Archived - The Department of Finance 2001-03 Sustainable Development Strategy:
Progress in 2001-02

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Preparation of Input to 2001-02 DPR

The Department of Finance's 2001-03 sustainable development strategy (SDS) was released in February 2001. Finance's two key sustainable development goals for 2001-03 are ensuring intergenerational equity and more fully integrating economic, social and environmental considerations and objectives into policy making. The 2001-03 SDS identifies four theme areas or key issues upon which to base action over the three years: Building the Future; Integrating the Economy and the Environment; Sustainable Development in the Global Economy; and Greening Operations. The Department's sustainable development action plan sets out a number of objectives and targeted actions for 2001-03 in each of these theme areas. The results achieved in 2001-02 are described in the table below.

Actions for 2001-03 Results Achieved in 2001-02

Key Issue: Building the Future

Objective: Maintaining a Healthy Fiscal Climate
Continue to pursue the Government's Debt Repayment Plan to ensure the debt-to-GDP (gross domestic product) ratio remains on a permanent downward track The federal government recorded a budgetary surplus of $8.9 billion in 2001-02. This marks the fifth consecutive year the federal budget has been in surplus. As a result of these surpluses, the net debt has been reduced by $46.7 billion since 1996-97. This reduction in debt, coupled with sustained economic growth, has resulted in a decline in the debt-to-GDP ratio to 49.1 per cent from its peak of 71 per cent in 1995-96.
Continue implementation of the Government's Five-Year Tax Reduction Plan As part of the Government's long-term fiscal plan, the December 2001 Budget reaffirmed its commitment to the $100-billion Five-Year Tax Reduction Plan. Most of the measures contained in the Planhave now been implemented.
Objective: Building a Strong Society
Ensure predictable and growing funding for health and social programs New funding of $23.4 billion was implemented for health care and early childhood development covering the 2000-01 to 2005-06 period. Canada Health and Social Transfer (CHST) cash in 2001-02 was 18% higher than in the previous year.
Conduct a mid-term review of the Canada Health and Social Transfer (CHST) in 2003-04 and set a new five-year legislative funding track by the end of 2003-04 The Department undertook preliminary background work to support mid-term review and establishment of CHST cash transfers for 2006-07 and 2007-08.
Ensure fiscal disparities are addressed through the Equalization and Territorial Formula Financing programs Leading to the next Equalization renewal in 2004, a work plan has been developed with provincial officials, which outlines research requirements and timelines. Ongoing work and research was reviewed periodically with the provinces and territories to consider options relating to this renewal.

Meetings were also held with territorial officials to consider changes and new approaches to Territorial Formula Financing leading to new agreements in 2004.

Monitor developments and make adjustments when necessary, or in the context of the Canada Pension Plan (CPP) 2001-03 review, to ensure that the retirement income system remains sustainable and meets seniors' needs The Department reviewed the results of the 18th actuarial report on the CPP, which confirms its long-term financial sustainability.

Progress was made with the provinces and Human Resources Development Canada on a number of specific issues in the context of the 2001-03 triennial review of the CPP.

Progress was made toward federal-provincial consensus to consolidate the investment management of all CPP assets with the Canada Pension Plan Investment Board. Legislation was introduced in Parliament in the fall of 2002.

Objective: Implementing Key Federal Sustainable Development Priorities
In the context of planning for future budgets, work with other federal departments and stakeholders to identify ways to address sustainable development priorities The Department worked with Natural Resources Canada to develop a new Wind Power Production Incentive (WPPI). Up to $260 million over 15 years was announced for this program in the 2001 Federal Budget.

Key Issue: Integrating the Economy and the Environment

Objective: Using the Tax System
Examine areas where the tax system may be having an impact on the longer-term goals of sustainable development The 2001 Budget extended the existing intergenerational tax-deferred rollover available for farm property to transfers of commercial woodlots that are operated in accordance with a prescribed forest management plan. Specific criteria for prescribed forest management plans will be developed in consultation with interested parties. This measure promotes the sound management of the resource by preventing the woodlot from being harvested prematurely at the time of the intergenerational transfer in order to pay the tax.

The Department also continued to monitor the tax system and assess its impact on the achievement of the Government's sustainable development goals.

Assess policy options aimed at levelling the playing field between various economic activities Class 43.1 describes certain renewable energy and energy efficiency equipment that qualifies for an accelerated capital cost allowance rate of 30 per cent. The Department announced changes to Class 43.1 in the 2001 Budget, together with consultations with industry, to determine whether additional improvements are required for this CCA class, including a streamlined process for eligibility of new types projects for Class 43.1.

The Department consulted with the Canadian wind energy industry on the definition of a test wind turbine contained in the Income Tax Regulations and the current Natural Resources Canada criteria for a test wind turbine. These consultations considered the possibilities to enhance incentives for wind energy projects. Changes to the regulations were announced July 26, 2002, permitting the installation of more than one test wind turbine as part of a taxpayer's wind farm. Other announced changes apply to wind electricity and qualifying renewable energy and energy conservation projects and provide greater flexibility in the timing of investment financed using flow-through shares.

