44th Parl. 1st Sess.
November 6, 2023 11:00AM
Madam Speaker, it is my privilege to address the House today on Bill C-34, an act to amend the Investment Canada Act.
There are some positive advancements in this bill. Notably, there is the move to give the minister more time and authority to assess foreign transactions that might compromise national security. These are important considerations in an increasingly less secure world where foreign actors are using several means, through asset acquisition, technology transfers and theft, to advance their economic interests, often to the detriment of others, including trade partners and allies. It is important that Canada represents itself well in this regard, and does not always arrive as the only boy scout at the negotiating table.
I will keep the rest of my comments today to the parts of this bill which, at this stage, seem to overlook key principles on which we, the people of Canada, govern ourselves, and to how some of the proposed amendments would affect business in the manner it transpires in an interconnected world, which is becoming more and more scarce of resources.
In March 2021, the current Minister of Innovation, Science and Industry, and let us say the industry minister going forward, updated and enhanced guidelines for national security reviews for transactions involving critical minerals and state-owned enterprises. They were just words on paper it seems because in January 2022, the same minister failed to follow these guidelines when he fast-tracked the takeover of Neo Lithium mining by Chinese state-owned Zijin Mining without a national security review.
It is an important illustrative case. Neo Lithium was a Canadian-listed company with assets in Argentina. None of the assets were in Canada, but in a country whose critical mineral assets were far from any supply chain that might emerge in Canada. Why was Neo Lithium a Canadian company? It is because it is registered in Canada and is listed for trading on the Toronto Stock Exchange, notably, the world's foremost exchange for listing mining properties in every jurisdiction.
About 43% of the world's publicly listed mining companies are hosted on Canadian exchanges, with an estimated market capitalization of over $560 billion. An understanding of this strength is critical to grasp what Canada and Canadians bring to the world wide mining landscape.
National instrument 43-101 is a Canadian regulatory reporting instrument that provides clarity on a company's resource plays and is world-renowned. This instrument is one of the ways in which our resource industry and our financial markets have become internationally renowned as being best in class. Investors around the world count on our standards to understand the prospects of mineralization in resource opportunities. This is an international advantage that we would let go of at our peril. Negligence of this understanding is not an excuse for decades of hard-won international repute.
Co-existent with this regulatory standard is pricing. No international miner is going to list their prospect in a jurisdiction where they cannot raise funds to advance their project. Gaining so-called liquidity on these markets means that there is an active and broad array of buyers and sellers following the industry.
Funds are raised for mineral developments of all types, including critical minerals, at what is called a “multiple”. For simplicity, let us use the price-to-earnings multiple in Canada, which is currently around 13.8 times. Concurrently, broad market multiples in the U.S. are 22 times. Comparing apples to apples, the market in the U.S. values their companies at a rate about 60% higher than in Canada.
There is more to consider in that analysis, as that is frankly too simplistic, and the resource industry has more sway in the Canadian market, so its discount is more like 15% to its U.S. counterparts, but we have more small and micro exploration companies. Any entrance of political interference in this very transparent process will move investment funds, prospects, jobs and money from Canadian oversight to foreign oversight. The loss to our economy and our reputation will be significant. Let us ensure we have these considerations in mind as we develop policies that are meant to restrict foreign investment in Canadian-listed companies with foreign assets.
As an example, Australia is Canada's main competition for listing mining properties. Its disclosure regime is not considered as robust as Canada's, so we win on the basis of reputation.
Fifty per cent of the world's lithium supply currently comes from mines in Australia. Ninety per cent of the lithium extracted in Australia ends up in China. That is what is meant by a “critical mineral supply chain”, at which China has performed so adeptly. In order to develop Canadian mines for the world's growing critical mineral needs, we will need the invested funds from around the world for development and financing at a multiple where it makes sense here as much as it does elsewhere, particularly in regimes with much lower regulatory oversight.
In the case of Neo Lithium, the industry minister approved the takeover, ignoring his own guidelines. Because no one could find the rationale, transparently, the Standing Committee on Industry and Technology undertook a study specifically on the acquisition. The committee received significant input and made three recommendations, the most important of which is “That the government create a formalized and transparent process” for these reviews. Members will note from my previous analysis that I do not disagree with the outcome at which the minister arrived. However, I am dismayed that it arose in direct contravention to his previously stated guidelines.
Canadian companies working in exploration and development opportunities globally need to continue to lead their peers in developing the minerals the world needs more of going forward. I agree with the committee that there should be a transparent process, and it seems that the minister and his department are only learning the inputs to these decisions on the fly. If they need help, there is an excess of industry expertise in Canada that can advise outside the halls of the industry department, and the minister should not be averse to seeking this input.
Now, I contrast the minister's decision on Neo Lithium with his decision this past November, where he ordered the divestment of Chinese state-controlled shareholdings in three Canadian-listed mining companies: Ultra Lithium, which has five mineral prospects, two of which are in Canada, two in Argentina and one in Nevada; Lithium Chile, which has three mineral prospects in Chile; and Power Metals Corp, which has three Canadian exploration properties. I cannot find the consistencies. Arguably, Lithium Chile should be treated in the same manner as the minister treated Neo Lithium. However, something changed, or something is not transparent, as the committee recommended it should be.
There are dozens of Canadian-listed mining companies with foreign investors, including in critical minerals, that were not addressed by the minister. At the same time, here in Canada, our only producing lithium mine is the Tanco mine in Manitoba. Tanco was taken over by Sinomine Resource Group, a Chinese state-controlled company, in June 2019. Notably, all the minerals it extracts are exported directly to China, which is a unique approach to our strategic supply chain in critical minerals. To add confusion to the mix, Sinomine was also the shareholder of Power Metals, which the minister ordered to divest its shares in the previous example I gave. It is a twisted plot with no apparent consistency.
