The North-South Institute



Canada is Silent on AID Innovation

March 8, 2006


Embassy Magazine

“With these contributions, we are going to extend our solidarity base using a fraction of the new wealth created by the globalization process, a large part of which goes untaxed.” Thus French President Jacques Chirac introduced the international solidarity levy on airline tickets to a large assembly commencing the Paris Conference on Innovative Development Financing Mechanisms on Feb. 28.

Among the approximately 600 people gathered in the golden chambers of the Elysée Palace, were over 80 finance, foreign and development ministers, along with three presidents and UN Secretary-General Kofi Annan. Some 93 participating countries, nine observer governments (including an economic officer from the Canadian embassy) and some 70 non-governmental organizations were represented. The “cross-over” dimension of the conference, embodied in the participation of AIDS, education, aid and debt advocates, was celebrated by one minister who noted that “foreign ministers are talking about health.”

In the context of the admitted failure, so far, to provide the funding necessary to meet the Millennium Development Goals by 2015, and citing a gap amounting to tens of billions of dollars, the airlines levy is seen as a significant –if insufficient– contribution to meeting needs in the area of HIV/AIDS. Although the final channels for the funds raised is not completely confirmed, the French and allied governments are proposing the creation of an International Drug Purchase Facility (IDPF) to negotiate lower prices and adequate supplies of anti-retroviral and other pharmaceuticals. Non-governmental and some official voices have raised cautions about setting up another international body, when UNAIDS and the Global Fund already exist, but few if any criticize the objective of putting the new funds to work against HIV/AIDS, tuberculosis and malaria.

One question which hardly anyone wishes to address –although some cite– is why innovative sources are necessary to supplement official development assistance, while governments continue to spend a trillion dollars a year on arms when less than a tenth of that amount is invested in human security via development funding. As we used to say in church circles, if they want more for the military, let them hold a bake sale.

Without challenging current budgetary priorities, France and 12 other signatory countries are proposing additional innovative ways to raise the pounds, euros or pesos needed to begin closing the gap.

The rationales provided for the airlines levy include the realization, brought home by SARS amongst other threats, that airlines and the travel industry in general have a great deal to lose from global epidemics. The French government cites arguments that the levy assists “front-loading” aid, and would provide predictable and sustained revenue. Virtually all participants cited the urgency of developing sources for funding over and above existing official development assistance (ODA) commitments to meet objectives like universal sustained access to prevention, care and treatment for HIV/AIDS, tuberculosis and malaria.

While the French government did not secure as many pledges of support as it may have hoped, UK Chancellor Gordon Brown confirmed a bilateral agreement which would see France contributing to the International Finance Facility and the UK to the airline levy. The German Development Minister made an emotional pledge to fight for her government’s support of the effort. Norway’s Development and Foreign Ministers pledged support and leadership in follow-up activities, and a Pilot Group for Solidarity Contributions for Development was created.

The accent was placed on innovative sources. As Mr.Chirac noted in his opening address, innovative financing proposals, like the levy and proposals for taxes on carbon emissions and currency transactions, “were considered unrealistic a short time ago. They were even taboo in certain international organizations. Now they are discussed in all the major international forums.”

The various ministers and officials who entered the debate repeated pledges to initiate a variety of innovative and additional sources of revenue for development, not only an airlines levy. This is due, in part, to the work of the group of governments, the Alliance against hunger and poverty, initiated by Brazilian President Luiz Inacio Lula and France’s Chirac, and which now includes Algeria, Chile, Germany and Spain. It is supported by solid intellectual work done by technical teams at the UN and by one led by French expert Jean-Pierre Landau.

Canadians will recall that Parliament passed a resolution endorsing Canadian participation in a currency transaction tax in the late 1990s, and Canada and Norway supported study of innovative measures at the UN Geneva 2000 conference. Yet Canada’s voice is presently muted in the discussion of new initiatives. Official sources testify to Canada’s “interest” in innovative sources, in general, but cite objections to virtually every individual proposal – IFF, Currency Transactions Tax (CTT), airlines levy, etc. Unlike Norway, which played a particularly positive role at the Paris Conference, Canada was silent. Nor does Canada appear to be developing an innovative proposal of its own, although organizations like the non-governmental Halifax Initiative and the Canadian Council for International Cooperation continue to pledge support. Research on implementation continues at The North-South Institute which has also participated in the UN’s Financing for Development expert consultations and multi-stakeholder panels.

Clearly, the moment for moving forward on the levy, the CTT and other innovative proposals has arrived. The new Canadian government has the opportunity to take part in joint efforts which have significant backing. Lacking such initiative, it has the challenge of developing its own proposals to meet global needs.

John W. Foster is a Principal Researcher at The North-South Institute. He represented the Canadian Council for International Cooperation at the Paris Conference.