44th Parl. 1st Sess.
February 8, 2023 02:00PM
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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Madam Speaker, the care of our seniors in long-term care facilities throughout this country, whoever they may be owned by, is of paramount concern to me and the residents of my riding, as is making sure that we maintain that commitment and promise to take care of our seniors at whatever age they are, so they can have a secure and dignified retirement. That is a solemn promise I made to my constituents. We need to uphold that promise.
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Madam Speaker, it is a privilege to rise today to speak to Bill C-34, legislation that represents the most significant update to the Investment Canada Act since 2009. In those 15 years, thanks to Canadian hard work and ingenuity and, for the last seven and a half years, a government that has been willing to invest in our future, Canada has become increasingly attractive to foreign investors who want what Canada has to offer, be that clean technologies, critical minerals, batteries or our skilled workforce.
I have the great pleasure of serving as the Parliamentary Secretary to the Minister of Innovation, Science and Industry. In this role, I have seen first-hand how Canadian innovators are getting attention from investors around the world.
I also have the great privilege of being the member of Parliament for Halifax, and in the riding of Halifax we are proud to claim Dalhousie University professor Jeff Dahn as one of our own. Dr. Dahn is one of the world's leading researchers on lithium ion batteries, whose work has received significant industry investment, including from Tesla.
Nova Scotia is also home to Novonix, known for producing the best and most accurate lithium ion battery testing technology in the world. I was present at the grand opening of its new facility in Dartmouth just last November, which was made possible with help from our government.
Another Nova Scotia example, CarbonCure Technologies, is the winner of the 2021 Carbon XPrize. CarbonCure has gained international attention for its technology, which introduces recycled CO2 into concrete to drastically reduce its carbon footprint and make the concrete substantially stronger. Canada has much to offer in today's world as we together tackle issues of global concern.
There is, of course, another important asset this country has going for it as we seek to position Canada as an investment destination. That is the tireless Minister of Innovation, Science and Industry himself, who has been remarkably prolific and successful in the last several years in bringing together foreign investment into Canada. That is because our government understands that attracting investment to Canada means creating jobs for Canadians and growing the Canadian economy.
At the same time, we recognize that the evolving national security landscape means that Canada's approach to foreign investment must also evolve. To be sure, Canada must remain an open economy, but we cannot ignore that we are increasingly being targeted by hostile actors. This threatens not just our national security, but also our prosperity, and we must always remember that economic security is national security.
Over the last number of years, we have already undertaken a number of measures to modernize the Investment Canada Act, or ICA, by updating our policies to improve transparency and provide certainty to investors. For example, in 2021, we updated guidelines on the national security review of foreign investments. In 2022, in response to the unprovoked and unjustifiable invasion of Ukraine, we set out a new policy on the review of foreign investments from Russia. We also introduced a voluntary filing mechanism for investors seeking regulatory certainty, triggering the same legal deadlines as a mandatory filing. That means investors can gain certainty about their plans while the government gains valuable insights into those plans ourselves. This past fall, we introduced a policy regarding foreign investment from state-owned enterprises in critical minerals under the ICA.
Bill C-34 is the next step forward. This legislation would protect the Canadian marketplace by evolving our tools to better defend against current and future threats. By equipping ourselves today for tomorrow's threats, Canada will remain a destination of choice for foreign investment.
With that framing, I would now like to touch on the amendments to the ICA that we are proposing, which all together would improve Canada's visibility into proposed investments, enhance transparency and investor confidence, and further empower Canada to act decisively on potential threats to our national security. There are seven proposed amendments to the ICA contained in Bill C-34.
The first is the introduction of a pre-implementation filing requirement for specified investments. This means that Canada would have oversight of investments made in certain sensitive business sectors, allowing a review of these transactions to be undertaken to prevent potential harm to our national security. This is a targeted approach designed to reduce unnecessary burden while bolstering transparency and certainty for investors.
