figure has gone up very significantly not only in terms of immigrants and immigrant processing, but in terms of visas. If you put a visa system in place for a country, you have to get a certain number of Canadians out there. The number of Department of Foreign Affairs and International Trade people has in fact gone down.
I find a lot of people don't realize that if you look at the program personnel abroad, we have 1,720 FTEs - as you probably know, that's what they're measured in, whereas it used to be person years - in the Department of Foreign Affairs and International Trade, while there are 1,842 from other government departments. Immigration has increased significantly. In that total, 1,250 are in Immigration.
CIDA has in fact cut back, although CIDA has other ways of managing their programs abroad. The Department of National Defence has cut back. Some other government departments, like Agriculture, are increasing a little, and some are decreasing, like Revenue Canada. I would want to check, but to the best of my knowledge the number of people in the Department of Foreign Affairs and International Trade abroad has been going down year by year, over the last five or six years.
Mr. English: Of your people abroad, the International Trade percentage has been increasing, I presume, and others have been decreasing.
Mr. G. Smith: Yes, the increase is on that side. That's correct. We're trying to reduce the number of people in administration, and we have. We've taken out the communicators abroad. To take one particular example, we reduced administration abroad and there has been a slight decrease - I'm sorry but I don't have the figures - in the number of people doing political reporting abroad.
Mr. English: I have one other question. I'm working on a study of the outlook statements of the various departments. I'm surprised to see how much of a difference there is among the various departments. The Department of National Defence, for example, has an outlook statement about three or four times the size of your department, and other departments are shorter, etc. Has there been any consultation among the deputy ministers on what an outlook statement is?
Mr. G. Smith: The consultation we had resulted in a direction to us that we should each do whatever we thought was appropriate in our sector. I think you will generally find in the system that there is much less of an attempt to centralize, that each department should do what it thinks is appropriate. We consulted with the Minister of Foreign Affairs and International Trade, and he obviously approved our outlook statement.
I would be very interested in the comments of the committee, as I'm sure Mr. Ouellet would, about where you think ours could be improved, and about what else you'd like to see and what you don't need to see.
Mr. English: That's fine. Thank you very much.
Mr. G. Smith: If I may, Mr. Chairman, I can provide this table to the committee if it is of interest. To give you a sense of the overall balance of people we have abroad, this is the Department of Foreign Affairs and International Trade list of program personnel abroad. We have 832 in trade; 193 in economic relations, which is obviously very close to trade; 276 in political relations; 224 in communications and culture; and 195 in consular.
You can see there that people doing trade and economic work outnumber those doing political work by over 4:1. I wanted to cite that because I find there is generally a misunderstanding of what our people are doing abroad. There is a feeling that people are reporting what you could read in the newspapers. We are in fact doing relatively little political reporting if you look at these numbers. The bulk of the work we are doing abroad is trade and economic work.
The Chairman: Thank you.
.0955
Mr. Volpe: Could I follow up on that, if you don't mind?
The Chairman: I'm sure Mr. Morrison won't mind, if it follows on. I had a quick one on that, too, but go ahead.
Mr. Volpe: Thanks for those figures, by the way. You've re-animated the question in my mind that Mr. English asked a moment ago, and that relates to whether there's interdepartmental cooperation on this.
I noticed that you used the word ``decentralization'', but I wondered whether there was in fact cooperation among all of those departments that have postings overseas or whether in fact there was a need to have representatives from those departments.
Secondly, you mentioned that businessmen are probably better able to handle the more mature markets without government assistance, but that the government has a role in emerging markets and different marketplaces. From what our committee has learned so far, much of the government's service to businesses is predicated essentially on two things: first, a correct political analysis of the environment in which business will be done, because of the obvious consequences on the finances of the business venture, and second, market intelligence.
You've given us numbers here. There are 832 trade officers and 193 economic relations officers posted abroad. I want to know, first, how many of those are in mature markets and, second, is the quality of the service provided by that component of DFAIT diminished by the diminution of your political relations and consular services officers?
The second question is how many of those businesses really need the kinds of services that those offices can provide if what the department is doing now is essentially coming up to the same speed that businesses that are export-ready are doing, and that is getting most of their market intelligence via Internet and similar computerized information dissemination systems?
I hope that's not too unfair or too long.
Mr. G. Smith: No. Let me do my best to reply to both parts of the question, but I'll askMr. Brault to add to what you said.
The first question, if I may say so, is an excellent question. It is one we are looking at very closely and we are doing that interdepartmentally. As I said earlier, over time what you see is that the proportion of personnel abroad from the Department of Foreign Affairs and International Trade is declining and that of other government departments abroad is increasing. We have been asked to work interdepartmentally. I've been asked to lead that process of asking, is this the kind of overall representation we want abroad? It's a good question.
As I said, if you look at the representation of other government departments abroad, you find that the great bulk of it is immigration. The Immigration representation abroad is in direct relationship to our immigration policies, the people we want to attract to this country, and the process that we have of reviewing the applications. In essence, this is controlled by another department and that department tells us how many people it needs in a particular location. If there are to be changes in that system or in their representation abroad, they are changes that they determine in the Department of Citizenship and Immigration. So that's the biggest component abroad.
With respect to CIDA, there the numbers of those abroad have varied over the years, but essentially they are now doing a lot of the project administration outside of the public service system, if I can put it that way. They have created offices - and I'm trying to think of the name of them -
Mr. Brault: Field support units.
Mr. G. Smith: - field support units - and you can ask Huguette Labelle about that - which are on top of the CIDA officers abroad. Again, it is a system they have devised for management of their program abroad and it gives us certain accommodation needs that come out of this in the end process, as does immigration.
The other big group abroad is DND. DND is, in many areas - such as London and Washington - very significantly reducing. In other words, precisely because of the enormous changes that are taking place in the world, they think it's useful, and we think it's useful, for them to have somebody abroad.
.1000
They probably have their representation abroad, I think it's fair to say, done in the most carefully calibrated way with us, but on the whole in terms of the others, we are left with their decisions as to what they need abroad and we have to provide the physical accommodation and the administration to support them. It's not necessarily an ideal system, but it's the way this present system works.
With respect to other government departments abroad, it may well be that they conclude that when they look at their total departmental resources - I'm thinking here of Agriculture as one recent example, and agricultural exports are very important - they would like to have more abroad. They have the money to do that and they have - in fact with our agreement - put people abroad, but they have more money obviously to send people abroad than we have. We're pulling back the representation abroad.
So there are real questions here, which I don't deny for a second, about the total balance of representation abroad.
Regrettably, I didn't bring them with me - maybe Mr. Brault did - but we have these figures on where the trade representation is abroad. We can certainly give you that sector by sector. Marc Brault may well have that.
Before turning the floor over to him, I would make one comment on the trade side about which he is more expert than I. Not only, I might add, is he the assistant deputy minister responsible for trade promotion in the area, but he's just come from a post in South Africa. This is a country that is obviously undergoing enormous change and where all sorts of opportunities are provided.
As it happens, last week I was in one of our newest missions in Shanghai. Shanghai has to be seen to be believed; 20% of the world's construction cranes are in that one city. It's unbelievable.
There we have a small Canadian office. I met Canadian businessmen, as well as meeting our people. You see that there are enormous opportunities in the Chinese market. That's just evident by looking out your hotel window and by walking down the streets. But any Canadian business, particularly small and medium-sized businesses, which is very much what the priority is on the trade side, has to go into that market with some considerable care. The legal system is far from established. More broadly than the legal system, the environment in which one makes investments has an element of unpredictability about it.
Quite apart from questions about the political stability in China, there are major issues there that anybody who is contemplating going into business in Shanghai and the surrounding area where there's rapid growth really needs our advice.
Increasingly there are people who are establishing themselves in the consulting business and, as a matter of fact, some of those whom I met were Canadians. But it's in a market like that, which has enormous uncertainty and great potential, where it seems to me we can be of particular value in providing advice to Canadian businessmen.
I would ask Mr. Brault to give you a more detailed answer on the second part of your question.
Mr. Brault: In fact, when you talk about providing information about the political situation in a country and also market information - including what you can get on the Internet - I have to make a distinction.
We say market information is something that is available freely or at a cost, but the private sector can supply it. Internet has a good volume of that kind of information.
More and more, we're concentrating on the intelligence of what the company needs to sign a contract and to develop a relationship in a very focused way. So it is information that is not readily available.
Bearing that in mind, our posts abroad and the trade commissions - but not only trade commissioners, heads of missions, political officers...everybody is more and more involved in the trade aspect, including CIDA officials.
We do provide quite a bit of market information, which is general information on the country, which we publish and pass on to whoever needs it.
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What we do more is to help the Canadian exporters getting into the market, with appointments, with suggestions for local partners and with guidance on how to do business in that market.
