Three ways to pay for aid commitments
EMBASSY – Canada’s Foreign Policy Newspaper

Wednesday, February 3, 2010

Stephen Harper’s announcement that child and maternal health will be the signature theme of June’s G8 meeting is certainly timely.

Every day 1,400 women die of pregnancy-related causes.  Every day 24,000 children under the age of five die of what are largely preventable causes. Progress on improving child and maternal health is the furthest off-track of the eight Millennium Development Goals (MDGs) UN member states committed to in 2000. This focus gives MDGs four and five, on child and maternal health, the push they need ahead of September’s United Nations High Level Meeting and ten year review of the MDGs.

But funding the initiative comes during difficult days – a global crisis and a budget deficit. Resources are tight.

Now that the announcement has been made, how much does the government intend to dedicate to its legacy initiative?

Credible estimates from those working in the field put the dollar figure for making a real difference at $2 billion over five years.

Where will the money come from? Will it be additional to the existing aid budget, or will it substitute past commitments Canada has already made on HIV AIDS, food security, education for all? Does this mean Canada will finally get on track to increasing our foreign aid spending to 0.7 % of gross national income?

Resources are limited; choices are tough. Canadians are suffering their own fallout from the financial meltdown. But the choices need not be either limited or tough.

Ahead of June’s G8 and G20 meetings, Canada could do three things to make these choices a lot easier – both for Canadians suffering from the economic crisis at home, and for the billions of people whose lives and livelihoods have been put on hold in the South.

Number one: Plug the leaks.

The US group Global Financial Integrity estimates that globally US$500-800 billion of illicit money flows out of developing and transitional economies every year. The vast majority, around 65 percent, is in the form of tax evasion and avoidance by multinational companies. The UK group Christian Aid further estimates that developing countries lose around $160bn each year in tax revenue through tax dodging—more than 30 % higher than the total amount of aid given by northern donors in 2008.

The G20 started to tackle this problem in 2009, but the model they have followed is deeply flawed, leaving the major financial centres where this happens untouched. In 2010, Canada should help plug the leaks in government revenue by advocating for the adoption of procedures that make the exchange of tax information automatic and for country-by-country reporting on accounts by multinational companies.

Number two: Fill the gaps.

In 2007, global trade in all financial assets stood at US$194 trillion – more than twelve times global trade in goods and services. The idea of placing a small levy – of 0.05% - on the trade of these assets has gained the support of British Prime Minister Gordon Brown, French President Nicholas Sarkozy and German Chancellor Angela Merkel. Austrian Economist Stephan Schulmeister estimates that taxing financial transactions could not only yield globally upwards of $700 billion a year – enough to fund the MDGs, the costs of climate change for developing countries and domestic stimulus packages – but could also help curb the kind of disruptive speculative day trading that helped get us into the current economic crisis.

Canadians know that the taxes represent an investment in the things they hold dear, like universal health care, public education and the environment. In 2010, Canada should support the global adoption of a financial transaction levy that would in invest in global public goods – closing the funding gap to pay for climate change mitigation and adaptation and giving all governments the resources they need to give their citizens the essential services that are theirs to claim.

Number three: Get on track.

The outpouring of support from the Canadian public in response to the disaster in Haiti clearly demonstrates that development assistance and supporting countries in need is a strong Canadian value. In a mere two weeks, the Canadian public has donated more than $80 million for Haiti. But Canada needs to reflect this support in terms of its own aid commitments and set a timetable in 2010 so that Ottawa definitively reaches 0.7 percent of gross national income in the next decade, by 2020.

In 2010, we will have fulfilled our 2005 pledge to double aid to Africa. We now need to fulfill a decades’ old pledge to achieve 0.7 percent overall.

The impacts of the global financial crisis on Canadians and the rest of the world are tough.

But finding the means to address these impacts are both straightforward and feasible. In 2010, the choice is Canada’s to make.

Fraser Reilly-King is the Coordinator with the Halifax Initiative, a coalition of development, environment, faith-based, human rights and labour organizations. The Halifax Initiative is a member of the 2010 Canadian G8 G20 Civil Society Coordinating Committee. The views expressed are his own.
Three ways to pay for aid commitments
EMBASSY – Canada’s Foreign Policy Newspaper

Wednesday, February 3, 2010

Stephen Harper’s announcement that child and maternal health will be the signature theme of June’s G8 meeting is certainly timely.