Evaluate all environment-related tax proposals received from stakeholders, including those to encourage environmentally positive activities and discourage environmentally negative ones The Department continues to evaluate tax proposals put forward by stakeholders on an ongoing basis. As well, the Department has been actively monitoring the work of non-governmental organisations, academics and other government departments on the subject of making changes to the tax system to encourage environmentally sustainable behaviour.
Objective: Developing Uses of Economic Instruments
Lead further work on the design of a potential greenhouse gas emissions trading system in co-operation with other federal departments, other governments and stakeholders A domestic emissions trading analysis office was established by the Climate Change Secretariat in Fall 2001 to take over lead work on emissions trading including through the federal-provincial climate change process. The Department continued to participate in analytical work on emissions trading through its participation in interdepartmental groups as well as the federal-provincial Domestic Emissions Trading Working Group (DETWG).
Continue to conduct economic research and analysis, including through the use of one of the economic models the Department maintains, to assess the potential costs of a major economic instrument, such as emissions trading, and other policy options to reduce emissions of greenhouse gases The Department participated in various interdepartmental meetings focussed on the analysis and modelling of different policy options to address climate change.
Participate in an initiative led by the National Round Table on the Environment and the Economy (NRTEE) on ecological fiscal reform (EFR) over 2000-02 Department officials participated on NRTEE's EFR Expert Advisory Group, which provides ongoing advice and strategic planning for the EFR research program.
Monitor and evaluate the use of economic instruments in the Organisation for Economic Co-operation and Development (OECD) countries Officials from the Department monitored international developments in the use of economic instruments by participating in OECD working groups, including the Working Party on National Environmental Policy. The Department has also reviewed recently released OECD publications relating to economic instruments, such as Environmentally Related Taxes in OECD Countries: Issues and Strategies (OECD 2001).
Objective: Integrated Decision Making - Increasing the Knowledge Base
Participate in the Budget 2000 initiative on environmental and sustainable development indicators (ESDI) led by NRTEE and Environment Canada over 2000-03 Department officials participated on NRTEE's ESDI Steering Committee and also attended various workshops.
Prepare a case study on different nations' use of assistance for green power to be completed by 2003 With the introduction of the Wind Power Production Incentive in the 2001 Federal Budget, the department gained considerable knowledge of issues related to assistance for green power production. Work on a case study comparing countries will be further defined in 2002.
Develop an inventory of economic research on the links between the new economy and the environment beginning in 2001 Discussions on developing an inventory were initiated. The inventory is to be made available within the department in 2002.

Key Issue: Sustainable Development in the Global Economy

Assist in the preparation of Canada's approach to international negotiations on climate change The Department attended the resumed sixth Conference of the Parties in Bonn, Germany in July 2001, and continued to participate in further interdepartmental discussions on the Kyoto Protocol negotiations.
Support initiatives to enhance the understanding of linkages between multilateral environmental agreements (MEAs) and trade rules The Department participated in the development of the Canadian position for multilateral negotiations on the relationship between existing WTO rules and trade obligations set out in MEAs, as called for in the Doha Ministerial Declaration.
Objective: Integrating Environment Into Future Negotiations on Trade and Investment Agreements
Work with the Department of Foreign Affairs and International Trade (DFAIT) on trade and environment linkages in the context of the WTO and possible future trade negotiations The Department participated in the development of a Canadian position for multilateral negotiations on trade and environment as called for in the Doha Ministerial Declaration.

Also, the Department participated in the launch of an environmental assessment of the FTAA negotiations on March 16, 2002.

The Department also monitored and participated in work related to the WTO Committee on Trade and Environment (CTE) and, specifically, is participating in the preparation of the report that the CTE has been mandated to submit at the fifth Session of the Ministerial Conference in 2003.

Work with DFAIT and Industry Canada to promote free trade in the environmental sector and continue to review specific requests to remove tariffs where they are identified as a significant disincentive to the acquisition of environmental technology products The Department developed the Canadian position for negotiations as a follow-up to the Doha Ministerial Declaration. The Declaration calls for negotiations on the reduction or, as appropriate, elimination of tariff and non-tariff barriers to environmental goods and services.
Together with DFAIT, actively participate in and contribute to the work of developing common environmental guidelines for export credit agencies at the OECD and at the G-8 level The Members of the OECD Working Party on Export Credits and Credit Guarantees (the ECG) have concluded the negotiation of a multilateral framework for the environmental review of official export credits. Canada and all other Members (except two) agreed to implement the framework on a voluntary basis beginning January 1, 2002.
Objective: Working With International Financial Institutions (IFIs)
Promote macroeconomic stability in the international financial system and in individual emerging economies The Department promoted macroeconomic stability by providing policy advice to Canada's Executive Directors at the IFIs on key macroeconomic issues pertaining to poor countries and emerging market economies.

