44th Parl. 1st Sess.
February 17, 2023 10:00AM
Mr. Speaker, I thank my colleague for his very good speech and all of the constructive work that he does on the Standing Committee on Finance. He is a really valuable member of the House.
The Bloc Québécois applauds this bill, but we do not think that it goes far enough. National security is important, but we are asking the government to go further and to address the issue of economic security so that we have better control over foreign investments in general and so that we can keep our head offices, our economic levers and control over our resources.
Last year, only 24 or 2% of the 1,255 foreign investment projects totalling $87 billion were considered to have national security implications. In our opinion, that is not enough. We need better oversight to preserve our economic interests.
What are my hon. colleague's thoughts on that?
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Mr. Speaker, my question for the hon. member is about the increasing number of foreign investments we see in the health sector, where for-profit companies from abroad see Canada as a place to make profits off the health care needs of Canadians. I am thinking of Anbang, which bought up Retirement Concepts. It owns 20 retirement homes in British Columbia and is the largest source of substantiated complaints about care in the province.
Does the member believe that this version of the bill will provide adequate protection against for-profit companies trying to invade the health care sector?
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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, 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 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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- Feb/17/23 11:22:25 a.m.
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Mr. Speaker, I have enormous respect for the member, but I am surprised that he would be talking down the Canadian economy at a time when we have record investment coming into our country. I think my colleague is forgetting that, for example, we rebuilt the whole biomanufacturing sector. We have investments like Moderna in Canada. We have further investments when it comes to the battery ecosystem.
Bloomberg ranks Canada as second in the world, just after China and ahead of the United States. We have the first gigafactory in Canada to build batteries, and we built the largest hydrogen plant in Edmonton. It is going well.
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Mr. Speaker, I am pleased to rise in the House today to speak to Bill C‑34, the national security review of investments modernization act, which was introduced by the Minister of Innovation, Science and Industry.
As the minister, my colleague from Saint‑Maurice—Champlain, mentioned, this bill is an attempt to update and strengthen the Investment Canada Act through seven amendments.
I will not list them all, but I will say that the government is seeking to streamline the minister's ability to investigate national security reviews of investments, strengthen penalties, create a list of industries in which acquisitions would automatically be subject to national security reviews, give the minister the power to impose interim conditions, remove the Governor in Council from the process for making an order for further national security reviews and substitute the minister, and improve coordination with international partners.
The act was last modernized in 2009. It is true that an update is needed. As my colleague from South Shore—St. Margarets and shadow minister for industry mentioned, I can confirm from the outset that we will be voting in favour of this bill at second reading. We will, however, work to make improvements to it.
If there is one phrase that sums up how we feel about this bill, it is “too little, too late”. After eight years of this Liberal government approving countless acquisitions of Canadian companies by state-owned firms, we are skeptical that protecting our national security interests is important to this government.
There is no shortage of examples of breaches. There have been numerous cases over the past few years where this government failed to take the real threats posed by foreign investments seriously.
I am proud to be a member of the Standing Committee on Industry and Technology. Over the past two years, we have examined several cases of government failures during transactions and contracting processes that had the potential to compromise national security.
I will share a few examples, some of which are very disturbing.
In January 2022, the Minister of Industry failed to follow his own guidelines when he fast-tracked the takeover of the Canadian company Neo Lithium by Chinese state-owned Zijin Mining without a national security review.
It seems to me that when a company controlled by the Chinese Communist regime wants to buy a Canadian company, that should raise a red flag. Unfortunately, that did not happen in this case. We are talking about rare materials that are important in dealing with climate change, for making more batteries and such. Lithium is an extremely important element in the production of batteries. A review should have been done.
As I just mentioned, this is a Canadian company specializing in critical minerals, like lithium. Unfortunately, this government did not sound the alarm or issue warnings. We should already be doing everything we can to protect our companies in such a key sector, but, when the buyer has ties to the Chinese Communist regime, that is stating the obvious. A serious and rigorous review should have automatically been considered.
The Standing Committee on Industry and Technology undertook an urgent study on this subject to investigate this questionable transaction. Following this study, we made three recommendations.
The first recommendation reads as follows: “That the government create a formalized and transparent process...by which government departments provide advice to the Minister...regarding decisions made under the Investment Canada Act”.
The second recommendation reads as follows, “That the Minister issue a notice...for all investments by firms from authoritarian regimes considered to be state-owned enterprises under the Investment Canada Act”.
It is worth noting that in China, the government often controls many companies, either partially or fully, through various means, so we need to have a closer look at that.
The third recommendation reads, “That the Minister release in a timely manner a full and comprehensive Critical Minerals Strategy”.
A year has passed, but it is clear that nothing has been done in that regard, unfortunately.
I will give a second example of a dubious contract. In December 2022, the RCMP awarded a contract for sensitive communications equipment to Sinclair Technologies, which is a subsidiary of Norsat.