The second amendment would introduce a new ministerial authority to order further national security reviews of investments. This means that the Minister of Innovation, Science and Industry would have the ability to order further reviews more efficiently, whereas previously a Governor in Council order was required.
The third amendment in Bill C-34 would increase penalties to strengthen deterrence. This means that penalties for non-compliance, which have not been updated in several decades, would reflect current financial realities, while also providing the authority to update penalties again as needed in the future.
The fourth would be the new authority provided to the Minister of Innovation, in consultation with the Minister of Public Safety, to impose interim conditions on parties to an investment. This means that during the review itself, we would better protect against national security threats that could come from the transfer of assets, IP or trade secrets.
The fifth amendment would provide the minister with the authority to accept mitigation undertakings. This means there would be more flexibility to improve or amend mitigation agreements at the ministerial level, where again, previously, the very rigid Governor in Council order was necessary to impose conditions on transactions to mitigate risks.
The sixth amendment in Bill C-34 would improve information sharing with international counterparts. We know that in the evolving geopolitical landscape that we inhabit, our co-operation with international allies is important for our collective security. This amendment would mean smoother consultations with our international partners and would allow Canada to share case-specific information, where appropriate, to support national security assessments.
The seventh and final amendment in the bill would bring new rules to protect information in the course of judicial review proceedings. This means sensitive information could be used in these proceedings while protecting it from disclosure, allowing judges to consider this information as part of their deliberations while allowing the applicants to fully participate in the judicial review.
Canada has a global reputation as a welcoming investment destination and ranks second among G20 countries in foreign investment. This is good news. In fact, last year we celebrated a new all-time high in the total number of filings. It is a job well done by the Minister of Innovation, Science and Industry. As a result of this success, Canada’s foreign investment regime must adapt to the speed of innovation.
Under the leadership of the minister and this government, Canada’s evolving policies and guidance have been addressing these developments as they arise, and we have taken clear and decisive action on transactions whenever necessary to protect Canada’s national security, but more must be done to ensure our ability to move quickly and decisively in the future. The guidance and decisions issued over the past several years make clear that some transactions, particularly those by state-owned or state-influenced investors, may be motivated by non-commercial imperatives that could harm Canada’s national security.
Ultimately, the volume and complexity of foreign investment reviews is increasing and this significant change provides a strong rationale for supporting ICA modernization. The time now is right to pursue modernization of the Investment Canada Act through Bill C-34 before the House today. Fundamentally, our government believes that an effective review regime must be robust, transparent and flexible to adapt to a changing world. We are making important moves now to review and modernize key aspects of the act, while ensuring that the overarching framework to support needed foreign investment to grow our economy remains strong and open.
Our record as a government makes it abundantly clear that where national security is concerned, we will not shy away from decisive action, and our assessment of risk keeps pace with evolving economic and geopolitical circumstances. While the ICA gives us much of the authorities we need to intercede and address national security risks that can arise in foreign investment, these amendments build on that strong foundation and improve the mechanics of the national security review of investments.
Taken together, these legislative amendments would ensure Canada is able to continue to gain the economic benefits of investments while strengthening our ability to address threats to our country and its future prosperity. For these reasons, I hope all members of the House will vote in favour of Bill C-34.
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Madam Speaker, I listened intently to the speech by my friend from Halifax, the parliamentary secretary, and it is interesting to note that the Minister of Industry did not do a security review on the purchase by Hytera, a state-owned enterprise of China, a telecommunications business. He did not do a security review of China's takeover of our only producing lithium mine. He did not do any security checks on the RCMP buying telecommunications equipment from a Chinese state-owned enterprise. This bill would remove the cabinet from any discussion and involvement in making those decisions at the beginning. Only at the end, and only if the minister decides to take it there, does this bill actually involve the cabinet.
When the Minister of Industry has made such poor decisions on our national security over the last eight years, why does the member think it would be great to remove the cabinet and just leave it up to a minister who clearly does not get it?