We pass on a lot of inquiries. We have them posted abroad. If companies abroad are looking for manufacturers of glasses or whatever, we pass this on to Canadian firms. We have all kinds of indexes and catalogues to lead us to the firms.
As part of Team Trade Canada we recently got all of the government departments together and we've just created the International Business Opportunities Centre, where if somebody wants to locate a Canadian manufacturer of product X and we can't find this product X in our catalogues because nobody has ever contacted us with this kind of product, we have a team in Foreign Affairs we send these inquiries to.
These people literally get on the phone until they find one, two or three firms who are not only producing but who are also interested in exporting. Very often you'll find that a firm producing a product is not interested in exporting because it's already totally busy meeting orders.
We pass on a lot of inquiries, and we also provide a lot of intelligence about what is going on in that sector. Who has the money? When will the money be spent? What is the budget? Who is the competition? What is the competition bringing? We spend more and more time on this kind of intelligence, very often at the request of Canadian firms or businesses, generally at the request of associations, including provincial governments.
We also have, especially in the U.S. posts, a lot of new exporters because we have a program called the New Exporters to Border States, where, here in Canada through Industry Canada and the regional agencies, we have training to bring small companies along to be ready to export. The first step has to take them somewhere, so we literally put them on a bus and take them to border states. Our posts are very involved in developing programs for these companies and spending time with them while they're getting their feet wet in the market.
As you know, there are a lot of trade fairs and missions all over the world and we sponsor Canadian participation at many of them. Our posts are very involved in getting and organizing Canadian delegations for these fairs and missions, and it's not only for missions per se, but in addition.... For example, the deputy minister was talking about South Africa. We'd have a lot of missions. We'd go for three or four days and we would always suggest that they spend another one, two or three days there, because why shouldn't they follow up right away on whatever they got during that mission? We would get very busy during the mission, setting up further appointments, individual one-on-one appointments, for all of these companies on the mission. We're very involved in that.
I could go on. Helping Canadian firms find credit and business information on companies.... If you are being introduced or if somebody tells you that company X wants your product, you want some kind of information on this company. Is it a big company? Is it a small, fly-by-night operator? Will they pay their bill? Don't they pay their bill? The banks will contact us, asking for all kinds of credit information. We do this kind of thing.
We also help with problems, all kinds of problems, issues and all that, some not solved, not created by us, some acts of God, others created by Canada and others created by the importers. We're problem solvers. We spend an inordinate amount of time solving problems. It's not necessarily because you're a small exporter or a big exporter. It just happens. That's international business. It is difficult and you very often need help on the spot.
Finally, on what I mentioned earlier, I just want to mention market conditions. Again, in South Africa the tariffs are extremely high and non-tariff barriers are also very difficult. We did quite a bit of promotion in getting companies into joint ventures with South Africa, thereby bypassing customs and the non-tariff barriers. You send the components and have the product assembled locally. Therefore, as I say, your products come in different ways, like developing new products here, passing them on and just getting a royalty back.
We're also slowly using South Africa as a bridge to go to southern Africa. South Africans are exporting about 60% of what Africa buys. They know how to get there and how to get paid, so it's very helpful for us to get together. In the past two years there have probably been between 40 and50 Canadian firms that have established joint ventures in South Africa in order to do business in South Africa and in the surrounding countries.
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So as I say there's quite a bit being done in addition to the market information. Of course, where you put your resources depends very much on where the activity is, Mr. Chair.
The Chairman: Thank you very much.
Mr. Morrison.
Mr. Morrison: Mr. Smith, before I get to my question I want to comment on something you said with respect to the new missions you'll be establishing in the new countries in transition in Europe. You stated that each one would have a minimum of two officers, but no ``expat'' clerical staff. That concerns me very much.
This idea of having foreign nationals working as secretaries, this type of thing, in large numbers is something that.... Even the old Soviet Union people, who may not have understood a lot, sure understood that. They even brought their cooks in from overseas for their missions.
It seems to me that if you're going to have a mission it has to be tight. It is false economy not to bring in Canadian staff. If you're going to cut back, I can think of areas you could cut back on, such as your staffing and the benefits, the travel, the education, the housing and so on, and then you could have more warm bodies. I wish you would think about it. That's just a comment.
I have a question respecting the new, emerging countries, the countries in transition, as you call them. According to Treasury Board, foreign aid to that particular group of countries, former Warsaw Pact countries, former Soviet Union countries, is going to be more than doubling. They're talking about an increase of $105 million according to a press release Treasury Board put out here three or four weeks ago.
I wonder how this is compatible with the official development assistance mandate that was stated on February 7 of this year. It says the purpose of Canada's ODA is:
- ...to support sustainable development in developing countries, in order to reduce poverty and to
contribute to a more secure, equitable and prosperous world.
Why are we pouring large amounts of money into these countries? Are we in effect bribing the governments of these countries in transition to do business with us by giving them aid? I find this very hard to understand, and if my interpretation is right I find it a little objectionable. Would you like to comment on that?
Mr. G. Smith: I would, Mr. Chairman, respond first to Mr. Morrison's first point. I cited an example of Zagreb, but I did not mean that it is a model we are using generally. In fact, it's the exception. Generally, we do exactly what you have said. We have some Canada-based support, both administrative and clerical-secretarial, for exactly the reasons you have indicated.
If I may say so, the truth is that you are right in your observation that loyalty to Canada is of fundamental importance. You can never be 100% sure about anyone who isn't a Canadian. I accept that. Over time we are certainly reducing the number of Canadian support staff and that's largely cost driven. I accept that it can be a false economy. We try not to do it where we think it would be a false economy. For example, on the trade programs, the immigration program, and on our administration, you in fact can get locals to do a lot of that. It always has to be under the supervision of a Canadian.
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So that's the first point. I share your concerns, and I think if I showed you post by post you would not have them. Zagreb is really the exception that has no Canadian-based support.
The Chairman: I'd like to move on to the second point and follow up on Mr. Morrison's question.
Talking to various posts where I've been, the suggestion has been that the new communications system you've put in place enables that very process of cutting out support staff. In other words, the average foreign service officer now types directly into their computer post and it goes straight to you in Ottawa, and you're cutting out a lot of what was former support staff in terms of secretarial and things like that. Is that a correct impression, and if so, how satisfied are you with the way that system is working?
I understand there are security problems with it, and while it may be flattening out the department and making it more accessible in some respects, it's also making it more awkward in others.
Is that all right, Mr. Morrison, if I ask that? It seems to follow.
Mr. G. Smith: I'll come to Mr. Morrison's second question, the question you asked.
Your impression is entirely accurate, Mr. Chairman. In the days when I joined the foreign service thirty years ago, I dictated my telegram to a secretary and that secretary typed it and took it down to the communications centre. A communicator would then send it off and there would be a clerk who would keep a file copy of it. In fact, what the technology permits now for unclassified material worldwide - for classified material we're not quite there yet but we're close - is that the officer himself types his material, he sends it, and we're not quite here yet but ultimately it will be electronically stored. With the present technology - and anybody who uses an e-mail system would be able to identify with this - all those three functions can be performed by the officer and his machine.
As I say, we're not fully there yet on the classified system, nor are we fully there yet in terms of data storage, but we're getting there.
We are taking the savings, for example, from the reduction in communicators abroad, some $35 million, and putting that into the further development of the technology. That would be my answer, Mr. Chairman.
With respect to your question, Mr. Morrison, I should be clear that the assistance to the countries of central and eastern Europe used to be a program in my department. The reason it originally was put in the Department of Foreign Affairs and International Trade rather than CIDA was because it was regarded to be fundamentally different, for essentially the reasons you've indicated, from normal development assistance. The reason the Government of Canada at the time decided we should be putting money into central and eastern Europe was essentially for strategic and security reasons.
Here were countries that had thrown off the shackles of a communist system, that were breaking free of the Soviet Union. We wanted to do everything to encourage economic development, but we also wanted to do everything to encourage the development of democratic systems in those countries. So we've been providing assistance in terms of the holding of elections, the development of a free press, the regulation of radio and television systems, all those things that are the apparatus of a functioning democracy.
The assistance we're providing is partly of that character and partly that when Canadian companies come to us saying, here is an opportunity I'd like to exploit in the Czech Republic, we have some money we could devote to that purpose.
As I say, that was regarded as something that was fundamentally related to the opportunities that were provided by the end of the Cold War and ensuring that those countries became functioning democracies and functioning market economies, a window of opportunity to be seized.
The decision was taken as part of the program review last year that despite the fact that the objectives of this program are quite different from the objectives for the traditional development assistance area, the reality was that CIDA knew more about running programs - and it was in that kind of business - than we did. The entire program was transferred from the Department of Foreign Affairs and International Trade to CIDA, all the while, of course, under the authority of the Minister of Foreign Affairs, Mr. Ouellet.
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To the best of my knowledge, there has been no increase in the amount of that money. The amount of that money has remained the same after the transfer took place. I'm no longer responsible for it so I do not have that information with me this morning, but I am quite sure that the amounts devoted to assistance to central and eastern European countries have not changed over the last couple of years.
