44th Parl. 1st Sess.
February 8, 2023 02:00PM
Madam Speaker, I wonder if my colleague can provide his thoughts in regard to the announcement with respect to the battery plant in the Kingston area.
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Madam Speaker, first I just want to take the opportunity to welcome Duncan Vendetti to Parliament Hill today. Duncan is a grade 6 student from Our Lady of Lourdes school in Kingston. There is no doubt, mark my words, that he will one day be sitting in the House. I am sure he will be on this side of the aisle, but the good news for my Conservative colleagues is that I am sure they will get along much better with Duncan than they do with me.
In terms of the battery manufacturing plant, this is a great example of how this piece of legislation would lend itself to the minister's being able to establish and bring new relationships to Canada, just like he has done by bringing to Canada the Umicore project, which will set up the largest electric-vehicle battery manufacturing plant in North America right outside of my riding in Hastings—Lennox and Addington.
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Madam Speaker, I am pleased to rise today to speak on behalf of the residents of Davenport in support of Bill C-34, an act to amend the Investment Canada Act.
The Investment Canada Act, for those who may not know, is designed to encourage investment, economic growth and employment in Canada. It is a very important act for our federal government, because as we continue to try to create a stronger culture of innovation in Canada, as our economy moves increasingly from tangible to intangible or non-physical assets, as intellectual property becomes more important, and as we work to define the freedom to operate rules in Canada, acts like the Investment Canada Act are very important.
It is also an act that provides mechanisms to review foreign investments in Canada to ensure that foreign investment is a net benefit to Canada and does not harm national security. The rules in the act are established to provide investor certainty while giving Canada the ability to block individual investments under specific circumstances. This act is critical to ensuring a prosperous economic future for Canada and to guiding the right type of investments in our country.
Let us review some of the key changes to the Investment Canada Act that are being proposed by Bill C-34. It is not first time we have made changes to this act, but it is probably the largest set of amendments we have proposed since 2009.
The first thing the bill would do is to introduce a preimplementation filing requirement for specific investments. This would give the Canadian government more tools to review any proposed investments in sensitive business sectors.
It would also give authority to our Minister of Innovation, Science and Industry, in consultation with our Minister of Public Safety, to order further national security reviews of investments.
It would update penalties to strengthen deterrence of any behaviours we may not want.
It would introduce the authority for the Minister of Industry, again in consultation with the Minister of Public Safety, to impose interim conditions on an investment to reduce the risk of national security injury taking place during the course of the review itself, such as through the possible transfer of assets, intellectual property or trade secrets before the review is complete.
The bill would provide greater flexibility in mitigating national security risks by allowing the Minister of Innovation, Science and Industry, in collaboration with the Minister of Public Safety, to impose binding undertakings on investors. These undertakings would have to demonstrate that they adequately mitigate the national security risk that would arise from the investment in question.
Finally, the bill would allow Canada to share case-specific information with international counterparts to help protect common security interests.
The Investment Canada Act not only sets out the rules that would encourage more investment and trade in Canada, but also includes a number of measures that would serve to protect any foreign-made investments in Canada as well.
The economy is changing, the global trade and investment environment is changing, and so must our rules, legislation and regulations change. This would ensure that Canada is able to attract the best foreign investments and trade that would encourage economic growth, innovation and employment opportunities in Canada while also protecting Canada's national security and interests as they relate to trade and foreign investments.
As I mentioned earlier, this is not the first time that our Minister of Innovation, Science and Industry has updated the Investment Canada Act. He has done so at least three times in the last couple of years. The first time, in March 2021, he updated the national security guidelines in light of the then-evolving national security concerns to include investments involving sensitive personal data, sensitive technologies and critical minerals, as well as investments by state-owned or state-influenced investors.
The second time, we adjusted our federal government act to begin in February 2022, when Russia began its unprovoked and illegal attacks against Ukraine, creating an environment of heightened national security and economic risk. At that time, we put out a policy advising clearly that any investment with ties to Russia would only be found to be of net benefit to Canada on an exceptional basis. Moreover, any foreign investments with ties to the Russian state would also be viewed as potentially harmful to Canada's national security.
Finally, the third time we updated the Investment Canada Act was when the federal government announced a new policy related to foreign investment in Canadian critical mineral sectors. The policy advised that any investment in the critical mineral sector by state-influenced investors would only be approved as being a net benefit to Canada on an exceptional basis. Then we took quick action to block transactions that would be injurious to Canada's national security, and the government ordered the divestiture of investments by three foreign companies in Canadian critical mineral companies.