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Madam Speaker, I thank my industry committee colleague for his hard work on that committee. I will have to take a disagreeing stance on his characterization of the minister's performance. On the contrary, Canada's national security and economic concerns have been very well protected and championed by this minister. In fact, he has taken changes and issued guidance to the public service based on some of the cases that the member has mentioned.
There is one other difference I would mention from the member's statement. Every case is analyzed individually to determine which level of review will happen. Every case is reviewed. Whether it gets to the final full review, of course, is the decision of the minister. Every case is reviewed, but not all go to the full review.
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Madam Speaker, I want to acknowledge my colleague, the member for Halifax, who is also the Parliamentary Secretary to the Minister of Innovation, Science and Industry. It is all well and good to use figures that suit the government. We are used to that with the Liberal government.
My colleague mentioned that Canada is ranked second among G20 countries for foreign investment. That is excellent. We attract companies, but we do not invest. Canada is ranked last among G20 countries for investment in business research and development. I also want to remind my colleague that Canada is the only G7 country that has reduced its investment in research and development in the past 20 years.
It is fine to present figures that look good. However, does he agree that Canada has one of the worst records when it comes to investment in business? Even the magazine Science says that researchers do not want to come to Canada because the scientific ecosystem is lacking and there is not enough funding.
What does my colleague have to say about that?
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Madam Speaker, I want to thank my colleague for his good question.
We have conflated two issues in this question. One is the issue of domestic investment in research. I agree with my colleague that we can always do better by investing more in Canadian research. That is a very serious pet project of mine, and I work on it weekly.
Coming back to the question of foreign investment, the ranking in the G20 is, in fact, a global ranking. That is something that the government has managed to shift and bring us from the back of the pack up to a very promising place. These seeds that are being planted by the minister through his work will grow and bloom. We will see tremendous foreign investment that will elevate research and productivity, it will create jobs in manufacturing and help us into a just transition.
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Madam Speaker, New Democrats support the modernization and improvements to the Investment Canada Act. One of the things we are looking for, of course, is the prevention and loss of publicly funded research dollars and development dollars when that money is transferred out of the country.
I reference specifically a case in London, Ontario, where the Conservative government, in 2008, provided funds not only through tax cuts but also research and development dollars to Electro-Motive Canada. Caterpillar bought out the company, moved it to the States and took all that money with it. There was no repayment. There were no consequences, and many Londoners lost their good-paying jobs.
I ask the parliamentary secretary if—
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- Feb/8/23 6:14:31 p.m.
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We have really run out of time.
The hon. parliamentary secretary, give a brief answer, please.
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Madam Speaker, I will repeat something I said during my remarks. Economic security is national security. The purpose of Bill C-34 and modernizing the ICA is to not only protect Canada's national security but to ensure that any foreign investments bring a net economic benefit into the country.
That answer with my previous answer, I hope, would satisfy the member.
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Madam Speaker, I am going to share my time with the member for Abbotsford.
Conservatives have been calling for changes to this act for years. For nearly eight years, the government has ignored the growing role of state-owned and state-controlled enterprises in Canada’s economy. For nearly eight years, the government has failed to take seriously the threat posed by the government of Beijing.
For nearly eight years, the government has sat back passively while Beijing has used ostensibly private corporations as proxies to project its government's power and influence into the Canadian economy. After eight years, the government has finally tabled legislation to strengthen the Investment Canada Act, which is a good thing, but it is something that should have been done years ago.
To assess the government's credibility on the issue, it is important that we examine its track record on protecting Canadians from investment by authoritarian regimes in the Canadian economy. This is a government that, in 2017, failed to conduct a national security review when Beijing-owned Hytera Communications bought Norsat.
The former minister Navdeep Bains and the Prime Minister falsely claimed that a review was done, obfuscating the mandatory 45-day waiting period for approval with an actual, fulsome national security review as defined in the existing act. Even Tom Mulcair, the former leader of the NDP, criticized the government for rubber stamping the Hytera deal.
