44th Parl. 1st Sess.
February 17, 2023 10:00AM
Mr. Speaker, I will be sharing my time with the hon. member for Northumberland—Peterborough South.
In December 1973, Parliament enacted the Foreign Investment Review Act, which was known as FIRA, to deal with the issue of foreign investors controlling Canadian industry, trade and commerce, and the ability of Canadians to maintain effective control over their economic future.
These investments would be allowed to proceed only if the government had determined that they were, or were likely to be, of significant benefit to Canada. This net benefit test still exists today, but much has changed given rising national security concerns that necessitate new measures. Let me elaborate.
In June 2017, Hytera Communications, a company owned by the Chinese Communist Party, acquired Norsat International, a B.C. telecom company. Just like that, a firm backed by an authoritarian regime took over an essential service provider here in Canada.
One would think this takeover would have raised some red flags, but it did not, not for the Liberal government at least. If it had acted rationally, the government would have conducted a national security review into Hytera. However, after eight years in power, it is clear that rationality is in short supply these days.
It did not bat an eye when, as all of this was taking place, our own Border Services Agency was using equipment from Hytera. We are talking about a company that has been charged with 21 counts of espionage. That company has been banned from doing business with our neighbour to the south. Up until that point, the Liberals have said that business is business, even when it means letting a hostile regime gain access to our essential services.
This sort of lax attitude toward issues of national security is clearly a problem. What is even more problematic is that for five long years after the Hytera fiasco, the government has not learned from its mistakes.
In 2020, it gave out a contract to Nuctech, a company founded by the son of a Chinese Community Party secretary general. It would not have taken a national security review to figure out who the company's founder was. A quick Google search would have sufficed.
It was not just standard, run-of-the-mill work that this company with Chinese Communist Party connections was doing. Nuctech was supplying X-ray equipment, of all things, to almost 200 Canadian embassies and consulates.
Two years ago, it looked like the government was changing its course when it updated its national security review guidelines. This was not the case, or at least it certainly was not the case when the Minister of Industry greenlit the takeover of a Canadian lithium mine by a Chinese state-owned enterprise.
Once again, the opportunity was right there. The minister could have requested a national security review. The review framework was even new and improved, or so they would have us think. However, the minister did not act. Delays, half measures and slaps on the wrist. Those have been the Liberal responses to national security threats throughout the past eight years.
Huawei is a perfect example of this. By 2021, each and every one of our allies within the Five Eyes had already banned Huawei from using their 5G networks. For years, my colleagues and I have been calling on the government to do the right thing: Listen to our allies, listen to security experts and ban Huawei from accessing 5G.
Reluctantly, and far too late, the Liberals finally took our advice and took a stand against the Chinese Communist Party. That was less than a year ago. With the Liberal government's dismal track record in matters related to national security, Bill C-34 feels like too little, too late. It is like the goalie letting in eight goals, then coming onto the ice at the last minute and saying, “Don't worry guys. I've got this.”
To be fair, this bill does address Canada's national security. It is a policy area where the government has been complacent for far too long. For that reason, I am prepared to support the bill at this stage, as long as it can be strengthened in committee.
For a while, a lot of us had the naive idea that these regimes were emerging partners, and they were slowly moving toward the democratic norm. Putin's war changed all of that, and it is time that Canada acted accordingly. It is time for a reality check. Hostile foreign governments want to subvert and undermine this country. The threat is real and the threat is here. Canadians are well aware. A few weeks ago, all that Canadians had to do was look up and see a Chinese surveillance balloon flying at 60,000 feet.
Bill C-34 responds to this new reality, but not well enough and not in its current form. The bill puts the power to request national security reviews in the hands of the Minister of Industry, the same minister whose predecessor did not even request a security review when Hytera took over an essential Canadian telecom provider. It is the same minister who, even after strengthening the security review guidelines in 2021, chose not to investigate the Chinese takeover of a critical Canadian mining company.
The bill is only as strong as the minister's scrutiny, whoever that minister may be in the future. Conservatives believe matters of such importance should be scrutinized by all of cabinet to make sure nothing slips through the cracks.
There are also existing problems with the Investment Canada Act that are not even addressed in Bill C-34. For no apparent reason, when a state-owned enterprise invests in a Canadian company, a national security review is only triggered if the Canadian company has assets worth more than $454 million. This provision has it all wrong. It is not about the size of the company that is being acquired. It is about the security risks that would inherently arise when a hostile state-owned company gains control over a critical service or product here in Canada.
