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Throne Speech: Opportunity to Stimulate Canada’s Support for Development

By Aniket Bhushan, Bridget Steele, Lance Hadley

Published: Sept 25, 2020 | Updated: Oct 1, 2020

The recent September 23 Throne Speech offers a significant opportunity to meaningfully stimulate Canada’s support for development. It is incumbent on the sector, especially in the period out to the Fall fiscal update, to push the government to follow up its words with action in the form of a sustainable, transparent and accountable financial commitment to increasing development spending.

This analysis covers three areas and its main findings are as follows:

Bounce back in programming and need for new resources

  1. We update our June 2020 analysis which quantified COVID19’s impact on programming. According to our analysis, the first quarter of the new fiscal cycle (Apr-Jun 2020) indicates a noticeable bounce back in the cadence of programming and a significant reversal compared to the sharp slowdown in the last quarter of the previous fiscal (Jan-March 2020). A key take-away is that the development sector is clearly showing greater resiliency than many expected. Furthermore, this also implies:
    1. It is now more likely that programming will catch up to available budget room through the course of the fiscal cycle.
    2. Any new commitments or large international requirements, which are very likely given the depth of impact in developing countries and relatively limited fiscal space to stimulate recovery, will require new and additional resources to be downloaded to the International Assistance Envelope (IAE) from the fiscal framework.

Canada’s international COVID response as a share of domestic response

  1. We provide a metric to help quantify Canada’s international COVID response. Several NGOs have argued for symmetry between what Canada spends domestically on COVID response and its international commitment. The case has been made that Canada’s international response should equate 1% of domestic response. As of July 2020 we found that Canada’s international COVID response equates approx. 0.22% of its domestic response. New and additional resources committed to international COVID response up to July 2020 totaled $120mn. Two significant new and additional commitments have been made more recently: first, to the GAVI COVAX AMC vaccine procurement for developing countries, $220mn; second, $400mn towards financing for development in the COVID era and beyond. These take Canada’s total response to approx. $1.14billion, of which $740mn are new and additional resources to the IAE. Canada’s total international response is now (at most) approx. 0.47% of domestic response; and new and additional resources are approx. 0.31% of total domestic response. Making these some of the largest one time additions to the IAE Canada has ever undertaken.

Throne Speech is an opportunity for collective action 

  1. If the sector works collectively to hold the government accountable and demands details by the Fall update, we argue the recent Throne Speech offers a meaningful opportunity to reverse Canada’s flagging support for development. Our analysis of the past 5 Throne Speeches (back to 2011) indicates this is the first time a Speech from the Throne has explicitly referenced increasing international development spending.

Bounce back in programming and need for new resources

In June we provided the first and only analysis that quantified Canada’s sharp slowdown in development programming. March 2020, we projected, represented a 90% slowdown compared to the same month in recent years.

Using the same approach and data (looking at the cadence of new projects starts and contracts by value and volume, leveraging TBS and GAC open data), we find that the first quarter of the new fiscal cycle (Apr-Jun 2020) indicates a bounce back compared to the last quarter of the previous fiscal.

New project starts in April 2020 were over 2x that in any April going back to 2016 (by value) and a similar trend is observed in wider GAC contracts disclosure data. This indicates the development sector has proven resilient in terms of both adapting existing programming and launching new programming in the COVID new normal.

While on a year to date, and especially fiscal start to date basis (i.e. Apr to Aug 2020), there is still some way to go to catch up with the cadence of new starts in recent years, it is reasonable to conclude that given the level of requirements, programming will catch up to available budget room.

New or large international commitments, e.g. on vaccine procurement and disbursement in developing countries, and or to support safe restart and economic recovery, will require new and additional resources to be downloaded to the IAE from the fiscal framework.

Canada’s international COVID response as a share of domestic response

COVID19 has brought into focus the fact that international solidarity and collective action are not just philosophical nice to haves, but essential for an effective response and recovery. To this end, NGOs have argued for symmetry between Canada’s commitment to international COVID response and its level of domestic support, some calling for an international commitment that equates at least 1% of domestic response.