The Chairman: Mrs. Labelle is coming next, so we'll ask her about that.
Mr. Morrison: It was more the policy end of it that I was concerned with when I askedMr. Smith, because I didn't realize that as deputy he doesn't have a hand on CIDA. You have another deputy who....
Mr. G. Smith: Well, CIDA has a separate president who's a deputy head in the Canadian government system, but clearly development assistance is a part of foreign policy. So CIDA is an executing agency, I would say, but has its own deputy minister-level head, Mrs. Huguette Labelle.
There is close coordination between the departments, and in terms of the overall setting of policy, for example, as I've just described with respect to the central and eastern European countries, or with respect to the developing world, yes, we have views on those subjects. We talk to CIDA.Mrs. Labelle and I have a committee that I chair with Mr. Kilpatrick, the deputy minister of trade, to ensure full coordination amongst these various agencies.
Mr. Morrison: So then in regard to this press release from Treasury Board, you would dispute that because they said that CIDA is getting an additional $105 million to help these transitional countries.
Mr. G. Smith: It may be the way it's worded. It's the money that's being transferred to us from them. It's not additional money. There is no new money being put into those countries. It may be that CIDA is getting certain moneys that we had, but the overall moneys that the Government of Canada is spending on those countries is not increasing. In other words, I think it's a transfer of responsibility that is occurring. I would suggest you take this up in more detail with Mrs. Labelle.
But I would underline that the purposes here - and I take the responsibility for this - in terms of providing assistance to the central and eastern European countries and to the countries that were a part of the former Soviet Union are very much a very high foreign policy interest to us. We don't see it in competition or in conflict with development assistance. We see it as an additional foreign policy priority occasioned by the end of the Cold War, the collapse of the Soviet Union, the collapse of Moscow's control over central and eastern Europe.
Mr. Morrison: Would you accept my inference then that in a sense we're paying tribute?
Mr. G. Smith: Not at all. We have spent billions of dollars on defence in Canada and hundreds of billions of dollars in the west to deal with a threat we saw coming from the Soviet Union, a communist system, and the Warsaw Pact as a military alliance.
To our great astonishment, that threat disappeared. It collapsed; it imploded. But you see in Moscow, if you look at the forecast for the next election in Russia, it is the former communists - or people who are still calling themselves communists - that as a political party, in a very fragmented political system, are leading the votes.
I would suggest, Mr. Chairman, that in Russia and in the other countries of the former Soviet Union, some of which are very important to us, like the Ukraine, the Baltic republics, countries like the Czech Republic, Poland, Hungary - I'm citing, I think, the key ones here but not the only ones - it is vitally in our security interest that these countries evolve as democracies, evolve as market economies, both for political and economic reasons.
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So I regard the putting of the investment there as the defence dividend, in some respects, that we are getting by being able to cut defence expenditures, as we have in this country. Some of the money that we might have otherwise had to spend in terms of having troops in Europe, which we did for forty years, we should be spending in terms of ensuring that these countries remain on the correct path.
The Chairman: Mr. Lastewka.
Mr. Lastewka (St. Catharines): Thank you, Mr. Chairman.
I have a couple of questions I'd like to get some information on. You mentioned here today,Mr. Smith, that there are many government departments that work in Foreign Affairs or work outside of Canada. I've listed at least nine other departments that I've been involved with in one way or another and that are engaged in this kind of work. My question to you is, how do you get your hand around all these departments to make sure we are utilizing the total dollars being spent outside of Canada for the best return?
Mr. G. Smith: Again, Mr. Chairman, if I may make an editorial comment, that's an excellent question.
It's a real challenge to us. The world we're living in is one in which the importance of national borders is obviously now much lower. An important element of virtually all departments deals with the rest of the world. We've done a calculation that shows that outside the Department of Foreign Affairs and International Trade - if I'm correct here, Ron - 5,000 people spend more than half their time dealing with international questions. So there are more Canadians outside the Department of Foreign Affairs who are involved on international questions - essentially economic and trade questions - than there are inside, and that's just in Ottawa. As a matter of fact, in a certain sense we're outnumbered two to one in Ottawa.
I'm sure you've seen this in terms of your own experience. I've quoted Immigration as a huge, very obvious one, but the reality is that departments like Agriculture and Finance now have people abroad.
Coordination of this is critical. We have one big advantage that is working well. For the last25 years, it has been clearly established that the head of a post is the manager of that entire post and is responsible not just to the Department of Foreign Affairs, but for the total operations of the Government of Canada in that particular post. That ensures pretty good coordination in the post, but we have to work interdepartmentally here - and we are doing that - at improving our coordination amongst departments. Within our own family, if I may put it that way, of Foreign Affairs, International Trade and CIDA, it works quite well. With the other government departments, we are now looking at steps that will increase our capacity to work together to make sure we are all pulling in the same direction.
As I was saying earlier, I think in answer to Mr. Volpe's question, we are also looking at our oversees representation abroad. We're portraying it the way it is now - and I've given you some of those numbers this morning. What we then have to do, because I don't have any authority and Mr. Ouellet doesn't have any authority over the other government departments, is portray this by asking if this is the kind of representation abroad that makes the most sense. To a certain extent, what we have here is a situation that is growing and changing rapidly, but not necessarily as part of a central plan. Here we're also working very closely with the Privy Council Office, which ultimately is in the central position in the whole system.
To show how important the activities of other government departments are - it's certainly been the most striking one in my period as deputy minister of foreign affairs and international trade - one example is Fisheries and Oceans and the great fish prices of 1995. A decision was made - and don't misunderstand me here, because it was the correct decision - to exert our jurisdiction beyond the 200-mile limit in order to protect the turbot stocks. This had huge international ramifications. I don't think it's any great secret that it involved some back-and-forth between my department and the Department of Fisheries and Oceans. We work these things out.
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The way in which the system works within government, of course, is that ultimately these questions are decided by cabinet at the ministerial level. At the official level there is a coordination that's provided by the Privy Council Office, and that involves what on a day-to-day basis worked out some of these issues as they arose, which they inevitably did, between Fisheries and ourselves in the management of that particular crisis.
It's a good question and it's one I would be happy to come back to. I don't pretend that we have found all the answers to the problems of fully coordinating and ensuring that the resources are best allocated and that policy is managed in a completely coherent way amongst the departments. I don't think we have a major problem there, but clearly we have to work harder to bring it all together.
Mr. Lastewka: Mr. Chairman, this question is something I've been thinking about for a long while. I did have some conversation with the minister on this, and I knew you were doing some work on it. I would like to have Mr. Smith come back at a later date. In fact, I think this committee, in one of its documents, needs to document very clearly that it's a global situation we're working in. It's not whether we should or shouldn't be; it's how we're going to do it, and how we're going to do it effectively with the best return on the dollar from every sector.
So often we can be doing things in countries, and I've always wanted to understand how it was being coordinated. In a recent trip from abroad I did run into a situation where two people were working in the same area in different departments, and it would have been nice if they knew these projects were going on. They could have reinforced each other because they are Canadian. I would appreciate something in the future to deal with how we're putting our global interaction amongst all departments together.
Mr. G. Smith: I might just add two points to that. Of course, Mr. Brault has reminded me of the use of the Team Canada approach, and that is a very important one where we do bring together the interests of a variety of government departments. Those have been big successes. I've just come back from India and I think we're well prepared to have a visit there of great importance, again where we are coordinating interdepartmentally.
I would add something else, if I may, Mr. Chairman. I've mentioned this to you before and I hope I'm not out of order in doing this. You as members of Parliament, both in the House and in the Senate, have a very important part to play as well, in my judgment. I certainly observed this when I was ambassador to the European Union, where the links - and Mr. Volpe was aware of them - with the European Parliament were terribly important on issues like the fur question, where we've bought another year, which I would venture to say is about the best we could possibly have done. There the ties are very important.
This is also true of the United States, where, as we all know only too well, there is enormous power in the U.S. Congress on foreign policy questions. The pressures that come from Congress on something like the softwood lumber issue are really of critical importance.
In my judgment, Team Canada has to involve Parliament as well. A final example I would cite from my experience a decade ago, when I was ambassador to NATO, concerns the designation of Goose Bay as a NATO low-level training site, where I was asked to brief the parliamentary committee that was going to a North Atlantic Assembly meeting. I must say I was delighted at the non-partisan attitude and the combined approach of Canadian members of Parliament, who really divided up the people they knew in the assembly and picked people off. We got a resolution that came out of the North Atlantic Assembly.
My department welcomes all opportunities to work with this committee and to work with various parliamentary delegations to ensure that we pull together. I really want to underline the importance of the role you and your colleagues can play in helping us achieve our goals. Thank you.
The Chairman: We'll try to pass that message on to Mr. Gagliano.