It is important to note that Norsat, which was founded and based in Richmond, British Columbia, had itself been acquired by Hytera Communications. Who owns Hytera?
It is headquartered in China and is therefore partly owned by the Communist regime of the People's Republic of China. The company is even a major supplier to China's national security department. The $500,000 contract was awarded without any thorough investigation or verification, even though it is known within the federal public service that China and the companies it controls have attempted to interfere in Canadian affairs.
When the media broke the story, the minister responsible took swift action and cancelled the contract. Still, it is astounding that, once again, no one in government saw this coming, no one realized how dangerous the situation was.
Hytera has been charged with 21 counts of espionage in the United States. President Biden has banned the company from doing business in the U.S., but it is free to operate here, no problem. The Prime Minister trusts everyone. Forgive me for questioning the severity of what the government wanted to do at that time.
I have one final, particularly troubling example that I would like to present here. It was identified by the Standing Committee on Government Operations and Estimates. In 2020, the Minister of Foreign Affairs awarded a contract to the Chinese company Nuctech, founded by the son of the former secretary general of the Chinese Communist Party, to supply X-ray equipment to 170 Canadian embassies and consulates. The contract was worth $6.8 million.
Although it was assured that this equipment would not be connected to embassy networks, the contracts included delivery, installation, and maintenance. Again, this is a question of national security. It is extremely important to verify these things.
During his testimony before the committee, David Mulroney, Canada's former ambassador to China, had some very harsh, but very fair, words for the government. He said that the experience gives us a troubling glimpse into this government's incompetence in dealing with China, considering that it has received clear, daily warnings that China is a strategic challenge to our country. However, there is no sign that the government is any more aware, no sign it has developed a greater sense of urgency to identify and better manage China-related issues. There is no evidence of any efforts to galvanize the government as a whole. All departments and agencies need to make an urgent effort to ensure that this does not happen.
This shows an appalling lack of leadership. Once again, history has repeated itself. We are hoping for changes to the bill. After second reading, it will go to committee, where we will be able to propose amendments.
I could say a lot more about this bill, but it is no different from everything else. Everything is broken.
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Mr. Speaker, I am pleased to rise in the House today to speak to Bill C‑34, the national security review of investments modernization act, which was introduced by the Minister of Innovation, Science and Industry.
As the minister, my colleague from Saint‑Maurice—Champlain, mentioned, this bill is an attempt to update and strengthen the Investment Canada Act through seven amendments.
I will not list them all, but I will say that the government is seeking to streamline the minister's ability to investigate national security reviews of investments, strengthen penalties, create a list of industries in which acquisitions would automatically be subject to national security reviews, give the minister the power to impose interim conditions, remove the Governor in Council from the process for making an order for further national security reviews and substitute the minister, and improve coordination with international partners.
The act was last modernized in 2009. It is true that an update is needed. As my colleague from South Shore—St. Margarets and shadow minister for industry mentioned, I can confirm from the outset that we will be voting in favour of this bill at second reading. We will, however, work to make improvements to it.
If there is one phrase that sums up how we feel about this bill, it is “too little, too late”. After eight years of this Liberal government approving countless acquisitions of Canadian companies by state-owned firms, we are skeptical that protecting our national security interests is important to this government.
There is no shortage of examples of breaches. There have been numerous cases over the past few years where this government failed to take the real threats posed by foreign investments seriously.
I am proud to be a member of the Standing Committee on Industry and Technology. Over the past two years, we have examined several cases of government failures during transactions and contracting processes that had the potential to compromise national security.
I will share a few examples, some of which are very disturbing.
In January 2022, the Minister of Industry failed to follow his own guidelines when he fast-tracked the takeover of the Canadian company Neo Lithium by Chinese state-owned Zijin Mining without a national security review.
It seems to me that when a company controlled by the Chinese Communist regime wants to buy a Canadian company, that should raise a red flag. Unfortunately, that did not happen in this case. We are talking about rare materials that are important in dealing with climate change, for making more batteries and such. Lithium is an extremely important element in the production of batteries. A review should have been done.
As I just mentioned, this is a Canadian company specializing in critical minerals, like lithium. Unfortunately, this government did not sound the alarm or issue warnings. We should already be doing everything we can to protect our companies in such a key sector, but, when the buyer has ties to the Chinese Communist regime, that is stating the obvious. A serious and rigorous review should have automatically been considered.
The Standing Committee on Industry and Technology undertook an urgent study on this subject to investigate this questionable transaction. Following this study, we made three recommendations.
The first recommendation reads as follows: “That the government create a formalized and transparent process...by which government departments provide advice to the Minister...regarding decisions made under the Investment Canada Act”.
The second recommendation reads as follows, “That the Minister issue a notice...for all investments by firms from authoritarian regimes considered to be state-owned enterprises under the Investment Canada Act”.
It is worth noting that in China, the government often controls many companies, either partially or fully, through various means, so we need to have a closer look at that.
The third recommendation reads, “That the Minister release in a timely manner a full and comprehensive Critical Minerals Strategy”.