This announcement was a change in procedure, and it is also part of our efforts to modernize and improve the administration of Canada's investment review regime. Despite previously having the authority to announce decisions of this nature, the Government of Canada had traditionally not done so.
Again, it is not the first time updating the Investment Canada Act. Indeed, this bill is the latest in a series of actions our government has taken to ensure that we have the right tools and flexibility to protect Canada's national security interests. In turn, I believe that this would ensure an investment climate in Canada that is positive for economic growth both now and in the future.
Let me take a moment to relay some of the great investments we have already made in the area of innovation, science and technology with an eye to the future. For me, these are the types of investments that absolutely set Canada up for success both now and in the future.
In late January, the Minister of Innovation, Science and Industry announced an investment of $100 million through the strategic—
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- Feb/8/23 5:08:31 p.m.
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On a point of order, the hon. member for South Shore—St. Margarets.
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Madam Speaker, this bill is about foreign direct investment in Canada. It is not about providing subsidies to foreign companies to operate battery plants. I would ask the member if she would—
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- Feb/8/23 5:08:44 p.m.
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I would remind the hon. member that there is some latitude during speeches. I am sure that the hon. member will come back to the original bill that is before the House.
The hon. member for Davenport.
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Madam Speaker, I was highlighting some of the great investments we have already made, which are innovative and very much set Canada and Canadians up for success.
At the end of January, the Minister of Innovation, Science and Industry announced an investment of $100 million through the strategic innovation fund to support Saskatchewan's BHP's $7.5-billion project to develop its world-leading, low-emissions potash fund. To me, this innovation is one of the many investments we are making that are going to help make sure we will be reaching our net-zero targets by 2050.
In mid-January, our Minister of Innovation, Science and Industry announced the launch of Canada's national quantum strategy, which will shape the future of quantum technologies in Canada and help create thousands of jobs. It is an investment of $360 million, and the strategy will amplify Canada's existing quantum research and grow quantum technologies, companies and talent.
Here are another couple of other things I am really proud that we have done.
Our Minister of Innovation has also signed MOUs with Volkswagen to investigate opportunities for Canada to contribute to Volkswagen's global and regional battery supply chains, which will be of mutual benefit to both of our countries and will advance our respective EV and energy agendas. Another great MOU I want to point out is the one we signed with Mercedes-Benz to look at opportunities to promote co-operation and to explore ways to advance opportunities across Canada's electric vehicle supply chain, including, but not limited to, securing sustainable sources of raw materials moving forward.
I will mention one more thing I am very proud of.
In 2019, we set up the innovation asset collective, which is a $30-million pilot that very much helps Canadian clean-tech companies harness the power of IP to maximize the value of their intangible assets and set the stage—
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- Feb/8/23 5:11:01 p.m.
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On a point of order, the hon. member for Calgary Rocky Ridge.
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Madam Speaker, I hate to have to do this, but in the time since you ruled on the previous point of order, we have not had any connection yet to the bill.
Perhaps, through you, Madam Speaker, we could remind the member to tie this to the bill, because we are actually talking about Bill C-34 and not a laundry list of funding announcements by the government that have nothing to do with the bill.
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- Feb/8/23 5:11:27 p.m.
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Again, there is a bit of latitude, but the hon. member is correct. I would remind those who are giving speeches today and speaking on this that they should be referencing the bill and maybe mentioning the bill during their allocations.
The hon. member for Davenport has 30 seconds to continue.
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Madam Speaker, I thought I had a minute left, but I just want to say to everyone who stood on a point of order that I very much outlined exactly what the bill is meant to do, why it is important to be part of the Investment Canada Act and why it is so important for both current and future economic success for Canada.
As we create a culture around intellectual property, as we work to translate inventions and innovation, as we work to educate and protect IP generated from R and D investment, and as we continue to encourage and need foreign investment and trade in Canada, it is important to modernize our Investment Canada Act for the good of our economy, for jobs, for current and future prosperity and to protect our national security interests.
I am thankful for the opportunity to speak—
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- Feb/8/23 5:12:38 p.m.
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The hon. member for South Shore—St. Margarets.
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Madam Speaker, the first half of the member's speech was a bit about this bill. The last half, obviously, was not.
She is a member of the government, and in 2017, it sent a letter to a company in B.C. that said it is okay to be bought by a state-owned enterprise from China. The former minister of industry said that. The company in China was called Hytera. In 2019, the government did not even do a national security review of this, nor of the acquisition of our only lithium mine, Tanco, in Manitoba.