Mr. Lastewka: Mr. English has something to add before I get to my second question.
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Mr. English: I strongly support you in your task of trying to bring it all together. This isn't such a new task. I recall talking to your predecessor, Mr. Gottlieb, 25 years ago, and his telling me how he was going to bring everything together, because all parts of government were wandering around doing quite different things. He tried to, as you well know, and with some success, with the central agency concept.
But on such things as that, if we take the Honourable Doug Peters, who is the Secretary of State for International Financial Institutions, he told me recently the only meeting he attends is the EBRD. The finance minister attends IMF and World Bank, and Mr. Ouellet attends the other development banks, or Mrs. Stewart, as his designate. Isn't that an example of the Canadian presence abroad being broken up into different parts? We've been to the IMF and World Bank and they talk about the other development banks. Lots of people talk about the EBRD.
About ministerial responsibility, I would think most people would think Mr. Peters is responsible for these things. But in fact it's divided, it seems to me, among three or four individuals attending the different meetings.
Mr. G. Smith: As far as I am aware, the governors of the banks are indeed either the Minister of Finance or the Minister of Foreign Affairs. Far be it from me to comment on how the Prime Minister chooses to assign responsibilities amongst his ministers for activities of that kind.
All I would say to you, Mr. English, is that while there is a different designation between Finance and Mr. Ouellet, in fact really quite a high degree of cooperation occurs at the officials level. Although Mr. Ouellet has not, to the best of my knowledge, ever been to any of the banks of which he is a governor, one of the alternate governors, normally a CIDA official - and again, you could ask this question of Ms Labelle - attends.
As for the EBRD, I am the alternate governor. So a cross-hatching occurs.
During the summit, as you're aware, we made certain decisions about the international financial institutions. In earlier testimony before this committee I indicated how we were following up on that work.
The interdepartmental coordination in that area, in my judgment, really works quite well. Although it may look a little messy and hard to explain, the fact is that it works fairly well.
But the overall allocation of responsibilities is the Prime Minister's. Far be it for me to comment on the way in which it is now actually done.
The Chairman: Mr. Lastewka, you had another question, but could I interrupt to ask a follow-up on your principal first question? Mr. Smith has shown an engaging ability to answer the questions rapidly, even when they are long.
To follow on Mr. Lastewka's point, one of the problems we have as a committee...and maybe the outlook document is not as helpful in this respect as it might be. I appreciate that this is the first year of outlook documents, so I don't say that as criticism, I say it as something such that hopefully we can work toward getting a better understanding of the overall impact of what we're trying to do.
Take something in a narrow area such as peacekeeping. You're expending moneys through the UN. My understanding is that some of the budget for the peacekeeping operations is also launched in DND. There will be headquarters expenses in DND that are going to be attributed to peacekeeping activities. We have Mounties located both in Haiti and in the former Yugoslavia. That's going to be in the Solicitor General's department. So even in an area as directly involved as that, we're into being scattered all over the place.
My problem is both Mr. Lastewka's, which is that it's very difficult for us to get an understanding on the overall expenditures of Canada in the foreign policy area when, as you say, we have Fisheries officials doing this.... I can recall in my days when I was teaching...I remember talking to people in the fisheries department who did nothing but negotiate international agreements, who went to the Law of the Sea convention. So you had fisheries people on the payroll of Fisheries who were really foreign service negotiators, in some respects.
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Is there any hope of our being able to pull all that together, even if it is not the responsibility of your department...at least pull it together so this committee and our members can say, oh, well, we were going to expend this much money on that; we have to realize there are these related expenses that are going on?
Mr. G. Smith: I must say, Mr. Chairman, my reaction to that is it makes a lot of sense. For example, in peacekeeping we pay an assessment from the UN just to straighten the money out. What DND pays is the soldiers' salaries, the fuel, and everything else. The money, while it all comes out of the Consolidated Revenue Fund...there's no relationship. We don't then transfer money back to DND to compensate them for their troops abroad.
For example, if you're looking at what we spend on the United Nations, we spend some money in assessed contributions, because that's the way the system works; CIDA spends some money in contributions, for example, to the UNDP. Moneys are spent by the Department of National Defence.
I would take this on advisement to make sure I don't make a commitment I can't live up to, because I do want, as I said to Mr. Volpe, to get a report in on time next year, but I don't see any reason why we couldn't take certain areas of that kind and indicate to you in our outlook document what the total expenditures are elsewhere in the government. We may not always have them down to the last cent, but we could at least do them looking backwards. You could get a better ballpark idea of how much we as a government are spending on peacekeeping, how much we as a government are spending on the United Nations, even if they don't all directly relate to our own estimates. Again, that might better inform the Canadian public about where their tax dollar is going.
The Chairman: I agree.
Mr. Lastewka: My other question was this. We've had a lot of discussion with SMEs over the last couple of months. Is the amount of turnover and movement of people in Foreign Affairs and Trade - specifically Trade...are we continuing with our movement of people, or have we slowed down? Where are we in moving people from consulates and the foreign affairs departments and points of service?
Mr. G. Smith: We are slowing it down, because we are well aware, as you've said, Mr. Lastewka - and it's truer in certain areas than in others. Certainly it's very true in the Asian markets. You really need people there for a period of time, and we are extending postings. We are lengthening postings. We're asking people if they want to stay longer, and on the whole, if they do, we don't argue.
On the other hand, if for family reasons people want to get out.... I come back to my example of Shanghai. It's not an easy place to live. It's an impossible place to live with children. I don't think any of our staff in Shanghai have children, actually. You can't really tell people they have to spend four years there. But most of them will spend three.
It also is a fact in places like that that the benefits - which I know often come under criticism - provided under the foreign service directives for travel make a big difference. One officer I recall...his wife and children are all back in Vancouver, because he basically made the decision that he just would not expose his teenage children to living in Shanghai. I don't think we can force employees to do that kind of thing.
I think we can lengthen postings. We are trying to do that. We're encouraging people to stay longer. I agree with you it makes a real difference. But we have to look at that in the light of the benefits provided.
Mr. Brault: Two other factors. First, we try to ensure our trade people don't all leave the post in the same year. If you have two trade officers at Post X, you try to stagger them so there is continuity.
But the big element of continuity is locally engaged commercial officers, and we have more and more of the commercial officers in, for example, Africa, because of the demand. Because of the way this kind of information is being asked for, we felt we get a lot more bang for the buck by recruiting locally, engaging officers locally, and training them as we train our own trade commissioners. We're involved in a very extensive program that will provide further continuity, while at the same time making certain that the commercial officer is attuned to Canadian demands, Canadian requests, by bringing them to Canada to see what Canada is, what our companies are and do, and the way we think about and do business.
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Mr. Lastewka: The reason I ask this question is that locally we had the same problem with bankers. They moved people around too often, and large corporations did the same thing, and they finally slowed it down a bit and took a more systematic approach.
I've not been a critic of the benefits for our foreign service, knowing full well what they have to go through, as your example illustrates. But I do have a concern that we are moving them around at a higher rate, especially during this time of transition when everything is going global. I think there is a need for caution there.
Thank you, Mr. Chairman.
The Chairman: Thank you, Mr. Lastewka.
Mr. Flis.
Mr. Flis (Parkdale - High Park): I hope the committee would allow me to raise a point or two in the outlook document, under consular services. I congratulate the department for recovering a lot of costs through the user-fee concept. I think taxpayers will be pleased with this. But I don't see anything under consular services, or anywhere in the outlook document, on the costs of processing visas to Canada. I imagine it would be under Citizenship and Immigration, but it's still a Foreign Affairs and International Trade issue.
The Department of Citizenship and Immigration has tried to reduce costs by centralizing visa processing. A Bulgarian wanting to come to Canada gets a visa processed through London. Someone in the former Yugoslavia gets a visa processed through Vienna. I'm wondering if we are really saving by centralizing the visa processing in expensive, high-cost-of-living cities - if I can call them that. Is it cheaper to have a consulate in Prague or in Bratislava, where accommodation is very cheap and secretarial help is very cheap? What we've done is centralized everything in Vienna. Well, we know the costs of accommodation, meals, etc., in Vienna, so are we really saving? Are we going in the right direction?
Another way of saving the visa processing costs would be to eliminate the need for visas. Surely to God, with the Cold War over and with the travel as it is.... I have had many Europeans, both from European and former Soviet Union countries, tell me they can travel all over the world without a visa, and especially around Europe, but they can't come to Canada. Some of those have visas exempted for travel back and forth to the U.S., but Canada seems to have its old Cold War hat on with this stiff, strict requirement for visas to come to Canada. I'm wondering whether or not you and your counterpart in Citizenship and Immigration have discussed this. Are we making any headway?