Bill C-34 needs a provision that would trigger an automatic national security review when a state-owned enterprise invests in Canada. The threshold should be zero dollars, not $454 million. Also, the bill would only deal with share purchases and non-asset purchases. Therefore, in theory, there is a roundabout way that foreign investors could acquire assets in Canada and completely circumvent the legislation. It is clearly a loophole that needs to be plugged.
Since 2017, Chinese companies have been governed by the national intelligence law. This law compels every citizen and every company to hand over data to Chinese intelligence agencies. For almost six years, so much Canadian information has gone to China's autocratic government that it is hard to even quantify. We need to put an end to this, but right now, Bill C-34 would not do that.
Bill C-34 needs a presumption against allowing the takeover of Canadian companies by China's designated state-owned entities. It needs a reformed net benefit test to better account for the potential effects of a transaction on the broader innovation ecosystem, with a particular focus on protecting intellectual property and human capital. It needs automatic review of transactions involving sensitive sectors, such as defence, artificial intelligence and rare earth minerals. It also needs a mandatory national security review for state-owned enterprises where national security is a concern.
The act would not attempt to change definitions of state-owned enterprises or look at the issue of what constitutes control. One would not have to buy 50% of a company to control it. Someone could buy small percentages of it, get a number of seats on the board or change management, which Hytera has done.
It is clear that Canada needs to improve these protections. Bill C-34 would be a small step in the right direction, but much more needs to be done.
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Mr. Speaker, it is quite troubling to hear that when the U.S. identifies national security risks, it shuts them down, and our LIberal government does absolutely nothing about it.
I wonder if the member can comment on what kind of signal this Liberal dithering sends to investors and to our allies, as far as addressing national security risks goes.
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Mr. Speaker, I would be remiss if I did not say what the elephant in the room was this morning. There is a report in The Globe and Mail saying how the extent to which the Chinese Communist Party tried to manipulate the results of both the 2019 and 2021 elections was surely a bombshell revelation.
We are dealing with a government that cannot even protect the basic integrity of our elections, and we are asking it to now make sure that we are secure in terms of foreign investment. I have grave concerns about Bill C-34 coming out of committee in a strengthened way. I certainly hope that members on the committee and in the Liberal Party see that this bill does need to be strengthened. We are living in a whole new world where it is not just about the net economic benefit anymore. It is about what the national security threats are to Canada as a whole.
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Mr. Speaker, I want to thank my hon. colleague with whom I have the pleasure of working on the Standing Committee on Finance. It is truly a pleasure to work with him. I thank him for his speech. He raised a number of very troubling issues.
I want to refer to the annual report from the department's investment division, which was tabled in Parliament last October. In the preceding year, there were 1,255 foreign investment projects, totalling $87 billion. However, only 2%, or 24 of them, were determined to have national security implications and would be covered by the new rules set out in this bill. The other 1,221 investments remain subject to the old rules. Of those, only eight, or less than 1%, were subject to a review to determine if they will truly provide a net economic benefit.
According to my hon. colleague, is the government doing enough to ensure both national and economic security?
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Mr. Speaker, I enjoy working with my colleague on the finance committee. He always has excellent questions and makes excellent points, and this is in fact one of them.
This is an opportunity to really overhaul how Canada reviews foreign investment, in light of the new world that we are living in. I agree with the member entirely. The committee needs to have a serious look at what we could do. It could be by reducing the threshold to zero; by including asset purchases; by making sure it is not just the Minister of Industry who decides, but all of cabinet or some other broader mechanism. That would make sure Canadians remain in control of their economic future.
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Mr. Speaker, I agree with my hon. colleague that this government really has failed in terms of protecting security in Canada. Let us look back in history. It was the Harper government that increased the threshold above which a foreign takeover of a Canadian firm would be reviewed in the first place.
Would the member support reducing the current threshold for a prospective acquisition of either state-owned or state-controlled enterprises to zero so that every transaction triggers a review, including a net benefit test and a national security test?
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Mr. Speaker, I was hoping that the member had listened to my speech before she asked her question. If she reviews the Hansard, she will see that is, in fact, exactly what I said. I don't think the $454 million threshold solves the problem anymore. It should be zero.
