44th Parl. 1st Sess.
February 8, 2023 02:00PM
Madam Speaker, when I look at the legislation, what I see is a modernization that would in essence enable the ministers to continue what I believe is a healthy history. Canada has been perceived as, and has been in real terms, an attraction or magnet for foreign investment. What we are talking about here is ensuring there is more transparency and accountability and the ability to protect and provide security in a better way going forward.
The principles of the legislation are worthy of supporting, no matter what side of the House one comes from. I wonder if the member from the Bloc would concur that, at the very least, this legislation should be going to committee. Hopefully it happens relatively soon.
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Madam Speaker, the member opposite is pretty much telling us that they are going to modernize Bill C-34, that it is a good thing and that we should be pleased.
I am pleased that Bill C‑34 will be updated somewhat; what is sad is that that requires rigour. The problem is that there is no rigour.
Is there a way to come up with a more rigorous bill, one that would require rigour? That is what I would find more interesting and make me happier.
Let us look at an example. In 2021-22, there were 1,255 notices of foreign investment. That is a lot. How many were examined? How many were reviewed?
Not even 1% of investments were reviewed. That is absolutely crazy, but that is what the government considers to be rigorous. It approves everything and has lost control.
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Madam Speaker, I found the member's speech very interesting, particularly with regard to whether there are any documents to support the minister's decision on the acquisition laws.
In the last Parliament, recommendation number one of the unanimous report by the industry committee was that a state-owned enterprise's financial ceiling for review by the government be lowered from $415 million, from a hostile country like China, to zero. This bill, Bill C-34, does not propose any changes to that limit, which means that state-owned enterprises can buy up anything they like in this country under $415 million.
I would like the member's views on whether he would like to see amendments to this bill in that area.
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Madam Speaker, I totally agree with what the Conservative member said.
It does not make any sense for an enterprise owned by foreign interests, not just private interests, but state-owned foreign interests, to be able to buy anything under the threshold he mentioned without any oversight. The government is not even bothering to look at whether it is a good thing or not. A review should be automatic when a state-owned enterprise buys a company here.
That does not mean blocking the transaction. The idea is not to block every purchase that might happen here. The same goes for private interests. The idea is for the government to at least review the purchase and ask questions rather than just letting everything go forward. Right now, the government is sticking its head in the sand and not seeing what is happening. It is blind.
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Madam Speaker, the government allowed a Chinese insurance giant and bank to take over operations of seniors' living facilities. This company was then seized by the Chinese government, which now holds a 98% ownership stake. There are no provisions in the Investment Canada Act that allow for a review of subsequent acquisitions by state-owned companies.
Does the member support closing this loophole?
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Madam Speaker, obviously I agree with my NDP colleague, who raises a really good point.
I would add one thing: out of sight, out of mind. That is true in general. It means that the more distanced the executives are from the company's operations, the less interested they are in the company's well-being and results. It means that the further away the owner of a company is geographically from what is happening here, the less accountability there is and the less likely the company owner is to take our national interests into account in their daily business decisions.
That is something the government needs to keep in mind when deciding whether to authorize transactions.
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Madam Speaker, Bill C-34, an act to amend the Investment Canada Act, has good intentions. It seeks to improve controls and give the Minister of Innovation, Science and Industry more authority over foreign investments in Canada. The Bloc Québécois fully supports this commitment to better protecting the economy of Quebec and Canada from foreign interests that may be harmful to us.
The new review process is essentially the same as the one used in the United States. Adopting it increases the chances that the U.S. will continue to see us as a reliable partner. That is a condition for being a preferred supplier that is well integrated into their supply chains. At a time when protectionism is on the rise among our neighbours to the south, a trend that could seriously disrupt our economy, that is an important asset, and the Bloc Québécois applauds it.
Bill C‑34 is in addition to the new critical minerals guidelines that the government adopted in October 2022, and that apply to 31 minerals that are critical for the long-term economic prosperity of Canada and its allies. Bill C‑34 and Canada's new critical minerals strategy should help stop Chinese companies, among others, from taking over our resources.
All these developments are positive, but they are only half-measures. That is why the Bloc Québécois is asking the government to go much further in controlling foreign investments in general. The bill under consideration is limited to investments affecting national security. This category of investment is extremely sensitive, so focusing on it is justified. However, it represents only a small fraction of all foreign investments made in Canada. It is clear that the safety net provided for in the new system created by these proposed amendments to the Investment Canada Act is inadequate.