Mr. G. Smith: It really is a question that you should address to Peter Harder, the deputy minister there for at least another few days, Mr. Flis. These are decisions that he has made or that his department has made and, again, we're informed of the result. They certainly have calculated the costs and have concluded that the centralization that they have done, and where they have done it, is the cheapest way to do it. But I have not seen those calculations myself.
I am well aware of the difficulty of getting visas. When you have to send your passport off to some other city, it is real and is a source of friction. I've heard that, just as you have. We're very conscious of it. From the point of view of our department, both in terms of foreign relations and on the trade side, we are also constantly urging Immigration to look at whether or not there really is a need for visas with respect to one country or another. Clearly you are right. If there are no visas, it certainly facilitates travel and business.
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I think, though I can't speak for the immigration department, if Mr. Harder was here today, he might dispute the assertion it is a legacy of the Cold War. I think he would be more inclined to say that in some countries, they don't really have adequate means for controlling who gets passports, or the passports are of poor quality and can be easily forged.
Therefore, if you don't have visas, you cannot be sure who is entering our country. Again, because of the legal system we have in this country, once people get in, even if they are in the country illegally, it is very hard to get them out.
I would invite you to bring Mr. Harder here to testify before you. But I think the pretty rigorous visa system we have, relative to other countries, is a function of the fact that once we get people in the country who aren't who they say they are, we can't get them out, or it is exceedingly expensive to get them out and it takes a long time.
Again, it is one of these other areas where you know there are a number of different departments involved, but we are dealing here with the charter, which makes it even more complicated. I think if you want to proceed in this area, you really should get the deputy minister of immigration in front of the committee.
The Chair: Mr. Morrison and then Mr. Volpe.
Mr. Morrison: I would just like to follow up on Mr. Flis' question. I agree that because of our rather peculiar domestic situation we cannot do away with visas. But can you not do away with them on a country-by-country basis? We could make reciprocal arrangements with France, for example, and say we don't give you visas, you don't give us visas, we just travel back and forth. Why can it not be done this way instead of saying everybody needs a visa?
My second question is, why on earth did they institute this centralized processing system? I've never had a visa in my life that wasn't issued right on the spot where I went into a consulate office and applied for it. Why do we do this?
Mr. G. Smith: Well, on the first question, Mr. Morrison, Australia requires a visa for everybody to come into Australia. We don't. We only require visas in a limited number of cases. We do basically what you suggest. We don't require a visa from somebody coming from France.
Mr. Morrison: I require one to get into France.
Mr. G. Smith: Well, I don't think so.
Mr. Morrison: The last time I was there I got held up in Orly because I didn't have a visa.
The Chairman: It must be personally directed at you.
Mr. Morrison: They wouldn't let me land. I had to land in Rotterdam.
Mr. G. Smith: The Spanish put a visa requirement on us for a little while. They put a visa requirement on us to penalize us for what we did to the Estai. But I would think that in more than half of the countries in the world, we don't need the visas to go to, but people don't need visas to come to Canada.
For example, we still require a visa from Poland because we are not satisfied with their passport issuing system.
If my memory is correct, we think the Czech Republic right next door have their act together. We are satisfied with their documentation, so we don't require a visa there.
With Chile we did require visas. We don't now. It is being looked at. There is some question about the Chilean passport issue system. So these countries kind of go in and out of the regime.
The Chairman: Second question. There is a decentralization of the system -
Mr. G. Smith: The centralization question again, as I said to Mr. Flis, you have to pose to the deputy minister of immigration. We were not involved in those decisions. Like you, when I have visas here they are issued by the local embassy in town. But that department is being quite severely cut back in the program review. There were further cuts announced about two weeks ago. They have made the calculation that they save money by centralizing it. But again, we are not consulted on how they make those calculations. We are informed of the result.
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The Chairman: Mr. Volpe, and then Mr. Smith has to go right at 11 a.m. sharp because he has a plane to catch.
Mr. Volpe: I'll let him go right away. Regrettably, my question really follows up onMr. Morrison's and Mr. Flis', although with a slight difference.
I would imagine the problems associated with granting visas to facilitate movement of people for business or for tourism must be predicated on a political assessment. So it takes me back to a question I asked you earlier on in your presentation. What degree of interdepartmental consultation goes into making a decision?
For example, in western Europe there's only one country to which and with which we don't have this visa-free relationship. Specifically, this country is Portugal. The assessment there is essentially what you've said. It is travel documents. The passport is not secure. It is also because of the relationship with Macau, an easy passport to acquire given the transition Macau will undergo, much like Hong Kong. So we could find ourselves with immigrants we might not have scheduled ourselves for.
At what point does a department like Immigration, but not necessarily exclusively Immigration, make the decisions for some of the political assessments your department will implement through our embassies? Or does it work the other way around? Does Immigration get its information for its policies from your field officers?
Mr. G. Smith: As best as I can answer that question, we frequently ask Immigration whether a visa is really necessary, because it is impeding travel or business opportunities or it makes it difficult for families. That is often how we go to that department.
We do, on the other hand, have a security function in our department. Indeed, Mr. Halpin was responsible for it up until recently. We do want to make sure intelligence officers and spies don't come into the country. We have an interest in that.
On the other hand, so does CSIS. There is a relationship between CSIS and Immigration to try to weed out those people who quite deliberately try to get into this country with improper documentation to do things they ought not to do.
So there is a relationship there both with us and with CSIS. As I say, I think the broader question you should ask the deputy minister of immigration is the concerns they have about the adequacy of travel documents. Macau is a good example.
When I was in Hong Kong and Beijing, we were talking about the documentation the Hong Kong special administrative region will have in 1997. The Chinese authorities are promising they will carefully control who gets the passport. From what we've seen so far, it looks like it will be a good passport. In other words, it will be difficult to forge.
For obvious reasons, we would like to have visa-free entry with the Hong Kong special administrative region after 1997. But we're making it very clear we will only have visa-free entry if we are fully satisfied there is adequate control of the people who are coming.
There is an interdepartmental consultation that takes place. But I do stress the ultimate determination here is made by the Minister of Citizenship and Immigration.
Mr. Volpe: Thank you.
The Chairman: You said one time, Mr. Smith, that Canadian passports were one of the easiest to forge and get. Is that no longer true?
Mr. G. Smith: That is no longer true. Mr. Halpin, in his previous capacity, may want to comment on this. But I think we now have a first-class passport and it is very difficult to forge.
Do you want to comment on this, Ron, from your previous expertise?
Mr. Halpin: In general, it is fair to say Canada is one of the leaders in the world at making secure documents, and the passports are a very good example.
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The Chairman: Thank you. I think you'd agree with me, though, that this is a change from ten or fifteen years ago.
To give you some unsolicited advice, Mr. Smith, if there are spies out there who ask for a visa and they want to get in, I wouldn't deny them one. Let them in. They're the ones we can at least watch. It's the ones we don't know are spies who are going to be the important ones.
Anyway, that's the way you run the department.
I would like to thank you very much for coming before us today. It was very helpful. We look forward to working with you on the outlook document for next year. This is a very good exercise for all of us and we appreciate the time you've put into it. We hope that year by year we can improve it and make it a meaningful exercise. Thank you very much for coming.
Mr. G. Smith: Thank you, Mr. Chairman. That's our objective as well. We will do our best to reflect the comments I've heard this morning. I think it can make for a better document next year and we'll get it in on time. Thank you.
The Chairman: Thank you.
Members of the committee, before we take a short break before Ms Labelle comes before us, you have before you the eighth report of the subcommittee on agenda and procedure. It was distributed some weeks ago. I'd ask if someone would move to approve it, unless anybody has any objections to any of the items on it. They are all items that we've discussed regularly. I would like to get it approved.
Mr. Lastewka: In item 5, I notice that in trade it's all agricultural items.
The Chairman: Yes.
Mr. Lastewka: You had listed agricultural and industry. Aren't there some outstanding issues on steel that we wanted to get some clarification on?
The Chairman: For some subsequent meeting that might be appropriate. You'll recall that this grew out of Mr. MacLaren's attendance before the committee and the desire of members to follow up the particular case on the agricultural tariffs that are coming up before the binational panel. That's why this is exclusively restricted to agriculture.
You're quite right. We do have to look at the whole concept of a sectoral study into the steel industry or something like that another time. Thank you.
Any other observations?
Mr. English will then move for approval, seconded by Mr. Morrison.
Motion agreed to
The Chairman: We'll take a five-minute break and then we'll have Madame Labelle.
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.1109
The Chairman: Before I begin with Madame Labelle, members, I draw your attention to the fact that we completed the supplementary estimates for the department before we passed on to the CIDA supplementary estimates, and we would therefore provide that votes 1a, 5a, 10a, 16a and 20a under Foreign Affairs and International Trade be referred to the Standing Committee on Foreign Affairs and International Trade.
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That was the order of reference that was being read into the record for this meeting.
[Translation]
Ms Labelle, you have been officially introduced. Thank you for coming back before our committee. I believe you have a few remarks to make, after which we will turn immediately to questions. Thank you very much.