Where does this ratio stand? Canada’s major international commitments to COVID response from March-July 2020 total $522million. This primarily includes: $120 million for the Access to Covid-19 Tools (ACT) Accelerator (new funding); $180 million for humanitarian and development assistance (crisis pool); $160 million to help vulnerable countries prepare for and respond to COVID-19; $2 million to the World Health Organization. Up to July 2020, the only new and additional resources to the IAE were for the $120mn towards the ACT accelerator, the rest were announcements funded out of the existing balance.

Over the same timeframe Canada’s domestic response is estimated to be between $230billion (Economic and Fiscal Snapshot 2020) and $240billion (COVID-19 Economic Response Plan estimates).

Taking the above together, and assuming the domestic response commitments total $235billion, we find that Canada’s international COVID response equates approx. 0.22% of its domestic response. This is obviously far short of what many NGOs have called for. Moreover, most of this level is made up of existing, as opposed to new and additional resources to the IAE from the fiscal framework.

Update as of Oct 1, 2020: 

In July 2020 Canada announced US$25mn towards the GAVI COVAX Advance Market Commitment (AMC), and on Sept 25 Canada announced a further $220mn towards the AMC’s vaccine procurement for developing countries. On Sept 29 at a High Level UN forum Canada also announced an additional $400mn towards financing for development in the COVID era and beyond

These commitments imply the following:

  • Canada’s total international COVID response now stands at approx. $1.142billion.
  • Of this, total new and additional resources to the IAE are approx. $740mn (approx. 65%).
  • Total domestic COVID response (as per the IMF and Dept. Finance’s rolling fiscal summary table) is at approx. $240billion to $325billion (depending on the treatment of fiscal side deferrals).
  • Therefore, we estimate that Canada’s total international response is now (at most) 0.47% of its domestic response. New and additional resources to the IAE total (at most) 0.31% of domestic COVID response.

These are some of the largest one time additions to the IAE Canada has ever undertaken, and for this the development sector and government ought to be commended. The key question now is whether these additions permanently increase the IAE base. This would be needed to ensure international COVID response does not crowd out other areas of development programming.

Throne Speech is an opportunity

If the sector works collectively to hold the government accountable and demands details by the Fall update, the recent Throne Speech could be a significant opportunity to reverse Canada’s otherwise flagging support for development.

According to our analysis of the last 5 Speeches from the Throne back to 2011 (see box below), the recent speech was the first to explicitly reference increasing international development spending.

The need for a sustainable, transparent, and accountable increase in development spending stems not just from the fact that Canada’s levels have hovered near historic lows for years, but that there are real growing needs, and significant opportunity.

In addition to immediate COVID health response and intermediate economic recovery needs, another obvious area is international climate finance, on which GAC has recently concluded consultations.

Collective action across the development sector and a focus on the headline IAE level allocations, to ensure new commitments are backed with new and additional resources from the fiscal framework, is essential in order to avoid the “robbing Peter to pay Paul” scenario which has too often been the case.

 

How have recent Speeches from the Throne referenced international development?

September 23 2020: “The Government will invest more in international development while supporting developing countries on their economic recoveries and resilience. Canada will also support work to ensure that people around the world have access to a vaccine. We cannot eliminate this pandemic in Canada unless we end it everywhere.”

Dec 5 2019: “As a compassionate partner, the Government will provide targeted resources for international development assistance, including investments in education and gender equality. It will help the world’s poorest and most vulnerable people live better lives and become strong partners for Canada in turn”

December 4 2015: “Internationally, the Government will focus its development assistance on helping the world’s poorest and most vulnerable.”

October 16 2013: “Our Government will help the world’s neediest by partnering with the private sector to create economic growth in the developing world. Tax dollars spent on foreign aid must achieve real results. Our Government’s international aid will continue to be focused, effective and accountable.”

June 3 2011: No reference to international development.

 

New development project starts: GAC project browser dataset (distinct count and value, by project number)

Overall pace of contracting: Agreements (over CAD$25k) Treasury Board Canada disclosure dataset (distinct count and value, by agreement number)

Year to Date (Jan-Aug), New development project starts: GAC project browser dataset (distinct count and value, by project number)

Year to Date (Jan-Aug), Overall pace of contracting: Agreements (over CAD$25k) Treasury Board Canada disclosure dataset (distinct count and value, by agreement number)

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