CIDA’s Underspending: The Minister’s Explanations Don’t Add Up

While global foreign aid reached an all-time high in 2013, the Canadian government’s contributions fell by over 11%. Among the 28 industrialized countries belonging to the Development Assistance Committee, only debt-ridden Portugal cut aid more drastically than Canada. Not even Greece, in the throes of austerity, cut aid as deeply as Canada—despite the fact that (as our government likes to remind us) we weathered the recent global financial crisis better than any other G8 country and will soon have a balanced federal budget.

Roughly half of the decline in Canadian spending was part of the Harper government’s multi-year decrease in the foreign aid budget, which was announced in 2012. However, the government allowed an additional $290 million to ‘lapse’—that is, go unspent—and it had to return the funds to the government’s central coffers instead of using them to alleviate global poverty.

Letting funds lapse is a form of budget-cutting through the back door—and of budget-balancing on the backs of the poor.

When asked about Canada’s rapidly dwindling generosity, Minister of International Development Christian Paradis replied, “What is good from Canada [is that] we pay what we pledge. And we fulfilled all of our international commitments last year.” Not only did he avoid explaining the reason for the decline, he also misrepresented Canada’s record. Though we may meet many commitments, we certainly do not meet them all. For instance, since the 1970s Canada has repeatedly committed itself to spending 0.7% of its gross national income (GNI) in development assistance. According to the latest data, Canadian aid now represents only 0.27% of GNI, down from 0.34% in 2010.  That certainly counts as a non-fulfillment of an international commitment.

Moreover, the foreign aid budget is approved by Parliament and represents official spending targets. Not meeting them does not represent “savings” (as Paradis’s predecessor Julian Fantino liked to call cuts). Rather, it is a failure to use the money to reduce poverty and improve lives in developing countries—and a failure to meet government commitments.

In a subsequent interview, Paradis stated that the “biggest reason” for underspending $290 million during the 2012-2013 fiscal year was actually twofold: the suspension of aid to Mali following a military coup there in March 2012, and the moratorium on new assistance to Haiti announced by Fantino in January 2013 (albeit mysteriously denied by his office). Though it is heartening to receive a clear explanation from the minister, how plausible is it?

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According to a recent government report for which Paradis wrote the foreword, the Canadian International Development Agency (CIDA) underspent in Mali by $38 million and in Haiti by $35 million. That still leaves $217 million (three quarters of the lapsed amount) unaccounted for. Unmentioned and unexplained by Paradis was the “decision to delay payments” in Mozambique that was noted in the same report, contributing to a $51-million underexpenditure (significantly larger than for Haiti or Mali).

Paradis’ explanation also contradicted the prior testimony of Nadir Patel, the Chief Financial Officer of the Department of Foreign Affairs, Trade and Development, into which CIDA was merged in June 2013. Patel said before a Parliamentary Committee in November 2013 that “the majority of that or a good chunk” of the spending shortfall was due to assessed contributions to international organizations being “a lot lower than we had expected”. That made more sense than Fantino’s earlier obfuscation that “We’re focused on results, not shovelling money out the door”. Still, it would be nice if the government got its story straight.

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A more accurate explanation would be the lack of political will to spend the funds. The government desperately wants to cut expenditure, but presumably fears a popular outcry if it cuts the aid budget even further. Letting funds lapse is a form of budget-cutting through the back door—and of budget-balancing on the backs of the poor. The government presumably hoped that no one would really notice.

If the government were actually committed to spending the aid budget, it could simply have done what CIDA had always done at the end of the fiscal year. It could have quickly approved a flurry of projects (as documented in this blog by Liam Swiss), or it could have paid Canada’s contributions to international organizations a little early. Such well-known tricks long allowed CIDA to ensure that foreign aid funds did not go unspent under the “use ’em or lose ’em” Treasury Board rules. Other government departments have similar methods of making sure they spend their money.

That the government did not allow CIDA to do so last year is a sign of either incompetence or a hidden anti-aid agenda. I am not sure which is worse, but we certainly deserve a more fulsome and honest explanation.

Stephen Brown
Stephen Brown

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