Here are some figures. Of the 1,255 investment projects filed last year, under the new rules being proposed in Bill C‑34, only 24 would be subject to review. Clearly, this is like a grain of sand on a beach. This bill would affect only 2% of all investment projects filed last year. The other 1,221 projects from last year would remain subject to the new rules. Those rules provide for a review to determine whether a project will truly provide a net economic benefit to Canada.
There are six criteria then used to assess whether a transaction is beneficial. That said, I would draw the attention of my colleagues to the fact that a review is only triggered when a project exceeds a certain monetary threshold, as my colleague from Pierre-Boucher—Les Patriotes—Verchères explained.
That is where the problem lies. Over the years, the threshold at which the government must assess whether an investment is economically beneficial has been significantly increased. It has more than tripled in the last 10 years. At the same time, the number of investment projects is increasing every year, and that must be taken into consideration.
The consequence of this aberration is that virtually all projects are rubber-stamped without additional review. Last year, of the 1,255 projects submitted, only eight were subject to a review under the Investment Canada Act. That is less than 1%.
The member for Winnipeg North says that the law is being amended, so it must be good. The Liberals have created a bill that does not affect even 1% of the projects. That is not very ambitious. It reminds me of yesterday's smoke show on health transfers.
The review rate was 10% as recently as about 10 years ago, in 2009. In reality, this measure has become essentially ineffective over time. It might as well not exist; it would not make much difference. The situation is such that foreign investments are rubber-stamped without analysis, save for exceptional cases. Understandably, less than 1% certainly qualifies as exceptional.
Everyone knows how much I love history, how passionate I am about it, and I believe that building our future depends on having a good understanding of the past so we can learn from our successes and avoid repeating mistakes. I would like to share some snippets of history to illustrate why we need to do more to control foreign investment.
Since the Quiet Revolution, the Government of Quebec has established some important economic and financial levers. These tools enable it to pursue a policy of economic nationalism designed to give Quebeckers more control over their economy. That does not mean Quebec is not open to foreign investment. We are open to it because it can drive growth and development. However, we believe the priority is supporting our own businesses to help them grow so we can protect the significant decision-making power of our own corporate headquarters.
In 1988, former Parti Québécois premier Bernard Landry lobbied for the North American Free Trade Agreement, better known as NAFTA, which was signed with the U.S. and Mexico in the early 1990s. Quebec's strategy worked. Quebec's decision to invest in its businesses paid off, and many flagship companies headquartered on Quebec soil grew.
As the figures show, the presence of head offices is important. There are currently close to 578 head offices in Quebec. This represents approximately 50,000 jobs that pay twice as much as the Quebec average. On top of that, head offices provide nearly 20,000 other jobs for specialized suppliers such as accounting, legal, financial and computer firms, and so on. Structurally, companies headquartered in Quebec also tend to favour procurement from local suppliers, which creates a positive economic circle. Finally, companies tend to concentrate their strategic activities, such as scientific research and technological development, where their head office is located.
As the Bloc Québécois science and innovation critic, I have to emphasize how important this characteristic is, since Canada ranks last in the G7 when it comes to corporate investments in research and development. This statistic can probably be traced to the fact that the Canadian economy has always been recognized as a subsidiary economy. One might think of the automotive sector, with Ford Canada and GM Canada, or the oil sector, with the Shell Canadas and the Imperial Oils of the world.
There is no shortage of examples of the harmful effects that ill-advised foreign investments can have on our economy and even our prosperity. Here are just a few.
First, there is the loss of decision-making powers and head offices, which condemns us to being a subsidiary economy, where foreigners decide for us. Second, there is the weakening of Montreal's financial sector as a global finance hub. Third, there is the total dependence of our businesses on foreign suppliers and supply chains that are more fragile than ever. We saw that during difficult times, such as the COVID‑19 pandemic. Fourth, there is the possible land grab by rich foreigners who do not care about our social and economic priorities. That is a concrete example. Fifth, there is the loss of control over our natural resources, which are our country's greatest asset.
By focusing exclusively on national security, Bill C‑34 does not address Quebeckers' and Canadians' gradual loss of control over their own economy. I want to reiterate that we invite the government to amend its bill to make it much more bold and ambitious and to modernize the entire Investment Canada Act and not just the part on national security.
As always, the Bloc Québécois strives to be a constructive partner, and as such it is recommending three types of amendments. The first is to lower the review threshold to prevent most foreign investments from being approved without review. The second is to pay special attention to strategic sectors of the economy. The third is to develop a tighter process for transactions involving control over intellectual property patents.
