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Budget 2016: Canada is back on the global stage

Centre Block - Canadian Parliament

by Aniket Bhushan

Published: March 22, 2016

The lead-up discussion and the budget itself, understandably, focuses on domestic tax and spend issues. Global aspects have received less attention.

In two posts we look at: specifics we will be watching for on global affairs, trade and development spending (here below); and high level areas that should be kept in view to interpret the budget (here).

Canada is back on the global stage

The key message of the new government since election, and earlier in the platform, is that Canada is back on the global stage. While clearly the budget largely focuses on domestic issues, it is inevitably also a first real test for the ‘how’ in Canada getting back on the global stage. Below are some areas that may be worth looking at to assess how far this budget goes.

Global affairs and development spending

How and how much does it talk about Global Affairs (if at all)? Does the budget reference foreign aid, international development or international assistance, and spending related to the same, explicitly (which some of the past budgets have specifically avoided)?

With the amalgamation and more recent re-branding of foreign affairs in Canada it is worth looking at how and how much the budget talks about the new department. Past austerity budgets have brought spending freezes and cuts. So will this deficit spending budget bring the opposite? Past budgets have brought institutional changes (amalgamation of development), will this one plan or portend a reversal – which would be a huge surprise.

According to our analysis, based on Public Accounts data, on an amalgamated basis (foreign affairs, trade and development combined), we are spending about 8 to 10% less now on global affairs than we did 5 years ago (approx. $6.5 billion in 2010-11 vs. under $6 billion in 2014-15). Spending on global poverty reduction and sustainable development are also lower (by around 12% compared with 2011-12). Canada’s development spending is at historically low levels.

At some stage the ‘Canada is back on the global stage’ message will be expected to be backed up by dollars – will this budget head in that direction?

Any reference to 0.7% of GNI aid levels or 0.15-0.2% GNI aid target for the poorest and fragile states (recently adopted by the UN) – would be a shocker. Modest reference to maintaining spending at current budget/expenditure levels would be a positive surprise especially as it will mean increases (as the denominator grows).

Interpreting recent figures (Dec 2015, as part of the ODA Accountability Act reporting) as reversal in spending levels would be misleading – sure there is an increase, but it is driven entirely by an exceptional payment to the World Bank and a couple of loans to Ukraine – which the report to its credit makes clear. The core of development spending from the department is otherwise flat (or down slightly).

Areas to watch go beyond spending levels however. Could the budget indicate a formal global affairs review (development and trade policy review?) or moves towards a new international policy statement? These would be welcome low cost surprises.

Going further on MNCH – reproductive health

One of the main, and indeed few, areas that the Liberal platform was specific on as it relates to development was the addition of reproductive health to MNCH spending and a continuation of MNCH priorities.

So far we have seen little more than restatement and repackaging of funding we already knew about. Will the budget go any further, for instance by elaborating on how aid and development finance allocation strategies may change?

Multilateralism, SDGs, Agenda 2030

We know that Canada plans to contest a UN security council seat in 2020. We know that this government plans to take the SDGs, including what they imply domestically, more seriously. But how will that translate in practice? Any explicit reference to SDGs and Agenda 2030 – for instance to justify increased spending globally even if only over the medium to longer term – would be a surprise. What other forms could ‘multilateralism’ take?

Reference to Global Fund replenishment – unless they come in at a higher than expected level – would not really be a surprise, seeing as Canada is an important contributor from the start.

Refugees and immigration

The 25th thousandth Syrian refugees arrived in Canada to much deserved national pride and fanfare. We know from the Feb update that the Syrian refugee resettlement will cost around $700 million out to 2017-18. Will the budget say anything further, either on refugee settlement and immigration numbers and targets, or costs?

Syria, and regional contribution

While Canada’s London conference pledge, if any, is hard to decipher, we know, from the Feb update, the ‘Whole-of-government strategy in Iraq, Syria, Jordan and Lebanon’ – i.e. assistance in the region – is placed at another $1 billion. Will there be anything further on regional response or humanitarian contribution?

Climate change and climate finance

Canada had a strong showing with a large delegation at COP 21 in Paris. Canada played an important and constructive role in the outcome. But the follow-through on actions at home on a whole-is-bigger-than-sum-of-parts national plan (as opposed to different provincial plans) is more elusive. Any indication of this, or incentives in the direction, in the budget would be an important sign.

Canada has also recommitted support to climate finance in developing countries – but will the budget go any further, either explicitly or by linking the same to promoting clean tech investment, knowledge transfer or other forms of cooperation?

Innovative finance and the DFI

The last budget announced a new development finance initiative ($300 million over 5 years) housed at EDC – will this one follow up on the same or update?

Additional funding for Grand Challenge Canada – a challenge fund which is part of the innovation arm of development finance – would not be a surprise (it was also in the last budget). Repeat references to blended finance initiatives like Convergence (or for that matter the Global Financing Facility for Women and Children which we know Canada is contributing to) would show things are still being figured out and not quite ready for any major announcement on innovative finance, or engaging the private sector.

Trade agenda

Most will view trade from the perspective of headline issues. The TPP seems to be in some trouble (in the US) – will there be an update on it? The conclusion of CETA as a ‘gold standard’ trade agreement has already been celebrated. Could there be anything further on the trade agenda?

Past budgets have referenced trade, for instance in the form of changes to the GPT preferential trade regime and in the form of removal of tariffs as part of economic stimulus (Budget 2013).

Here is a great idea that is doing the rounds (and wont make the budget) – unilateral reduction of complicated tariffs that contribute little by way of revenue and are of little importance as strategic leverage in future trade negotiations.

This could have a big impact including from a development perspective because at least two out of the three main areas where the bulk of the $4 billion in import tariffs are collected are clothing and shoes – both products where developing countries already have substantial market share and could benefit greatly from more liberalized and better market access.

Open data and the evidence base

The new government has raised expectations in terms of transparency and accountability. It has also claimed one of the ways it will do things differently is by being more evidenced based. Further investing in the open data ecosystem in Canada is key.

While we have a lot of data – too much in fact – and data.gc.ca has made a lot of progress in pushing data out, we are a long way from it being facilitated in the most effective way. In many areas we have overlapping data that make more sense to take the effort to consolidate than share disparately (migration data is a great and frustrating example). In other areas while there is a lot of reporting the data coverage and gaps make it poor (FDI is a great example). In yet other areas while we have good data on some aspects (financials) we have little on others (results and outcomes) as we have seen in the case of MNCH development spending data, less than 50% of which according to our analysis of 2010 to 2015 reporting has any information on results even if only in the form of outputs.

Stats Canada makes odd choices – to cite only one example, we know on a weekly basis the weight of all eggs laid and processed in Canada, but have no data on Fall 2013 college and university enrollment rates!

It will be worth watching if and how the budget refers to open data, transparency and evidence-based policy. Achievements in open data have been much celebrated rightly or wrongly, but we are a long way from what is really needed and can be achieved with relatively modest investment.

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