Can the member enlighten this House, with her extensive reading of the bill, by telling us which clause in the bill will stop that from happening in the future?
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- Feb/8/23 5:13:33 p.m.
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It is my duty, pursuant to Standing Order 38, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for Victoria, Climate Change; the hon. member for Kitchener Centre, Health; and the hon. member for Nunavut, Indigenous Affairs.
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Madam Speaker, the changes that are being proposed to the Investment Canada Act would provide more flexibility and agility for our minister to make these types of decisions in the future. My understanding is that he is always advised by our national security advisers. We will always take direction from those who provide us advice.
There is a reason we are here: We are constantly modernizing our act to make sure that the national security interests of Canada continue to be protected.
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Madam Speaker, I would like to thank the member for her interesting speech. What is unfortunate is that there is a major problem in Bill C‑34. I do not understand why the government has not addressed it.
It had the opportunity to modernize the Investment Canada Act. It addressed national security. That is a good thing. However, there is another aspect, the net benefit review, which has an extremely high threshold. At this time, the threshold for the review of an investment is between $1.3 billion and $9 billion.
Does my colleague not find this threshold to be too high, and that it makes no sense to not examine investments that fall below that very high threshold?
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Madam Speaker, as I mentioned before, the Investment Canada Act provides for net benefit and national security reviews of foreign investments in Canada. We have proposed a number of changes in this particular act. Assuming the bill passes second reading in the House and goes to committee, there will be many opportunities to consider amendments that might strengthen it.
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Madam Speaker, one of the concerns the NDP and I have about this bill is that we should be looking more closely at transactions where a company is being taken over by a state-owned enterprise. The member for South Shore—St. Margarets mentioned Chinese investments. In British Columbia, we had a case where Anbang Insurance bought Retirement Concepts, a local British Columbia company that operates long-term care facilities in B.C. That company was then taken over by the Chinese government, yet there was no automatic trigger for an analysis there. We should have that in this bill for when there is a takeover by a foreign state-owned enterprise.
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Madam Speaker, I want to thank the hon. member for his important work on this file.
As I mentioned, it is not the first time we have updated the Investment Canada Act. We have taken a number of actions to ensure that we have the right tools and flexibility to protect Canada's national security interests. Assuming the bill passes seconding reading in this House, it will go to committee, and there will be many opportunities there for us to have a debate and talk about what additional elements we might want to see in it.
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Madam Speaker, I would like to mention that I will be sharing my time with the member for Rimouski-Neigette—Témiscouata—Les Basques.
We are here today to talk about Bill C‑34. To date, there has been a great deal of discussion about national security, which is the main part of the bill. This bill seeks to reinforce the powers the minister has to take action to protect national security. This is not a bad thing; it is even a very good thing, but decidedly, it does not go far enough.
I also want to talk about one of my concerns relating to another aspect of the Investment Canada Act, which, unfortunately, the bill under consideration does not address.
In fact, there are a number of things in the Investment Canada Act. First, people abroad who want, for example, to purchase a company, invest in a mine, start a research firm or make any significant investment whatsoever have to fill out a form and give notice of their investment indicating their intention.
Then, the federal government must determine whether it wants to review the actual investment. It can review it based on national security criteria, which is what this bill is about. The bill seeks to give the minister more power and to tighten the review criteria.
The other review criterion has to do with the net benefit for Canada. That is something that is a little more vague and that is not very clearly defined. I would even go so far as to say that there is not much on the subject in the current act. That gives the minister a lot of latitude in determining what constitutes a net benefit for Canada. In some unforeseen circumstances, it might be good for the minister to have the latitude to use their judgment. However, it would be good to have a bit more accountability and proactivity on the part of the government with regard to the use of the act.
I would like to talk about where the review threshold was when I was first elected in 2015. I would note that the minister is not obligated to conduct a review. Reviews are mandatory only beyond a certain threshold. When I was elected in 2015, the review threshold was $369 million. What is it now? Better be sitting down for this. It has been indexed, but let us just say it is indexing on steroids. Today, in 2023, the threshold ranges from $1.3 billion to $1.9 billion. That means not all transactions go through a net benefit review if they are below that threshold.
The $1.3-billion threshold is for businesses with which Canada does not have a trade agreement, while the $1.9-billion threshold is for those with which it has agreements, such as the U.K., the U.S., the EU and so on.