I hope the government will listen to our practical proposals and modernize this bill.
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Madam Speaker, I am encouraged that, toward the tail end, the member referred to the idea that there could be room for improving the legislation. This is a reason that I am hopeful the member would share those thoughts with the minister. Let us ultimately see the legislation go to committee.
At the beginning of his speech, the member referred to this whole one per cent factor. We also need to recognize that some industries need more attention than others. Information technology is an example of this, and I think that is another area that the committee could be looking at.
Could the member provide some additional thoughts in regard to those industries he would think offhand, and I do not expect a list, that there should be more attention given to?
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Madam Speaker, I thank my colleague from Winnipeg North for that good question. I like these concise questions that are on topic and are neither provocative nor arrogant.
To answer my colleague's question, there are indeed several sectors. I am thinking about the biopharmaceutical sector in particular.
In the early 2000s, there were a lot of pharmaceutical companies in Canada, primarily in Quebec. They are all gone now because of the underinvestment in research and development and the underinvestment in programs to develop them.
I think that we need to focus on our own expertise and protect what we have. We are in a globalized economy, and competition is fierce. I encourage my colleague from Winnipeg North to realize that Canada is the only G7 country that cut its investments in research and development. That is too bad. As I said, Canada is the only G7 country that is still unable to stimulate the private enterprise economy.
There is a parallel to be drawn. As I explained very clearly in my speech, when we have fewer head offices, we have fewer means of intervention. This creates jobs in parallel, including with partners in nearby supply chains. Understand this: If we allow others to make decisions for us, people overseas will not take us into consideration as much.
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Madam Speaker, in response to the member for Winnipeg North, I will add food as one of the industries that should be on the list.
However, my question is around the issue of assets. The Investment Canada Act focuses on companies, but more and more, we are seeing Canadian companies selling their strategic assets, sometimes to countries that are not favourable to us. A company could remain Canadian but sell off a mine; a technology; or in our intangible asset world, even data.
Could the member speak to the issue that, if the bill goes to committee, which I believe it will, we should be looking at it in terms of the areas of assets in addition to just companies?
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- Feb/8/23 5:46:08 p.m.
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I would ask the hon. member for Rimouski-Neigette—Témiscouata—Les Basques to please answer briefly because we have to get to the next question.
The hon. member.
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Madam Speaker, this is a very interesting subject. We have to avoid the intellectual shortcuts that people sometimes take in the House.
I sure appreciate the opportunity my colleague gave me. My colleague from Pierre-Boucher—Les Patriotes—Verchères gave us a very good example. Rona was purchased by foreign interests, a company called Lowe's, not to name names. It was then resold for a pittance. The company the government had invested in was originally valued at over $3 billion, but it was sold for $400 million.
Our constituents are watching us. They placed their trust in us, and they want us to manage their investment with great care. In this case, it was a total failure.
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Madam Speaker, of course, coming from British Columbia, my concern is that we saw a Chinese company come in and buy a lot of seniors' homes. When I look at the piece of legislation, there is still a significant loophole. If something were taken over by the Government of China, as it was before, there would be no process for investment Canada or the minister to be able to review the next acquisition.
Is this something the member would support the NDP to look at in the committee?
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Madam Speaker, I thank my colleague for her question. I touched on this subject briefly in my speech. People with foreign interests or economic interests coming to invest here do not always have our social investments at heart.
She mentioned seniors' homes. I fully agree that we need to pay close attention in modernizing the bill, and we must consider that the interests of foreign investors will not always align with ours.
She makes an interesting point. I gave the example of land grabs. Everyone here needs to eat, just like the general population. It is the same thing. The Bloc Québécois will certainly be able to work with my colleague.
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Mr. Speaker, I rise today to speak to Bill C‑34, an act to amend the Investment Canada Act.
Today, our government is proposing important amendments to modernize this legislation. We will never hesitate to act swiftly and decisively when there is a threat to our national security, and these amendments are at the heart of that effort.
The purpose of this bill is to modernize the Investment Canada Act. The proposed amendments will help make Canada more agile in addressing any threats that may arise from foreign investment, thereby maintaining Canada's position as a top destination for doing business.
Today I want to talk specifically about increasing foreign investment across the entire economy and in certain key sectors of Canada's economy over the past few years. More than ever, we know and recognize the importance of ensuring that we are doing everything we can to promote and foster a strong, innovative green economy. A clear and predictable regulatory regime in Canada is essential for businesses and investors.
