FAAE Committee Report

Supplementary Opinion from the Liberal Party of Canada

Private Sector Actors and the Canadian International Development Agency

The Liberal Party of Canada agrees with the great majority of this Report and would like to commend the Committee for its work and diligence. The Committee heard from many witnesses with different backgrounds who were able to give Committee Members an array of opinions on how to harness the resources Private Sector Actors invest in foreign countries to better help the people in developing and under-developed countries.

The Liberal Party of Canada agrees that the Private Sector offers enormous untapped potential to help under-developed and developing countries establish sustainable and inclusive economic growth. However, as Khalil Shariff told the Committee: “you have also heard –and I think correctly – that not all economic growth is the same and it does not always translate into poverty reduction”[1]. Thus, the Canadian International Development Agency (CIDA) has a role to ensure the work accomplished by Private Sector Actors has a truly positive impact for everyone in the communities where they operate.

Consequently, there are three recommendations in this Report which the Liberal Party of Canada find problematic or that should be improved to better harness the potential of the private sector and ensure the emphasis remains on poverty alleviation.

Recommendation 10

We appreciate that the Committee has stated the importance of revenue transparency in recommendation 10 and would like to further endorse action on revenue transparency.

The Committee has heard mining industry representatives voice their support of revenue transparency. Pierre Gratton, President of the Mining Association of Canada, stated the following: “I think by and large it's not only seen as the right thing to do, but it's starting to be seen as actually good business to have these payments to government published.”[2]

Brent Bergeron, representing Goldcorp Inc., echoed this sentiment in regards to reporting requirements: “We think they're extremely important. We want to try to get as much information out as possible.”[3] 

Revenue transparency is an important tool for development as it helps create a relationship of trust between the private sector and the communities in which it is present. By requiring companies to disclose, it discourages governments from approaching companies for bribes, as the public disclosure of all payments will make it easier to track instances in which corruption is occurring. This helps to ensure that the profits from the projects help to establish development in the communities. 

We therefore recommend the following:

That the Government of Canada demonstrate leadership in terms of revenue transparency and take pro-active measures, in partnership with Provinces if needed, to establish a reporting mechanism for payments made to foreign governments consistent with Canadian laws, regulations and practices. 

Recommendation 3

Although we were pleased to see the terms “sustainable economic growth” included in recommendation 3, the use of the term “loan” is very worrisome. The Liberal Party of Canada agrees that CIDA may need other financial instruments which it does not currently have to achieve its objectives. This is evident in recommendation 1, which recommends a strategy that outlines, amongst other things, “Any new development finance tools that may be required”.

However, recommendation 3, as drafted, opens the door for CIDA to act as a financial institution for private sector actors operating abroad. We consider this problematic. The Government of Canada already has many tools which enable loans. While this may not have been the spirit of this recommendation, the wording is such that it could blur the responsibilities between public and private partners.

Consequently, the Liberal Party of Canada opposes recommendation 3.

Recommendation 6

Although we appreciate the intent of recommendation 6, it seems to be redundant as CIDA already offers technical assistance to developing country governments. In fact, government resources for technical assistance are going to be decreased within the $377 million cut to CIDA by 2014-2015, cuts which the Liberal Party of Canada have strongly opposed.

Also, many of the recommendations in this report deal with CIDA helping to develop the rule of law, transparency and democratic institutions in foreign countries. The Liberal Party of Canada believes this is where CIDA should be maintaining its focus.

As currently drafted, recommendation 6 gives the impression that CIDA could interfere in foreign governments’ land use policies, taxation policies, etc. This should not be a goal or an objective for CIDA. The focus needs to remain on development, poverty reduction and institution building.

Consequently, the Liberal Party of Canada opposes recommendation 6 as drafted.