This takeover had serious consequences for Canada’s credibility with our allies. Norsat was an American defence contractor, and Canada allowed this takeover without a proper security review. Such a review was an option, and is an option, for the government under the existing Investment Canada Act, and that option was not undertaken on the Hytera deal.
Since then, Hytera has been banned from doing business in the United States and faces 21 espionage charges. This is the company that the government let into Canada without a national security review on the Norsat deal. The same company then received a contract to supply radio communications work to the RCMP. The same company had a contract with the Canada Border Services Agency for X-ray equipment.
This is the same government that also failed to stop Anbang from buying a chain of seniors homes, as we heard earlier from the NDP. Anbang also bought other buildings, which raised concerns not only about the substandard care that subsequently occurred in the seniors homes it took over, but also about corporate espionage in other buildings that were part of that deal.
This is a government that contracted with a company, whose founder was connected to the very top echelons of the PRC, to supply X-ray equipment to 170 embassies. This is a government that took years to finally ban Huawei from being a supplier of infrastructure to Canada’s 5G network, despite the obvious national security concerns. This reluctance has compromised Canada’s credibility with our Five Eyes intelligence partners. The government’s current industry minister approved the Neo Lithium takeover without a national security review
The opposition has spent years raising important questions about cracks and loopholes in existing laws, while the government claimed that there was no need to change the law until now, and it falsely claimed that it was using the tools available to it to help keep Canadians safe. It did this with such arrogance. It claimed that the opposition was simply playing politics whenever we raised a question about national security.
This is what the Liberals do. They dig in, when they find themselves on the wrong side of an issue, then finally flip while ignoring their past intransigence. This sudden flip, like what we are seeing right now with Bill C-34, on the need to address investment by autocratic, state-owned enterprises, is just like last week’s flip on Bill C-21 when they attempted to ban hunting rifles and shotguns.
Did they admit that the opposition was right all along? No. Did they thank the opposition for raising a point that they made a mistake that needed to be fixed? Did they admit that they were misleading Canadians for months? Did they admit that they were falsely claiming that the opposition was lying about the consequences of their amendment? Did the Minister of Public Safety admit that he was wrong and that he had misled Canadians? Did he apologize for attacking the opposition's motives? No, of course not. That is not what they do.
What they do is attack the motives of those who criticize them. When it becomes absolutely clear, like it is on this issue today of investment by autocratic state-owned enterprises, they might backpedal, but they do not take responsibility. They do not apologize or admit they were wrong.
As the opposition, we are just doing our job when we raise questions about public policy concerns, identify mistakes the government has made and identify shortcomings in existing laws or potential consequences of new laws or policies. The opposition has an ancient and sacred obligation to force the government to try to be better, and I just wish that it would listen from time to time, especially when it comes to national security.
Liberals and Conservatives are probably not very far apart from each other on the role of government when it comes to national security. I would hope that we are not far apart. This is not an ideological difference. We all care about our national security. With that in mind, I have some suggestions and points for Parliament to consider and hopefully also for the government to consider.
The bill would give the minister significantly more power but not necessarily a pathway to the best decisions. One thing this bill would do is shift power from cabinet, from order in council, to direct ministerial decision-making. This may result in faster decision-making but not necessarily better decisions.
I am concerned that the lack of a clear, strong definition of a state-owned enterprise may harm foreign investment in Canada overall without protecting Canadians from hostile foreign governments. The Canadian economy relies on direct foreign investment, and the parliamentary secretary talked about that. We need foreign, private capital from reciprocating open economies, and we have to be careful about what signals the bill sends to global capital markets.
I am disappointed that the bill does not simply allow the government to ban governments of autocratic and hostile regimes, such as Russia, Iran, North Korea or the People's Republic of China, through a simple list. This might be the easiest way to deal with the small number of countries seeking to exert power and influence within the Canadian economy through state-owned enterprises.
I am concerned that the bill does not appear to capture transactions where, rather than shares, a Canadian company sells assets, such as mines, farms, intellectual property and data, to a foreign state-owned enterprise.