Ms Huguette Labelle (President, Canadian International Development Agency): Thank you for your invitation.
I would like to introduce the staff who are with me today. They are Al Smith, Director General, Eastern Europe and Former Soviet Union Programs, Claudia Roberts, Director General, Finance Branch, and John Robinson, whom you already know, since he has come before this committee on a number of occasions.
[English]
Briefly, the supplementary estimates do two things. Perhaps I should precede my comments by saying this is not additional money. The supplementary estimates are requesting transfers of funds in two sectors. The first sector is to push forward from 1994-95 to 1995-96 the allowable amount from our operating budget, which we succeeded in saving in order to help us deal with the staff reduction in 1995-96. So we don't have to go back to Treasury Board and ask for funds; we were able to reduce our expenditures for that purpose.
The second area, as our minister indicated in the government's foreign policy, is the transfer of the expenditures for central and eastern Europe, the former Soviet Union, from Foreign Affairs to CIDA. You will remember that this program was established in 1989 and has been ongoing since the original idea, which was that for two to three years this part of the world would require some support for its transition.
It hasn't quite worked like that, as we know from everyday evidence of the difficulties that transition has had. When our minister and the government saw that this was becoming much more closely related to our day-to-day programming in CIDA, they felt it would be easier to put it under our roof for its management. The program is one geographic program. It is kept as such, and the funds that are before you in the supplementary estimates are to transfer the budget that was already in Foreign Affairs to CIDA for that purpose.
[Translation]
This group includes countries that are recognized by the OECD as being pure developing countries and a certain number of countries that have already requested that status. The OECD is currently reviewing their requests. Lastly, you have Russia, the Ukraine and Poland, which with per capita GNPs of $1,800, $1,900 and $2,000 respectively, are countries in great difficulty.
[English]
Mr. Chairman, we will be pleased to deal with the major areas of substance or any questions members might have, either on the supplementary or on the substance of the program.
The Chairman: Thank you very much.
Mr. Morrison.
Mr. Morrison: Madame Labelle, you have stated that none of the money requested in the supplementaries would be new money, that this is only a lateral transfer. That's clear enough on the operating budget, the $94,515,000 that was transferred over from DFAIT. That is actually shown as a transfer on page 11 of the supplementary estimates. But on that same page vote 16a does state new appropriation for operating of $12,124,000, and vote 20a states new appropriation of $98,375,000. ``New'' to me means new money. If this is not indeed new money, why isn't it shown as a transfer? If it is a transfer, where is it transferred from?
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Ms Labelle: As you stated, the $94 million is rather clear. These are funds that are already within CIDA's operating budget prior to the transfer of a CEE. The $12 million is made up of two parts: the $5.5 million, which we are moving from 1994-95 to 1995-96, and the CEE operating part of their budget, which is $6.6 million.
When you're looking at that line across, that's straight operation. It has nothing to do with grants and contributions. CIDA's current operating budget is $94 million minus employee benefits, which are not calculated, as you know. The $12 million is the $5 million from last year to this year in CIDA's operating budget plus -
Mr. Morrison: That's the carry-over, which basically is not budgeted for. That's money that was essentially saved.
Ms Labelle: Exactly. So the $12 million is that carry-over plus the $6.6 million from the operating budget for central and eastern Europe, the former Soviet Union, which was transferred from Foreign Affairs to us. That's what these three numbers mean.
You asked why this is new. I think that was the sense of your question. What happened is that our main estimates had already been submitted, and I believe plates were prepared, by the time this decision was made. Therefore, in order for Parliament to be able to see what was happening, it was felt that it would be easier to have what is being called vote 16a. In that sense it's a temporary new vote to allow for the transition year because of the timing when this decision was made, because the estimates had already been sent forward to Treasury Board at that time.
Mr. Morrison: Can you just tell me again how much of that $12 million then was carry-over from the last fiscal year?
Ms Labelle: It was $5.4 million from within CIDA's regular past budget.
The Chairman: Why isn't the $6 million considered a transfer, since you say it was a transfer?
Ms Labelle: It was a transfer.
The Chairman: It was a transfer but you're calling it new anyway.
Ms Labelle: It was a transfer; that's what it was. It's financial specialist's language as per estimates language, but it is a transfer.
Mr Morrison: But however you cut it, Madame Labelle, you are looking at a 13% increase over what Parliament approved when the budget was voted.
Ms Labelle: What we are looking at is the transfer from Foreign Affairs, so it's a straight transfer from one department to another, plus the carry-over from last year. This is what makes up the bulk of that number.
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The Chairman: If I may follow up on Mr. Morrison's question, if it's a transfer out of Foreign Affairs, this amount would have been approved when we approved the Foreign Affairs budget. That's what you're telling me.
Ms Labelle: Yes.
The Chairman: Now it's going over to yours.
Ms Labelle: Yes.
The Chairman: Are you telling us the Foreign Affairs budget will have been reduced by that amount?
Ms Labelle: Yes; not on this one, but it has the effect of doing that in their own.
When we both submitted our estimates, CEE grants, contributions, and operating were in Foreign Affairs...and we did not. This is meant to correct that. But it is transfers.
Mr. Morrison: Let's talk about that second line, the increase in grants and contributions, which is a 6.7% increase over the budget that was presented in Parliament. I would expect there are some items under grants and contributions that have actually decreased. At least I would hope there were some. Your overall increase, then, has to be fairly substantial in certain areas.
There's no indication to me that the $98 million is a lateral transfer. If it is, what was it appropriated for previously? Where was that money going to be spent? According to Treasury Board, that $98 million, plus a little more, is dedicated to the countries in transition. But if you say that's not new money, where exactly did it come from? What was it going to be spent on?
Ms Labelle: CIDA's budget, as you know, was reduced by 15% between 1994-95 and 1995-96. That part of what used to be the Foreign Affairs budget...the CEE was also reduced by 15% in the main estimates that were tabled for 1995-96. But when we look at that next line, the $1.47 billion is CIDA's grants and contributions as reduced for 1995-96. The $98 million is the CEE grants and contributions budget as reduced for 1995-96. It was in Foreign Affairs and was transferred to us for its management on April 1.
Again, your $98 million is taking those funds that were in the Department of Foreign Affairs, as submitted in their main estimates in February...and transferred to us. So their budget is now less that amount of money and ours would reflect it.
Mr. Morrison: Where would we find that in these documents? I don't see any indication of a reduction except in the operating expenses. That is shown, but I don't see anywhere where that $98,375,000 is taken off DFAIT.
Ms Labelle: You will see the impact of it. That has the effect of doing this.
Mr. Morrison: As for that $98 million, am I correct in assuming this is money Treasury Board referred to when they issued their press release saying another $105 million was going to be spent on the countries in transition? Is that what this $98 million actually is?
Ms Labelle: That's exactly it. It is the $98 million, plus the operating money which now you see on the upper line, the $6.6 million.
The Chairman: That is ``estimatespeak'', in a rather Orwellian sense.
Mr. Volpe: Mr. Chairman, a point of order. That explanation does occur on page 46 of the supplementary estimates.
The Chairman: Thank you.
Mr. Lastewka.
Mr. Lastewka: I didn't want to get into the accounting changes. That's what I consider just an accounting change. I want to know about the progress in the transition and the benefits as a result of the transfer.
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Ms Labelle: The staff has been located, as of June, and the necessary budget personnel work has been pretty much completed. So for all intents and purposes, the transfer of staff and activities has been done.
The advantage is that we're able to use a number of CIDA's systems to deal with grants and contributions without expanding those central systems, and have them available for central and eastern Europe. We also have been able to provide some of the outside suppliers of services, the people we work with on a day-to-day basis, with a little more congruence when doing business with us. They had to go to two places before, and I think the majority will find it easier to be under the same roof in terms of the overall aspect.
CIDA also has some professional expertise in a number of the areas. We are doing a lot of work in energy and energy safety right now in some of these countries of the world, as an example of being able to support the program.
These are the sorts of things so far, but as you know this is still very young. The program has only been with us in a real way since about June of this year, so we are dealing with less than half a year.
Mr. Lastewka: Do you see future benefits, as everything gets settled in, that you could share with us? I am looking at it from the standpoint that we've moved so many millions of dollars over and we're trying to utilize systems and so forth. By rights, we should be getting more for our dollar once everything has settled in.
Ms Labelle: Yes, I think there are a number of things. One of the objectives I have had in CIDA is to reduce the overhead. We don't have a high overhead by comparison to any of our other sister organizations around the world, but every dollar counts. If it's not spent on delivering programs, then there's that much less to do in other countries. This is something we should be able to continue to do.
As I mentioned, the second objective is to have ready access of a number of professional people who can service the whole of the institution as opposed to having potential duplication there.
