Prime Minister Stephen Harper arrives at Xstrata Nickel's Raglan Mine in the northern Nunavik region of Quebec on Friday, August 23, 2013.Sean Kilpatrick/The Canadian Press
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It wasn't hard, it appears, to get federal, provincial and territorial resource ministers to agree that Canada should require mining and oil companies to publish what they pay to various levels of governments in countries where they operate. The difficult part will be reaching consensus in this fractious federation on how to do it.
At a meeting of natural resource ministers in Yellowknife last week, provinces and territories agreed to work with Ottawa "in support of Canada's commitment to establish new mandatory reporting standards for Canadian extractive companies," as the joint news release put it. That's very careful, open-ended wording: agreeing to work with the federal government "in support of" a commitment that Prime Minister Stephen Harper government made at the G8 summit in London this summer.
In an interview, Natural Resources Minister Joe Oliver said there are "complexities" around the implementation, putting it mildly. "We're looking at how this can be done most efficiently, but [the provinces and territories] see the need for us to be in the forefront, with world-class standards," he said. And they agreed to work toward a 2015 deadline to implement the new standards.
For the federal Conservatives, the transparency initiative could represent a positive political move, one that with proper standards and enforcement would be widely applauded by non-governmental organizations that are typically this government's harshest critics. And all before the expected election in 2015.
The mining industry has provided governments with a model for implementation, but it would require close federal-provincial co-operation in an area of securities regulations that has been plagued by division.
Last spring, the Mining Association of Canada and the Prospectors and Developers Association of Canada issued a joint report with two NGOs, Publish What You Pay-Canada and Revenue Watch Institute, that urged mandatory reporting of payment to governments, and suggested the best home for such regulations would be provincial securities commissions, which already police a host of other financial reporting standards for publicly traded companies.
That's the approach being adopted in the United States and in Europe. In the U.S., the Securities and Exchange Commission had promulgated new rules that were due to take effect this year. But in a suit launched by the American Petroleum Institute, the oil industry lobby group, a federal court last week ordered the SEC to revisit its rule-making, a decision which will delay implementation of regulations that would not only cover American corporations but major Canadian oil and mining firms that are listed on the New York Stock Exchange and other U.S. exchanges.
While the transparency initiative has stalled south of the border on the typical American roadblock of litigation, the effort here faces its the usual Canadian bugbears of fed-prov relations and First Nations governance. At the same time, the oil industry has serious concerns about the transparency initiative, arguing in the U.S. that it would create a significant regulatory burden and undermine their competitiveness against rivals from developing countries that don't face such rules.
Proponents fear the push for publish-what-you-pay laws will become enmeshed in the ongoing dispute between Ottawa and some provinces over a proposed national securities regulator, with the provinces wary that the Conservative government will use it as Trojan Horse to enter what they claim as exclusive jurisdiction. Mr. Oliver said the effort will likely involve provincial securities regulators, as well as the Canadian Securities Administrators, an umbrella group representing the provincial and territorial securities commissions.
There is also concern that the Harper government will use the transparency initiative to impose further financial reforms on First Nations reserves, who are already resisting new federal accountability rules. In their June report, the mining industry and its NGO partners recommended that the First Nations issue be taken off the table, to avoid a lengthy battle that would delay broader implementation of the rules. It's not clear Ottawa is prepared to give the local aboriginal governments a pass on this.
At the very least, the looming "complexities" pose political challenges to Prime Minister Harper. And his commitment to the transparency cause will made apparent in his government's effort to overcome them.
Shawn McCarthy covers energy from Ottawa.