A year has passed, but it is clear that nothing has been done in that regard, unfortunately.
I will give a second example of a dubious contract. In December 2022, the RCMP awarded a contract for sensitive communications equipment to Sinclair Technologies, which is a subsidiary of Norsat.
It is important to note that Norsat, which was founded and based in Richmond, British Columbia, had itself been acquired by Hytera Communications. Who owns Hytera?
It is headquartered in China and is therefore partly owned by the Communist regime of the People's Republic of China. The company is even a major supplier to China's national security department. The $500,000 contract was awarded without any thorough investigation or verification, even though it is known within the federal public service that China and the companies it controls have attempted to interfere in Canadian affairs.
When the media broke the story, the minister responsible took swift action and cancelled the contract. Still, it is astounding that, once again, no one in government saw this coming, no one realized how dangerous the situation was.
Hytera has been charged with 21 counts of espionage in the United States. President Biden has banned the company from doing business in the U.S., but it is free to operate here, no problem. The Prime Minister trusts everyone. Forgive me for questioning the severity of what the government wanted to do at that time.
I have one final, particularly troubling example that I would like to present here. It was identified by the Standing Committee on Government Operations and Estimates. In 2020, the Minister of Foreign Affairs awarded a contract to the Chinese company Nuctech, founded by the son of the former secretary general of the Chinese Communist Party, to supply X-ray equipment to 170 Canadian embassies and consulates. The contract was worth $6.8 million.
Although it was assured that this equipment would not be connected to embassy networks, the contracts included delivery, installation, and maintenance. Again, this is a question of national security. It is extremely important to verify these things.
During his testimony before the committee, David Mulroney, Canada's former ambassador to China, had some very harsh, but very fair, words for the government. He said that the experience gives us a troubling glimpse into this government's incompetence in dealing with China, considering that it has received clear, daily warnings that China is a strategic challenge to our country. However, there is no sign that the government is any more aware, no sign it has developed a greater sense of urgency to identify and better manage China-related issues. There is no evidence of any efforts to galvanize the government as a whole. All departments and agencies need to make an urgent effort to ensure that this does not happen.
This shows an appalling lack of leadership. Once again, history has repeated itself. We are hoping for changes to the bill. After second reading, it will go to committee, where we will be able to propose amendments.
I could say a lot more about this bill, but it is no different from everything else. Everything is broken.
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Mr. Speaker, when we made that decision several years ago, the reality was that the value of international investments was much higher. We wanted the flexibility to conduct the reviews for contracts within those amounts.
Yes, I agree with the amounts. Given the current cost of living, the cost of building or repairing a home or buying a business has increased spectacularly because of the inflation caused by the current government. Inevitably, greater flexibility was required in conducting these reviews.
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Mr. Speaker, my colleague raised some very troubling points in his speech.
There seems to be a trend. Year after year, the number of foreign investments made in Canada goes up, as does their value. According to the latest available data, there were 1,255 applications for a total of $87 billion. Only eight of those applications were reviewed.
This bill would bump the number of applications reviewed up a bit, to 24. That is barely 2%. It does not sound like that is enough.
What should the government do to improve this bill?
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Mr. Speaker, I am very pleased to hear that the Conservative Party will be voting in favour of this bill. It is important to make investments before things get difficult. Can he comment on the fact that it really is important to modernize the international trade regulations?
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Mr. Speaker, I appreciate the work that the member for Kelowna—Lake Country did on the industry committee's study on this issue, in terms of this act, in the last Parliament, which made nine recommendations. This bill addresses only two of those nine recommendations. Recommendation 1 from that report, which I think would address a lot of the concerns of members, was that the threshold for investments made by state-owned enterprises in Canada, for the review on national security or net benefit, be reduced from $415 million to zero.
I would like to know whether the member has any views on that aspect.
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Mr. Speaker, it should be remembered that the former Conservative government signed a foreign investment protection act with China that protected its investments in the event that Canada wanted to change legislation or do things in the interests of security.
Can the hon. member reflect on what the future of FIPA might be now that China and other countries have shown their true colours?
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Mr. Speaker, on the issue of protecting Canadian workers or ensuring that they are at the forefront for investments, Conservatives have a long record of prioritizing foreign investors over Canadian workers. Does the member think that protecting Canadian jobs and workers should be at the forefront of any decision on the net benefit of a foreign investment in Canada?
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Mr. Speaker, I listened with interest to the member's comments. The bill we are discussing is on the Investment Canada Act and whether we need to update it given some changes in the world.
I will ask a question that I asked earlier of a Conservative member.
Increasingly, foreign investors see the Canadian health sector as place in which they can invest. We have the example of Anbang, a Chinese insurance company that was later nationalized or seized by the Chinese government, which is a major investor in long-term care homes in my province. I wonder if the member agrees with us in the New Democratic Party that we need to update this piece of legislation before us to take into account investments like these, which put the health of Canadians at risk.
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