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Mr. Speaker, getting into the substance of Bill C-34, this is an important topic. I do not know whether this legislation really crosses into being an important piece of legislation. Unfortunately, it is another half measure, a poorly drafted piece of legislation. It is going in the right direction, there is no doubt, but I want to give a little context before we break into a piece-by-piece discussion of Bill C-34. I will give a bit of a historical reference.
When we look back over thousands of years, the nations, peoples and countries that innovate the best end up having the most prosperity. They are the ones that drive the world forward. If we look at the Roman Empire, it dominated the world and was a leader in innovation in that era. If we look back to the Industrial Revolution, we saw the prosperity of humanity grow exponentially during that time because of innovation. If we look at the digital revolution, the countries that will dominate are those that take hold of the new world we are entering. They are the ones that will see new levels of prosperity.
Unfortunately, as innovation continues to go forward, Canada seems not to. We see that innovation is growing exponentially. This is not a linear chart; things are going faster and faster. Indeed, when we look forward to technologies such as artificial intelligence, bioscience and big data, these things will have a real impact on our lives. I strongly suggest that the world of my children is going to be a lot different than the world I grew up in, and their children will inherit a much different world.
As the pace of change continues to grow exponentially, governments have to be more agile and quicker to respond than ever. As Elon Musk commented recently, many of these technologies can have tremendous power for good, but they can also pose substantial challenges to our societies and governments. That is why we need a government that is willing to be agile.
For Canada to prosper, we must have a government that is starting to lead the way with respect to innovation and technology. Unfortunately, the government, as we have seen, seems challenged to even keep the lights on, much less to innovate and move forward. As we look forward, we see that the empirical data is coming back over the last eight years of government, and the numbers are not pretty.
Canada has traditionally been a leader in innovation and productivity, yet we are falling further and further behind. We are currently ranked sixth out of the seven G7 countries. That is nearly last in the G7 when it comes to intellectual property. Intellectual property will be the driver of our future economy. It will drive our future of prosperity. It is what manufacturing was to the 1950s and 1960s. It is what agriculture was to the many centuries before. Those who are able to prosper in that area, to conquer the area of intellectual property, will be the ones who win the future.
Canada currently ranks 24th overall with respect to knowledge and technology, which are measured by patents generated. We used to be in the top 10 in that area and we are falling further and further behind.
Canada's issue is not with respect to basic research. We are recognized around the world as being one of the best idea generators in the entire world. We have some of the brightest minds. We have a wonderful diversity of opinion that no doubt comes from our diverse and great population. We have wonderful post-secondary education. We have many different great think tanks and institutions that generate these wonderful ideas.
Indeed, our ideas are generating prosperity. The challenge is that they are generating prosperity in countries other than ours. What is happening is that we are generating these great ideas and, being the generous Canadians we are, we are giving them to the world.
The problem is that they are taking those ideas and selling them back at a profit. Although Canadians are doing a lot of the hard work in coming up with the great ideas that are leading this world and lifting people into prosperity, Canadians are not getting the benefit from that.
Whether it is from sheer incompetence, naïveté or worse, the government does not seem to understand the world we are in today. It does not understand the world of aggressive trade action and of state-owned enterprises. Companies and states around this world, authoritarian regimes, are utilizing Canada's generosity to put themselves ahead of Canadians.
This is not, and we heard this from other colleagues, really a partisan issue. There are people raising the red flags from across the political spectrum. Jack Mintz, a noted economist and free marketeer, is talking about this as an issue, as is Jim Balsillie, founder of BlackBerry and noted expert on intellectual property.
We also have that “random Liberal”. That has to hurt Bill Morneau, right? One day I will be out of this place and I just hope that the next prime minister, Pierre Poilievre, never refers to me—
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- Feb/17/23 10:52:16 a.m.
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There is a point of order from the hon. parliamentary secretary to the government House leader.
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Mr. Speaker, the member might need to leave sooner than he thought, by resigning, after he just said the first and last names of the Leader of the Opposition. Perhaps the Speaker would like to weigh in on this.
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- Feb/17/23 10:52:33 a.m.
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I will remind members that we cannot refer to members of the House of Commons by their proper names and that we need to go by riding names. I suggest the member should retract that and use the correct terminology.
The hon. member Northumberland—Peterborough South has the floor.