Every day 1,400 women die of pregnancy-related causes.  Every day 24,000 children under the age of five die of what are largely preventable causes. Progress on improving child and maternal health is the furthest off-track of the eight Millennium Development Goals (MDGs) UN member states committed to in 2000. This focus gives MDGs four and five, on child and maternal health, the push they need ahead of September’s United Nations High Level Meeting and ten year review of the MDGs.

But funding the initiative comes during difficult days – a global crisis and a budget deficit. Resources are tight.

Now that the announcement has been made, how much does the government intend to dedicate to its legacy initiative?

Credible estimates from those working in the field put the dollar figure for making a real difference at $2 billion over five years.

Where will the money come from? Will it be additional to the existing aid budget, or will it substitute past commitments Canada has already made on HIV AIDS, food security, education for all? Does this mean Canada will finally get on track to increasing our foreign aid spending to 0.7 % of gross national income?

Resources are limited; choices are tough. Canadians are suffering their own fallout from the financial meltdown. But the choices need not be either limited or tough.

Ahead of June’s G8 and G20 meetings, Canada could do three things to make these choices a lot easier – both for Canadians suffering from the economic crisis at home, and for the billions of people whose lives and livelihoods have been put on hold in the South.

Number one: Plug the leaks.

The US group Global Financial Integrity estimates that globally US$500-800 billion of illicit money flows out of developing and transitional economies every year. The vast majority, around 65 percent, is in the form of tax evasion and avoidance by multinational companies. The UK group Christian Aid further estimates that developing countries lose around $160bn each year in tax revenue through tax dodging—more than 30 % higher than the total amount of aid given by northern donors in 2008.

The G20 started to tackle this problem in 2009, but the model they have followed is deeply flawed, leaving the major financial centres where this happens untouched. In 2010, Canada should help plug the leaks in government revenue by advocating for the adoption of procedures that make the exchange of tax information automatic and for country-by-country reporting on accounts by multinational companies.

Number two: Fill the gaps.

In 2007, global trade in all financial assets stood at US$194 trillion – more than twelve times global trade in goods and services. The idea of placing a small levy – of 0.05% - on the trade of these assets has gained the support of British Prime Minister Gordon Brown, French President Nicholas Sarkozy and German Chancellor Angela Merkel. Austrian Economist Stephan Schulmeister estimates that taxing financial transactions could not only yield globally upwards of $700 billion a year – enough to fund the MDGs, the costs of climate change for developing countries and domestic stimulus packages – but could also help curb the kind of disruptive speculative day trading that helped get us into the current economic crisis.

Canadians know that the taxes represent an investment in the things they hold dear, like universal health care, public education and the environment. In 2010, Canada should support the global adoption of a financial transaction levy that would in invest in global public goods – closing the funding gap to pay for climate change mitigation and adaptation and giving all governments the resources they need to give their citizens the essential services that are theirs to claim.

Number three: Get on track.

The outpouring of support from the Canadian public in response to the disaster in Haiti clearly demonstrates that development assistance and supporting countries in need is a strong Canadian value. In a mere two weeks, the Canadian public has donated more than $80 million for Haiti. But Canada needs to reflect this support in terms of its own aid commitments and set a timetable in 2010 so that Ottawa definitively reaches 0.7 percent of gross national income in the next decade, by 2020.

In 2010, we will have fulfilled our 2005 pledge to double aid to Africa. We now need to fulfill a decades’ old pledge to achieve 0.7 percent overall.

The impacts of the global financial crisis on Canadians and the rest of the world are tough.

But finding the means to address these impacts are both straightforward and feasible. In 2010, the choice is Canada’s to make.

Fraser Reilly-King is the Coordinator with the Halifax Initiative, a coalition of development, environment, faith-based, human rights and labour organizations. The Halifax Initiative is a member of the 2010 Canadian G8 G20 Civil Society Coordinating Committee. The views expressed are his own.