The third objective is that in every program, as we undertake new initiatives, our staff members who plan projects should be able to talk to their counterparts in the other geographic programs, to learn from what has been happening so we can reduce the time of planning and use some of the examples of things that maybe we should avoid in the future. So people should have the capacity within the institution to learn from each other.
We are already benefiting from being able to bring some of the practices this program had that were lighter and simpler in certain cases, and look at applying them to the rest of CIDA. It's a two-way street, and so far I think we are doing fine.
Mr. Lastewka: Thank you, Mr. Chairman.
The Chairman: Thank you, Mr. Lastewka.
Mr. English and then Mr. Patry.
Mr. English: Thank you very much, Mr. Chairman.
We have received an outlook statement from the Department of Foreign Affairs and International Trade and there's a very brief mention of CIDA. I am just wondering where you appear in an outlook statement.
Ms Labelle: In about three weeks or so from now we will appear before this committee.
Mr. English: So you will appear separately from Foreign Affairs entirely.
Ms Labelle: Yes.
The Chairman: It's on your radar screen now, Mr. English.
.1130
Mr. English: Many of us, as members of Parliament, had questions in our constituencies about the closing of some of the global education centres. I'm not debating or arguing about that decision, but I think you would recognize that education on the subject of development assistance is perhaps not as full as it was a year ago.
I recall that when you appeared just after we were elected, and after you were appointed, you said you thought it was important that the work of development assistance be understood more generally, that the Speaker's program within CIDA in particular should be kept, and indeed be expanded if possible. As I understand it now, there is no Speaker's program. You have a communications section, but the kind of outreach that used to be present five years ago is no longer in existence.
I recognize that you have budgetary problems, as everyone does, but if you look at the percentage of Canadian development assistance related to the GDP, for example, you've dropped more than those. Your work and its importance is probably best explained by people who have worked in the field or whatever. I can see how you were getting at that by linking education with international NGOs, but I think the quantum was reduced. I was wondering what you were thinking of doing in terms of CIDA itself, in terms of outreach.
Ms Labelle: This is probably one of the biggest challenges one has, as you know. This committee has been concerned about this, and I think we will also have the opportunity in February or so to discuss this.
What are we doing now in terms of the Speaker's program? It had pretty well died over the last number of years. We are reinvigorating it. We are trying to do so in a way that would not be at a cost, but in a way that would be a part of doing business. I don't know how successful we will be on that front.
There is a second thing that we are doing in this coming year. We are working quite differently on International Development Week in order to try to bring in even greater support from our partners around the country to try to use that opportunity to continue the education of the population about what is happening in other countries and about Canada's part in that.
A third area is found in the fact that we are very much working right now with the development NGOs to try to see how they, individually, can increase the sharing of their knowledge with their constituency, but also over and beyond that.
I guess the reduction in global education to a very small amount has, in a way, forced us to rethink how we reach out to Canadians pretty well completely. As you probably know, we also have a number of development information and education pieces at work in our communications area, again working with people around the country.
So to go back to the Speaker's program, we are redeveloping it through our communications section because it was something that worked, but that disappeared over time because of cutbacks.
Mr. English: Thank you.
The Chairman: Thank you, Mr. English.
[Translation]
Dr. Patry.
Dr. Patry (Pierrefonds - Dollard): Ms Labelle, in order to rationalize services, CIDA will be given additional responsibilities by the department with respect to technical aid to Central and Eastern European countries and the former Soviet Union.
There is also a coordination committee at the deputy minister's level that was created in order to try to rationalize other sectors such as common services. Could you please tell us how far that subcommittee's work has progressed?
Ms Labelle: We set out a program at the start and we are meeting every four or five weeks.
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We have reached a joint agreement to identify those areas where we could work together and thus reduce costs. A certain number of things have been done and I'm going to give you a few examples. Ms Roberts may be able to add to this.
First, we are transferring CIDA's briefing centre for those who are going to work in development overseas. We are merging it with that of Foreign Affairs. In this way, we hope to reduce our common expenses in this area within a year.
Second, in the computer field, we are working very closely with them so that the areas that we have not developed can benefit from what they already have and vice versa.
We should also see a reduction of personnel in the training areas given that we are pooling certain types of training that the department and the Agency have previously provided separately.
All services are being examined in this way to see whether they can be merged.
The same thing has been done in the field of communications to see what we could pool together.
So the list is already long and we are very pleased with this new cooperative arrangement which is yielding good results in, among other things, the policy areas where research is conducted jointly. Does that answer your question, Mr. Patry?
Mr. Patry: Very much so, thank you.
[English]
The Chairman: Madame Labelle, Mr. Morrison raised a question with Mr. Smith, and I don't know whether he intended to pursue it.
Mr. Morrison: You can.
The Chairman: Let me phrase it this way. I suspect this is a question that might more properly be dealt with when you're talking about your outlook document, but it does relate to the supplementary estimates in the sense of the expenditures in the area of the former Soviet Union.
The question is on the extent to which aid expenditures are being used as a trade entry vehicle, in other words. There are some areas where you might say this is...I don't say blatant, but I know, for example, in Vietnam now, to get into the Vietnamese market one is expected to make substantial investments in aid. The Americans and others are being called upon to do that. So when we talk about our outlook document we might discuss more fully the relationship between aid and trade.
But specifically in the former Soviet Union, do you see these expenditures as related to future aid prospects, and how? Is this a good thing from the aid perspective, or does this impact unfavourably on our aid expenditures?
Would that be a fair way of putting the question, Mr. Morrison?
Mr. Morrison: I couldn't have said it better myself, Mr. Chairman.
Ms Labelle: If we look at the former Soviet Union and EEC, as I mentioned earlier, we now have a number of these countries who have become qualified because they are as poor as many other countries around the world, no matter what indices you use, whether you use access to food, basic health, education, employment, income of some kind, housing, shelter.... So there is that group that is really very much in development.
.1140
The other group, which we would call more in transition, are still countries.... Those of you who have visited those countries know the kinds of difficulties they're experiencing right now. The Ukraine, which used to be the breadbasket of a large part of Europe, cannot feed itself right now. Because of being in between two regimes, they are finding they need a lot of assistance. They don't have a land regime that is conducive to being able to privatize the land so that hopefully they can gain not only greater efficiency but get food produced in adequate quantity.
Canada has been very helpful in assisting a number of these countries to establish the kind of land regime they will need.
In countries in transition we have been very helpful on the democratic government side. They are completely relooking at themselves. We've also been helpful in helping them to pass from a central economy to a market economy, and that means new economic systems, new financial systems, in some cases starting at a very different level from what we would think is needed.
On the safety side, environmentally we have been working very hard to assist countries such as the Ukraine and Russia to prevent another major nuclear disaster. They need the energy, and it's a question of helping them to get greater efficiency with the energy they have and trying to see how they can contain the potential future damage in controlling and decontaminating what they have so they can again use the land and so on.
In a number of these countries, Canada's being there to assist them is leading Canada to very substantial returns, whether it is in energy, in some of the environment fields or in some of the basic infrastructure. We have a number of examples where a $1.7 million grant to assist a Canadian enterprise to do a particular design of something in a country is then leading that country to come to Canada for a $200 million or $300 million contract following that. We have a number of examples like that.
Our prime purpose was to help them either on the energy side or in developing their basic infrastructure, land tenure and so on, but it has the consequence of bringing to Canada very large returns, either by sole-sourcing or by placing some of our Canadian enterprises in lead positions for contracts that might be led by the European Bank for Reconstruction or the country itself.
The Chair: Mr. Morrison.
Mr. Morrison: Thank you.
Madame Labelle, perhaps you could allay some of my fears with respect to this $98 million, which I do feel falls a little bit outside of the mandate of CIDA or of our agencies in general for ODA. Do you have a feel for the percentages of that money that are applied for what I would call real aid, in other words repairing infrastructure and that sort of thing; what percentage of it is bilaterally passed over to foreign governments, and Lord knows what happens to it after that; and what percentage of it is just devoted to people running around with briefcases telling these folks how to run their countries?
There are three very distinct classifications there. Can you give me some comfort as to how this is being distributed?
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Ms Labelle: In terms of distribution by program priorities, I would not have the exact answer to your question. We would be pleased to send that information to the committee.
We are not passing on any funds to these foreign governments - zero.
On the third point about how many of our people are in those countries trying to sell their services perhaps, or as you indicated, telling them how to run their country, to a great extent what we fund are projects where a particular local government, national government or state enterprise comes to us, very often along with a Canadian partner - or vice versa, a Canadian partner comes to us - and identifies an area of badly needed intervention.
Of course these are assessed on the basis of whether this going to make a difference. Is this developmental or are we just replacing money they should be spending on their own? In the end, will it make a significant difference? Do we have the Canadian expertise to be able to provide something there that is as good as if not better than something that could be provided by other potential countries like us?
I don't know how many other people would be in those countries if it weren't for the funds they get from us, and we certainly know a lot of Canadian enterprises are there commercially every day.