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Mr. Speaker, I will apologize and not resign. I am glad I gave the member for Kingston and the Islands something to do today. I am pleased to have accomplished that today.
Like I said, it has to hurt Bill Morneau to be referred to as a random Liberal. I certainly hope the next Prime Minister of Canada does not refer to me, or any member of our caucus, as a random Conservative, or worse, a random Liberal, I suppose.
When I get into the substance of Bill C-34, the challenge is not directional. Directionally, it is on the right path. The government is trying to at least take the steps it needs to in order to protect domestic assets, corporations and intellectual property from foreign actors.
The challenge is that it is not particularly well drafted, at least in my opinion and in the opinions of many other experts, and that it does not go far enough. We heard my colleagues talk specifically about some things that should be in there. For the record, I will reiterate what they said.
First, we need to have not only sales of shares but also sales of assets. One can buy the actual corporation, which is buying the vessel, but one can also buy everything within that vessel. There are many different ways smart lawyers and accountants can avoid that, and this legislation is not smart enough, at least not yet, to catch those.
We need to have automatic triggers, regardless of the amounts of sales, in certain sectors and also with respect to certain state-owned enterprises.
While Conservatives acknowledge this is a step in the right direction, we are very hopeful we can have a robust conversation in committee and improve Bill C-34, because it certainly needs it.
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Mr. Speaker, I thank my colleague who also sits on the Standing Committee on Finance.
I would first like to comment on the point of order. I want to quote a line from a French movie, a Christmas classic: “I am not blaming you, Pierre”.
This bill is a step in the right direction, but it does not go far enough. That is how I see it.
I would like to ask my colleague to explain once more what the government should do to improve the bill and enhance what is being proposed.
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Mr. Speaker, I very much enjoyed working with the fine member from the Bloc Québécois at the finance committee. I am confident we will work with the members of the Bloc to include things like automatic triggers for reviews by cabinet and for reducing the ability of actors to avoid this through things like asset sales and otherwise.
We need to tighten up potential loopholes in this legislation to make sure we can fully protect Canadian companies, resources and ideas.
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Mr. Speaker, I am just looking for a comment from the member. Why should we believe the Liberals would even use these new powers, after eight years of inability to recognize national security risks?
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Mr. Speaker, I am not sure it is a great thing that I speak on behalf of the government. What I would say is that there are many different fields where the government could have acted, including perhaps reviewing past applications and transactions. That simply has not been done in many cases and should have been. Divestitures should have happened with respect to state-owned enterprises. Even with regard to other issues, such as passports or putting in place Magnitsky sanctions on human rights, the government cannot seem to get out of its own way.
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Mr. Speaker, I listen to my colleague's discussion on Bill C-34, and I cannot help but think of some of the incredible investments we have seen just recently in a neighbouring area to where our ridings are. In particular, in Hastings—Lennox and Addington, I think of the incredible work the Minister of Innovation, Science and Industry did in attracting Umicore, a multi-billion dollar operation to build electric vehicle batteries right in a neighbouring riding to both of ours.
Would he not agree that the types of investments we can see through the modernization of this act would continue to benefit not just our ridings but Canada as a whole?
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Mr. Speaker, it is a joy to be a neighbour of the member for Kingston and the Islands. That probably ends my career with the Conservative Party, but there we go.
What I would say to him, in all seriousness, is that that is a great exception. It unfortunately proves the rule that Canada continues to be a laggard in the G7 and the OECD when it comes to productivity and innovation.
While I certainly welcome the manufacturing jobs, it would be even better to get the research and development, as well as the heads of these companies, right here in Canada so that we would not be just a secondary manufacturer or resource economy but actually have a controlling interest and prosper from our own ideas.
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Mr. Speaker, I have a question about foreign corporations and state-owned corporations funding research chairs at our world-class leading universities and, at the end of the process, being the owners of the intellectual property that has been produced by Canadian brain power.
Does he think there should be controls or regulations around that? Does Bill C-34 address that?
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Mr. Speaker, we have to acknowledge the world that we live in today, not the world we lived in 20 years ago. There are challenging actors out there who are trying to take Canadian ideas and utilize them for their own prosperity.
We must control our ideas. We have to be straightforward with it but cannot back away from the ideas. Canadian ideas are Canadian, and they are there for Canadian prosperity.
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