September 24, 2012 - World Economic Forum Headquarters, New York
Good afternoon everyone.
Your Excellency, President Tsakhia, fellow ministers, distinguished guests, welcome.
Today, in this room, we have gathered representatives from government, industry and civil society—on behalf of both Canada and Australia, I would like to thank you for your interest in this discussion on Responsible Extractive Sector Development.
Co-hosting today's discussion is Peter Baxter of the Australian Agency for International Development. I would also like to thank Robert Greenhill and his team from the World Economic Forum for their generous support and assistance in bringing everyone together today.
As I begin, let me first tell you that I will focus my remarks on three key areas:
- First—what Canada is doing to advance responsible natural resources development;
- Second—the importance of transparency in the extractive sector;
- And third—the importance of partnerships.
Canada's efforts to advance responsible natural resources development
Canada's own history and experience are a reflection of the important role of natural resources in building a robust economy.
A good part of Canada's economic strength is the result of rich natural resource endowments and a knowledge-oriented economy. Canada's expertise in the management of its renewable and non-renewable natural resources gives us a solid platform from which to play a strong role in extractive industries internationally. It allows us to support our developing country partners to maximize the benefits from their own resource wealth.
Canada's approach to the extractive sector and development is three-pronged. We work to:
- Build the capacity of governments to manage their natural resources;
- Enable communities to engage in and benefit from the sustainable management of the resource sector; and,
- Advance international standards and guidelines.
Canada collaborates with developing country governments, civil society, multilateral institutions and the private sector, so that together, we can deliver sustainable development results.
Canada also supports a number of developing countries through successful projects related to the extractive sector.
For example, to build government capacity, the Government of Canada has provided support to the Peruvian government for mining sector reforms that have assisted in the rapid maturation of the sector there, and is now assisting local governments to effectively manage resource revenues.
In Bolivia, the Government of Canada has provided technical assistance on revenue management and taxation, helping that country to more than quintuple its national revenues from the oil and gas sector to $2.8 billion.
In its work with local communities, Canada is assisting 12 mining communities in Ghana—in collaboration with Rio Tinto Alcan and World University Service Canada—to improve education, water, and sanitation services.
Canada stands alongside Australia in supporting developing countries that want to make the most of their natural resource wealth. Last year at the Commonwealth Heads of Government Meeting, Canada and Australia both announced significant initiatives to support extractive industries in developing countries.
I commend the Australian government for its leadership in this area through the Mining for Development Initiative.
Along the same vein, in the coming months I will be announcing the host of the new Canadian International Institute for Extractive Industries and Development, which was announced by Prime Minister Harper last year. The Institute complements Canada's Corporate Social Responsibility Strategy which, among other things, helps Canadian extractive sector companies operating abroad to enhance their ability to manage social and environmental risks.
With the best in Canadian government, private sector, academic and civil society expertise gathered under one roof, the Institute will provide developing country partners with the support they need to manage and govern their natural resources responsibly.
Canada—and many other countries represented here today—is well-positioned to help developing countries maximize the benefits from their extractive sectors, to ensure they flow to their people in ways that improve the overall quality of life.
The importance of transparency in the extractive sector
Canada and Australia are recognized as global leaders in the extractives industries and key supporters of related transparency initiatives.
Canada is also a strong supporter of the Extractive Industries Transparency Initiative.
In Tanzania, for example, Canada has been providing the country with direct support for its successful compliance with the Initiative's standards.
The extractive sector is an increasingly important driver of sustainable economic growth and poverty reduction in developing countries. In Africa, a quarter of economic growth in the past decade is due to the extractive sector, while regional economic activity in the sector is expected to expand by another 25 percent by 2020.
To be a driver of development, however, the extractive sector needs to be managed sustainably and responsibly.
This means several things.
It means developing clear and consistent mining codes, oil and gas laws, and taxation systems.
But these are only the first steps to creating the broader business environment for both investment and local business participation in extractive sector development.
The foundation for establishing a business environment where the rules of doing business are known and enforced, and the private sector can flourish, is based on transparency.
Transparency limits opportunities for corruption and abuse of power. It can help to improve the effectiveness of public policy and build more accountable and democratic institutions.
Transparency also fosters trust, which we all know is the starting point for any good relationship—with government, with business, with citizens. In the case of the extractive sector, all three of these groups are essential for development.
Great strides are being made in developing countries to increase disclosure of payments and revenues—and today's other speakers will provide testimony to that. Similarly, a number of countries—many represented here today—are improving extractive sector management and making progress by adhering to international standards, such as the Extractive Industries Transparency Initiative.
Transparency and accountability in public spending—central to achieving broader social and economic development goals in all countries-represent a key area that links extractive sector development to poverty reduction.
Poor management of resource revenues robs communities of the benefits of growth, opens the door to corruption and conflict, worsens poverty and inequality, and discourages extractive sector investments.
If managed sustainably and responsibly, the extractive sector can generate substantial revenues for governments. In turn, governments can then re-invest in much-needed infrastructure and basic services, including health and education.
With the recent discovery of new mineral, oil and gas deposits in Africa and elsewhere, it is more important than ever for all of us to take steps to ensure that these natural endowments bring benefits to all.
That is why I am here today, and why the Canadian International Development Agency places such great importance on the responsible development of the extractive sector.
The importance of partnerships
Before closing, I would like to make a few remarks about the importance of partnerships and the role of both civil society and the private sector in effective resource management. Our hosts today—the World Economic Forum—provide an excellent example of the value of multi-stakeholder participation in achieving results in all of their work.
Leveraging private sector partnerships for better development results can contribute to building the solid business environment in which viable enterprises can thrive. The impact can be game-changing, leading to more high-quality employment opportunities in the formal economy, and more contributions to the public resources available for investment in both improving productivity and public well-being.
There is also a clear role for civil society in ensuring development results—real, lasting results.
Civil society brings community needs and concerns to the attention of governments and industry. Civil society also addresses social and environmental issues of extractive sector development. These are not minor considerations, but central components for success in the extractive sector.
We must work together—civil society, government and the private sector, using innovative partnership approaches to make our investments that much more effective.
I firmly believe that partnerships, based on trust, offer the best opportunity to maximize shareholder value, jobs and poverty reduction.
Conclusion
Ladies and gentlemen, your presence here today confirms the importance of responsible extractive sector development for your businesses, organizations and countries. I am looking forward to our discussions and the perspectives you all bring.
Canada, through our international development assistance, remains committed to improving resource revenue management globally—standing by our developing country partners to help them realize the immense potential of their natural resources and a better future for all.
Thank you.
Julian Fantino
Minister of International Cooperation