I am especially concerned that maintaining the existing $400-million threshold for a mandatory government approval of a foreign takeover leaves the door wide open for the growing concern of Beijing-affiliated entities buying up farms, fishing enterprises, wharves and airport cargo facilities. These enterprises may have diverse ownership, but in aggregate, they have the potential to distort markets for important commodities, such as food. If the buyer of a Canadian company is the Government of China, the threshold for a national security review should be zero dollars, and every transaction of the foreign enterprises owned by the state should be captured.
In short, I do agree that the bill is an attempt to address serious and important policy concerns, and I will support the motion that is before the House to send the bill to committee. My opposition colleagues and I are committed to working with other parliamentarians to make the bill better.
No party has a monopoly on good ideas. This is a great opportunity to show Canadians that parliamentarians can work together and that the result of Parliament's adversarial process is that the best ideas will prevail through debate. As we debate the bill and study it at committee, we can co-operate, get beyond past mistakes and get serious about protecting Canadians from property theft, espionage, intellectual property theft, market distortions and other harms that result when foreign governments that are hostile to Canada's way of life take advantage of our open society and open economy. We are talking about transactions that are not fuelled by the market but by the raw power of a state to exert its influence on the Canadian economy.
Therefore, I will vote for the bill, but it is weak and needs a lot of work.
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Madam Speaker, I need further clarification of some of the comments made later in the member's speech about there being a zero threshold. I think that might not be the most effective use of everyone's time if we are chasing every dollar investment that is made in Canada. Does the member find that would be time well spent in our system?
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Madam Speaker, I think I was quite careful and precise in what I said, but I will repeat it. I said that if the foreign buyer is a Chinese state-owned enterprise, the threshold should be zero. The threshold for the dollar amount of a transaction by a Chinese state-owned enterprise should be zero.
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Madam Speaker, I found my Conservative colleague's speech very enlightening. I find it interesting that he pointed out that there have been cases in the past, which were investigated after the fact, where there was an obligation to conduct a national security review. The government does not seem to have done the work it was required to do and analyze whether the investment was a good idea or not.
The bill under consideration, Bill C‑34, is intended to provide a bit more authority. At the end of the day, if the requirement is the same, if the government is not doing its job any more than it is now, does my colleague think that anything will change?
I find it peculiar because he talked about a case. In my riding, there was a case where there was also an obligation to review. Thanks to an access to information request, it was discovered that there had been no review. It seems that the government is systematically delinquent when it comes to its own obligations. How does that happen?
Does that not worry my colleague?
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Madam Speaker, that is an excellent point, which I did touch on, but it bears repeating. The government failed to use the existing tools under this act in the past, so here we are, debating the creation of new tools and stronger tools with a government that would not use the tools that already existed. Its credibility on this issue is a problem, and we need to get really serious about this, not just through new laws but also through implementation of laws, both existing and new, as contemplated in Bill C-34.
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Madam Speaker, the Harper government increased the threshold above which foreign takeover of a Canadian firm is reviewed from $330 million to $1 billion. I am wondering if the member stands by that decision or if he supports reducing the current threshold to zero so every prospective transaction by either state-owned or state-controlled enterprises triggers a review.
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Madam Speaker, as I said both in my speech and in my remarks to the government deputy whip, if the buyer is a state-owned enterprise of an autocratic regime like the People's Republic of China, the threshold should be zero.
With respect to the preamble to her question regarding the increase to the threshold in general, I think that was made to be compliant with regulation under the WTO. I was not a member of that government, but that is my understanding of why that decision was made quite a number of years ago.
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Madam Speaker, there seems to be some confusion on the Liberal side about this issue of zero state-owned enterprises. In the last quarter, four lobster-buying businesses in my riding were acquired by a Chinese state-owned enterprise. It controls the price at the dock. It paid five times the value of the business. It is taking that over. That is why, from my view, I support what the member said, but I wonder if the member could expand on that a little more to educate the folks on the government side so they will accept some amendments.
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