As we know, Canada is one of the best places in the world to do business. Businesses that invest here benefit from favourable economic conditions, a stable political climate, safe infrastructure and an innovation-friendly environment. Canada's advantageous position makes companies that do business here more competitive and increases prosperity for all Canadians.
Over the past few years, more and more foreign investors have chosen Canada for its business-friendly environment. The flow of foreign direct investment in Canada has nearly doubled over the past five years.
I will be sharing my time with my hon. colleague and esteemed friend from Halifax.
According to the United Nations, in 2021, Canada had the second-largest ratio of foreign direct investment stock to GDP among G20 countries. However, this increase in the volume of foreign investment also comes with certain risks. For example, the number of investments reviewed under the Investment Canada Act also doubled over the past five years. There are also more and more investments related to sensitive technologies, critical minerals and sensitive information.
It is also important to point out the recent increase in national security reviews under the Investment Canada Act. There have been more national security reviews since 2020 than in the previous 10 years. This upward trend is expected to continue, given that Canada is an attractive destination for foreign investors.
The reality is that today's geopolitical dynamic is evolving quickly. Hostile actors could seek to disrupt Canada's economic security through our open market economy. Threats to Canada are changing all the time, and the government must ensure that Canada's foreign investment review regime strikes a good balance between promoting foreign direct investment and protecting Canada's interests and security.
We are all proud that Canada is an open economy and a trading nation. Our country is one of the most attractive destinations for the foreign investments that are necessary to our economic prosperity. In order to ensure that Canada remains an attractive destination for foreign investment, we must have a clear and predictable regulatory regime. That is why this new bill, which modernizes Canada's foreign investment review regime by amending the Investment Canada Act, or ICA, is so important.
The amendments to the ICA will make the investment review process more effective and transparent, while ensuring that the interests and security of all Canadians are better protected. This new Bill C-34 represents the most significant update of the Investment Canada Act since 2009.
Together, these legislative amendments will help ensure that Canada is able to enjoy the economic benefits of foreign investments in all sectors, while strengthening its ability to act quickly and decisively to defend against threats to our national and economic security.
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Madam Speaker, I listened intently to the member's speech. I would like to ask the hon. member what he thinks is contained in this bill that would improve the government's performance from the last eight years and the issue of national security reviews of companies bought by Chinese state-owned enterprises in Canada.
Essentially, those powers would not be changing in this act, and the government continues to send notices to Chinese state-owned enterprises that they can buy our companies and our assets without any national security review.
What does the member see in the bill that would change that?
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Madam Speaker, what I would say is that the direction of the bill is so important. I have risen many times in the House to talk about corporate concentration and foreign ownership. Especially, when foreign owners attempt to purchase an asset in Canada, whether it is a holding company, an operating company or straight asset, and they are backed by, say, a fund that is backed by the government, we need to have the tools and resources to block those types of acquisitions.
If this is going on that track, the bill will hopefully be sent to committee for further studies, further recommendations and more in-depth questions.
I appreciate the hon. member's question. I share those concerns.
We need to make sure that we protect our assets and our companies from national security threats from wherever they may arise throughout the world.
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Madam Speaker, if I am not mistaken, the member across the way is an accountant by training. So am I, as it happens.
He has been an MP in the Liberal government for a few years now. If I am not mistaken, he, like me, was elected in 2015. In 2015, the net benefit review threshold was $369 million. Today, the threshold is $1.9 billion. There is quite a gap between $1.9 billion and $369 million. However, it was the member's government that raised the threshold year after year. In any case, it does not even review 1% of investments.
My question is the following. As an accountant, does he think that $1.9 billion is pocket change?
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Madam Speaker, I am actually an economist by training, but I have about half my accounting designation as well, along with my CFA charter. Therefore, I am well versed on the finance issues.
I will say that on any sort of net benefit test, the test should not be on the value of the transaction. It should actually be, in my opinion, on the strategic asset that is being looked at or being purchased by a foreign entity or an entity that we would consider injurious to Canada's national security interests and national economic interests.
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Madam Speaker, Chinese insurance agent giant Anbang took over B.C.-based Retirement Concepts, a Canadian company that operates senior living facilities.
At the time of acquisition, Anbang was a privately owned corporation. After a review by industry Canada, the takeover was approved, and relatively shortly afterwards, the company was seized by the Chinese government, which now holds 98% ownership. At present, there are no provisions in the ICA that would allow industry Canada or the minister to be able to review this subsequent acquisition by a state-owned enterprise of an ICA approved takeover or merger by a foreign private company.
Does the member opposite not think that this is an issue? Does he agree that amendments are required?
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