The Department contributed to strengthening the international financial system through its work in the G-7 and the G-20. For example, in April 2002, G-7 Finance Ministers and Central Bank Governors adopted an integrated Action Plan to help improve crisis prevention and resolution. The aim is to create the conditions for sustained growth of private investment in emerging markets and to help raise living standards in these countries. In the G-20, Ministers and Governors considered a comprehensive review of their countries' experiences with globalization, and agreed, in the aftermath of the September 11 attacks, on an Action Plan to deny terrorists access to their financial systems.

Support the work of IFIs in the development of alternative energy projects The Department continued to support the development of alternative energy projects at the IFIs. In particular, the Department supported hydro and natural gas power projects at the World Bank and energy efficiency projects at the EBRD.
Work with IFIs, civil society and other stakeholders to operationalize the Comprehensive Development Framework (CDF) as a practical strategy for promoting long-term sustainable development in poor countries Over 50 Poverty Reduction Strategy Papers have been prepared by poorer borrowing countries in cooperation with the World Bank and IMF, which take environmental sustainability issues into consideration as part of operationalizing the CDF. The World Bank's environmental strategy was updated in July 2001 and focuses on mainstreaming environmental considerations and paying more attention to sustainability issues. All Bank projects take environmental considerations into account, and a number of Bank projects include discrete environmental sub-components
Expand the focus on sustainable development in the Department's annual reports to Parliament on the Bretton Woods institutions and the European Bank for Reconstruction and Development (EBRD) The annual reports for 2001 contained comprehensive comments on the World Bank's and EBRD's environmental work.
Objective: Increasing Knowledge and Understanding of International Environmental Financial Practices
Participate in upcoming activities and conferences of the United Nations Environment Programme (UNEP) Financial Services Initiatives Departmental officials attended the UNEP FI Annual Global Roundtable Meeting on Finance and Sustainability on March 13-15, 2002.

Officials also participated in various inter-departmental and external events on sustainable development (SD) and corporate social responsibility (CSR) issues with regards to the financial sector.

On March 21, 2002, the Public Accountability Statement Regulations came into force. These regulations require that federal financial institutions with equity over $1 billion publish an annual report stating their contribution to Canada's economy and society. These statements would cover issues such as SD and CSR. The first round of statements will be released in the first months of 2003.

Key Issue: Greening Operations

Objective: Enhancing Awareness of the Environmental Impact of Our Operations
Develop and implement a communications strategy to encourage the adoption of best practices A communication strategy was developed to aid employees working on the greening of departmental operations. The aim of the strategy is to direct both the content and method of communications regarding the greening of our operations. When the communication of information is required, the strategy is consulted and the various mechanisms for communications are evaluated.
Promote Earth Day and Environment Week Earth Day and Environment Week events were promoted by various means including:
  • Communiqués were sent to each Finance staff member promoting events and providing information relating to the greening of operations and environmental stewardship
  • Contests were developed and prizes were awarded for participation in Earth Day and Environment Week events
  • Displays were presented in the central concourse of the Finance headquarters (L'Esplanade Laurier) to generate interest on various topics relating to the greening of operations and environmental stewardship
Objective: Developing Tools and Implementing Programs to Support Best Practices
Review existing programs All environmental management programs including Earth Day, Environment Week, Ethanol Fuels, InfoSite (Departmental Intranet site), Laser Toner Cartridge Recycling, Pantyhose Recycling, PaperSave, Waste Reduction, Canadian Book Exchange, Computers for Schools, Duplex Photocopying and Desktop Printing, Energy Efficiency Awareness, and Enviro E-mail Account have been evaluated.
Establish baselines and benchmarks for progress in five areas (solid waste, energy use, fleet management, procurement and toxic substances). Baseline data has been collected for all pertinent environmental management programs. During the evaluation process, it was revealed that baselines would not be appropriate for three programs (Computers for Schools, Crown Assets Distribution, and Canadian Book Exchange). These government mandated programs require 100% participation from the Department.

The baseline data has assisted in:

  • Evaluation of program success
  • Identification of changes year over year
  • Development of program revisions as required
  • Guidance on where resources need to be allocated
  • Continued performance measurement
Develop inventories in key areas for regulated substances (e.g. ozone-destroying halons used in fire extinguishers). Areas of concern have been identified. Appropriate persons have been contacted. A draft inventory framework has been developed through consultations with Environment Canada.
Promote the use of ethanol-blended fuel for Finance's three vehicles. Updates have been made to the InfoSite Ethanol Fuels Service Provider List on a regular basis.

Data has been collected on the use of alternative fuels in Departmental vehicles. Methods of further communicating the promotion of the use of ethanol-blended fuels for Departmental vehicles are being explored via the internal (greening of operations) communication strategy.

Develop a purchasing guide and provide related training. In collaboration with purchasing officers and acquisition cardholders, a list of commonly purchased items was developed. A draft guide framework has been developed which is anticipated to support purchasers in the selection and acquisition of "green" products.
Develop means for selling debt to Canadians electronically. In October 2001, the government introduced on-line sales of Canada Savings Bonds and Canada Premium Bonds through its web site. In addition, an electronic payroll savings campaign was piloted in the federal public service, with rollout planned for 2002-03.