Mr. Morrison: And they're doing very well. But they're doing it themselves.
Ms Labelle: Yes.
Mr. Morrison: Sorry, I interrupted you. Excuse me. It's a parliamentary syndrome.
The Chairman: It's hard to see Mr. Morrison has been corrupted.
Some hon. members: Oh, oh!
Ms Labelle: Very often NGOs, universities and enterprises from Canada do see an important opportunity, and yes, they do come to us, as I mentioned before. The important part is for us then to do a solid assessment of that.
We know that when we do that and when we're able to help, not only does it help the country but there is a good return on that investment several-fold for Canada. There is also a long-term relationship return. Canada is there when those countries need us, and then when we sit at the table of the United Nations, the World Bank and so on, and Canada has important values it wants to pursue, it is much easier to be able to turn to people we have worked with and seek their support, whether it is on demilitarization, elimination of land mines, etc.
There are many such things that are creating a lot of problems in the world today.
The Chairman: Mr. Flis.
Mr. Flis: Thank you.
Ms Labelle, do we have any projects in Sri Lanka?
Ms Labelle: Yes, we do. The projects we have in Sri Lanka, because of the situation there at this time, are aimed primarily at supporting some of the civil society in their current plight and working primarily through NGOs, whether it is in the field of human rights or on some of the very basic human needs. We want to keep an eye on the future stability of that country.
Mr. Flis: The Tamils have been demonstrating, as you know. I've met them almost on a weekly basis. They claim the humanitarian aid we're offering, which goes through the International Committee of the Red Cross or the UN Human Rights Committee, is not getting to the Tamil refugees - that the government is preventing the aid from getting to the people most in need.
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Do we, or does CIDA, have any control once aid like that is turned over to an international body? What influence do we have to monitor, to make sure it gets to the right people?
Ms Labelle: On a daily basis, we are in contact with the Red Cross, with the UN refugee and humanitarian assistance program. I would certainly be interested in double-checking in this particular case and ensuring that these comments that have been made are...that indeed the food is going through. The reason why we go through the Red Cross and UN is that usually this is a way of making sure it reaches the people who need it because of the understandings you have between these organizations and the country.
But it is our sense that it is. I would like to double-check, Mr. Chairman.
Mr. Flis: They're pushing even further - pushing for Canada to deliver a plane-load of food and medical supplies, etc. But again, I'm hearing only one side. I'm hearing from the Tamil side.
Ms Labelle: Of course.
Mr. Flis: So if you wouldn't mind checking into that....
Ms Labelle: Okay.
Mr. Flis: Then I have a totally unrelated question. I wonder if you could give the committee a few examples of developing countries where Canada has provided a lot of assistance over the years and now these countries are approaching Canada to do business with them.
I'm thinking of when the deputy prime minister of Thailand was here just recently, and their interest. Of course we did a lot of development work in Thailand. Now the government is interested in purchasing a CANDU reactor, a communications satellite, etc.
I've had another ambassador meet with me. He couldn't thank Canada enough for the development work we've done in that country. But now he's approaching us to say, we are in a position now to do business, to sign contracts; we'd like Canada to benefit from that now, because you've helped us so much, yet other countries are there before you, the Canadians.
I think it would help the committee when we're talking to the public, etc., to give such examples.
Ms Labelle: Thailand and Malaysia are the two that come to mind immediately, as two countries where indeed our support to them is now creating a situation, at least by their own recognition, where they see Canada in a privileged way when it comes to doing business.
We have a number of other countries which are just at the beginning of doing this, countries such as India. India still has a very large number of poor people, but India has been doing a lot of things to improve its development status. They see Canada as a very privileged partner. Indonesia is also getting close to being in that particular group of countries.
We see the results in very dramatic ways when we look at how they are turning to Canada for some major commercial pieces. They feel they want to continue to work with us, but as equal partners.
For example, what we're doing is inviting Thailand and Malaysia to join us in doing trilateral cooperation in some of the Indo-Chinese countries, because they have something they can bring. It's also part of encouraging some of the countries in transition to become donor countries themselves. These countries are beginning to do that.
They don't want to sever their relationship with us abruptly, because they feel if they do that, it will leave a vacuum that will not automatically be replaced. That's why we continue to have very small programs - more to create that major link between ourselves.
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Mr. Flis: Yes, they feel they would like to reciprocate now.
Ms Labelle: Yes.
Mr. Flis: I think this is a good sign that we are there truly for development reasons, and now the pay-off is coming.
Thank you.
The Chairman: Thank you, Mr. Flis.
I'd like to follow up on Mr. Flis's point and go back to eastern Europe. You mentioned energy and Ukraine, for example, with the tremendous costs associated with the clean-up of the Chernobyl plant. Is CIDA in any way linking itself with the Canadian nuclear industry, AECL or Ontario Hydro, to be part of a constructive help in that process?
Ms Labelle: Mr. Chairman, I would like Al Smith to answer your question because, yes, we are involved with many other partners. They include the European Bank for Reconstruction and Development, as well as a number of other countries like our own, because it is a major, very significant problem at this time.
With your permission, Mr. Chairman, I'll turn it over to Al.
The Chairman: I'll just give you the follow-up first.
Do you see other areas where this might become very important - Armenia and various other places - where there are similar problems?
Ms Labelle: Yes.
Mr. Alan C. H. Smith (Vice-President, Central and Eastern Europe Branch, Canadian International Development Agency): Thank you, Mr. Chairman.
You may recall that two summers ago, at the G-7 meeting in Naples, the closure of Chernobyl and the Ukrainian energy policies were a subject of important debate among the G-7 leaders. At that summit, Canada committed funds to support the clean-up of Chernobyl.
Funds have been disbursed both through a contract to AECL and through an initial contribution to the nuclear safety account of the European Bank for Reconstruction and Development. That commitment will be fulfilled over a number of years as progress develops in Ukraine, and as our other partners make their contributions as well.
On the applications to others, the concern about nuclear safety developed soon after the fall of the Soviet Union. There were early contributions made once again to the nuclear safety account of the European Bank, and also bilaterally, in the cases of Russia and of the Baltic states. There have been some expressions of interest from Armenia, but to date we have not formally followed up in Armenia on a bilateral basis.
The Chairman: Thank you very much.
It's now twelve o'clock, so unless any member has any other observations or questions.... We'll have an opportunity to review in greater depth some of these issues when we do our outlook document with you.
[Translation]
Ms Labelle, thank you for coming before the committee.
[English]
Mr. Morrison.
Mr. Morrison: I wonder if we could just very briefly touch on something here after the witnesses leave.
The Chairman: Absolutely, sir.
Thank you.
Mr. Volpe: I don't know if it has anything to do with the heavy work of this committee, but I'd like to think there's some sort of a relationship.
The Chairman: Into every life a little sun must shine.
Mr. Morrison.
Mr. Morrison: Mr. Chairman, Madame Labelle explained the source of the $12 million increase in the supplementary estimates for.... What do they call it? It's overhead, anyway. That includes a $5.4 million carry-over from the previous year. It seems to me that just because you have the carry-over, you don't have to spend it all. You're not required to do so.
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On that basis, I would like to move that this $12 million item be reduced by $1 million just as a matter of form. I have the written motion here and I filled in the numbers after listening to whatMr. Smith and Madame Labelle had to say.
Similarly, I believe that as a matter of form I would like to see a modest reduction in the$98 million. I move that it be reduced by $5 million to $93,375,000. With your indulgence, I place those two motions on the table.
The Chairman: The motions are that vote 16a would be reduced by $1 million, $12 million would be reduced by $1 million, and that vote 20a would be reduced by $5 million from $98 million.
Mr. Morrison: That's correct. I have the motions here.
The Chairman: I wonder if we could table those motions for now, because we've lost our quorum. We'll have to address them when we have an opportunity and a proper quorum.
Mr. Lastewka, do you have a preliminary comment?
Mr. Lastewka: I'm not sure this is the right way to do it. If that was what Mr. Morrison wanted to do, he should have brought it up in discussion with Madame Labelle here. That's why we have witnesses. You know -
Mr. Morrison: The question thoroughly -
Mr. Lastewka: Excuse me. It's not any different from the members' budget, where we have 5% moved over to next year. Just because we didn't spend it doesn't mean I'm going to spend it the second year anyway, but if I've allocated for something to be spent on a program, that's what's in my budget. I don't think we should be cutting after the witness leaves. We should have asked them those questions too.
An hon. member: Hear! Hear!
The Chairman: I'm sorry. Your point is that in fact these might have been moneys that were committed to be spent on something and didn't get spent last year so of course they have to moved. We didn't have a chance to get to that question.
Mr. Lastewka: That's right.
The Chairman: Okay. Since we've lost our quorum, maybe we could have a full discussion of this later on. But I think that's a good observation.
Thank you very much. We're adjourned until 9 o'clock on Thursday morning.