This means that some Quebec companies are not protected by the current review threshold. These companies are very important to Quebec's economy, which is very different from Canada's economy. The Canadian economy relies heavily on subsidiaries of U.S. companies, but Quebec's economy is more about small and medium-sized businesses. Slowly but surely, some small businesses grow by dint of hard work and even end up getting listed on the stock exchange.
Some of these major Quebec corporations that are publicly traded and are not protected under the current review threshold include Héroux-Devtek, which has a market value of $560 million, Lassonde Industries, which has a market value of $805 million, Cascades, which has a market value of $909 million, TC Transcontinental, which has a market value of $1.3 billion, and Resolute Forest Products, which has a market value of $1.6 billion.
All of these companies could disappear overnight. Any big shot from the U.S. or any other country on the planet could come in and take them over. The minister would not even look at it. It would be rubber-stamped. Thank you, good night, goodbye to that company. These are major, strategic corporations in terms of Quebec's national interest, and the federal government will not even look at them. It could not be bothered to take the time to analyze the transaction. It is unbelievable.
Worse, in some situations, a review is conducted, but it is not always very rigorous. Let me give an example. My riding was home to a company called Rona. Everyone in Quebec knows Rona. It is a major hardware store that sells all the building materials used in homes. In 2016, the company was sold for $3.2 billion to the American company Lowe's, a company in the same sector.
What happened? A review was supposed to take place because, at that time, the threshold was set at $369 million and it was exceeded. However, immediately after the transaction, some potential wrongdoing came to light. The former board of directors was fired, as was its president, Robert Dutton. Complicit in this was the president of the Caisse de dépôt et placement du Québec, who allegedly planned his exit in order to facilitate the sale of Rona, since it was blocked the first time around, in 2012. This former president of the Caisse de dépôt et placement du Québec is now working for the Liberals. His name is Michael Sabia.
What is interesting is that when we learned about this, we immediately wrote to Minister Bains. We asked him to take a look at what was happening before authorizing the transaction. We just wanted to put it on hold to see if it was a good idea for Quebec or not. What happened? The minister rubber-stamped it. He did not ask any questions. Before we knew it, the company was gone. That is sad. The company was re-sold for $400 million U.S. when it was originally purchased for $3.2 billion. That loss of value signals an abysmal failure. It was sold for a pittance to another U.S. company after Lowe's fell flat on its face in Quebec.
Well, after the minister approved the transaction, we wondered why he made that decision and what his thought process was. There should have been a net benefit to Canada review. We submitted an ATIP request to see what documents and analyses helped the minister make his decision. The answer we got was surreal. Here is what it said: We carried out a comprehensive search and regret to inform you that we found no documents corresponding to your request.
There are no documents. The minister referred to zero documents and zero analyses to make his decision about net benefit to Canada. That is what passes for rigorous analysis by the Liberals for a company worth $3.2 billion, a massive company of strategic value to Quebec. What do people buy at hardware stores? They buy building materials. Building materials are made from raw materials. What do we produce here? We produce wood, nails, shovels and so on. The products that end up on the shelves in those stores are products we make in Quebec.
What happens when a foreign company buys that company? The foreign company has its own suppliers already. For example, an American company will use American suppliers because it already does business with them. Quebec suppliers get kicked to the curb. That is what happened, unfortunately. Many Quebec suppliers lost their orders.
Now Rona will have a second chance with its new owner. We hope things will improve, but it is sad. What happened was the Liberals could not be bothered to review the transaction to see whether it was beneficial or whether it was even over the threshold. That is a big problem. I find that really odd. When a company comes here from overseas and takes a heavy-handed approach, often our first instinct is to assume that they are much better than us, that they are much bigger and therefore unbeatable. We think we have no choice but to sell, so we immediately roll over.
Companies like Target come to mind. When Target came along, the owners of Zellers sold all their stores. It was a fire sale. Run for your lives. Target was going to come in and kill everyone. What happened to Target? It did not last a year before it shut down. Another example is Provigo. Provigo was a Quebec company, a large grocery store chain that created competition. Now we have Loblaws, which exists in the market and is up against Metro, but there used to be other players, too. Unfortunately, when Provigo disappeared, there was less competition, which resulted in higher prices in grocery stores. Today, there are no longer any Loblaws grocery stores in Quebec. Loblaws put the Provigo signs back up. They realized that the Loblaws stores were not working.
Just because a foreign company comes here does not mean that it will succeed. We too have good, solid companies. We should be proud of them. We should ask questions before rubber-stamping any old transaction. Unfortunately, it seems that this government does not understand that. There was an opportunity with Bill C‑34 to do more to defend our companies, and it did not do so. I am really disappointed.
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