This brings me to a significant concern with the proposed amendments to the Investment Canada Act in the bill. The legislation proposes to remove Governor in Council oversight from the process of assessing foreign transactions for national security consideration. This would effectively dilute the government's role and place it directly in the hands of one minister. Let me remind members that this very minister has already acted with absolute inconsistency on this file, in direct contravention of his own guidelines. Now this amendment seeks to move this decision further from the transparent process that the industry committee recommended; he has stated that he agrees with the recommendation, yet he is not acting that way.
I say that words and actions need to align. Unfortunately, with the bill before us, as with so many of the government's initiatives, they do not.
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Madam Speaker, I am tempted to remind my friend of the incredibly dismal record of the Harper regime. Over nine years, we repeatedly saw the sellout of important companies: Nexen to CNOOC and Progress to Petronas. We also had the disastrous signing of the Canada-China FIPA, which is one of the reasons why Bill C-34 is so important. This was over a 30-year period, so the Harper government did not sell out Canada just for the period when it was in office, but also for more than three decades.
Diane Francis with the Financial Post, who is certainly not a left-winger, said that the Conservatives:
have demonstrated the worst negotiating skills since Neville Chamberlain....
The terms agreed to by Ottawa [and the Harper government] are unprecedented and would be laughed out of Britain, Brussels, Canberra or Washington. Beijing has negotiated a heads-I-win-tails-Canada-loses deal.
This is the kind of situation that has to be addressed by Bill C-34. We know that the Conservatives have been blocking the passage of the bill, even though they say they support it. Is it not important that we fix the mistakes of the Harper regime, and can the member apologize on behalf of Conservatives for their sellout of Canada?
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Madam Speaker, I am a little confused. My colleague spoke about many issues.
There are some excellent foreign investors that came into Canada in the previous regime, but that is over eight years ago now. We are looking at a lot here. My colleague advanced 14 amendments, some of which were supported by the member's party at committee and some of which were not, in order to strengthen the bill. The bill needs to be strengthened to make sure we do not have a puppet democracy, where one person would decide what goes forward. I do not know why my colleague is so averse to making a bill stronger in relation to how it would be perceived and practised in every other democratic country in the world.
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Madam Speaker, I know my colleague from Calgary Centre has done a lot of good work in the area of mergers and acquisitions throughout his career. I would like him to comment on what we are actually debating today that some members in the NDP-Liberal coalition do not seem to want to talk about, which is the removal, in the bill, of cabinet from the decision-making process.
Given that my colleague has sat at C-suite tables and board tables, and I know he understands how cabinet works, does he not think decision-making processes in the area of foreign takeovers would be much enhanced by the collective decision-making of a management team, a board or a cabinet as opposed to letting one lone minister make the decisions?
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Madam Speaker, that is the crux of what Conservatives see as being wrong with the bill. It has been led by our industry critic, who just spoke. That is what we need to change more than anything else in the bill: to make sure collective decision-making is happening at the cabinet table. We cannot have one person from one region of Canada deciding what happens to a company that might exist in another province of Canada, without input from people at the cabinet table who might have differing perspectives on it as far as how it affects the country, whether in finance, transport or defence. All of these things have to be taken together in collective decision-making.
That is what we have in Canada right now, and that is what the bill is trying to usurp. This has to change. Conservatives are trying to get that out of the bill, and I thank my colleague for bringing that forward in a very strong amendment. I hope the House considers that amendment very strongly and we can get back to the way democracies function in this regard.
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Madam Speaker, one of the amendments in committee that was defeated by the Liberals said that any takeover in Canada by a corporation whose headquarters are resident in Beijing would be automatically reviewed. The Liberals voted against that for some reason, perhaps because Beijing's government is most admired by the Prime Minister.
I am wondering whether the member could comment about what would possess Liberals to oppose an amendment that would force an automatic review.
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Madam Speaker, I do not know where the government is going on this. It is obvious that for years, we were looking at transparent decisions made with the market. Unfortunately, a lot of acquisitions happen in the market around the world by foreign actors that are state-owned enterprises. Those require oversight because, frankly, state-owned actors have a different way of doing business than businesses—
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- Nov/6/23 5:44:07 p.m.
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We have to resume debate.
The hon. member for Charleswood—St. James—Assiniboia—Headingley.
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Madam Speaker, I am honoured to rise today to speak on Bill C-34.
Before I do, I would be remiss if I did not talk about the calamitous vote the Liberal members of this House took earlier today by excluding all Canadians from being treated fairly by pausing the carbon tax for Canadians all over the country. I come from Winnipeg, one of the coldest cities on the planet. Today, Liberal members from Winnipeg said no to Winnipeggers, while their Atlantic Canadian counterparts seem to be more effective than they are. They have the ear of the Prime Minister who I suppose was trying to save himself from his terrible polling results with this desperate measure by the government. However, at the end of the day the Liberals chose not to pause the carbon tax pain, which is really unfortunate for all Canadians.
As far as Bill C-34 is concerned, I want to say this. After eight years of the Prime Minister, numerous foreign state-owned enterprises have acquired interests and control in many Canadian companies, intellectual property, intangible assets and the data of our citizens. The government is doing too little, too late to protect our national economic and security interests with this bill.
Since the Liberals came to power, business investment per employee in Canada has dropped 20%. At the same time, business investment per employee in the United States has increased 14%. Per capita growth is at the lowest level since the Great Depression some 90 years ago and Canada has the most at-risk mortgage default portfolio in the G7. According to the National Bank of Canada, for the first time ever, business investment is now lower in this country than housing investment. When we think about all the manufacturing, oil production and everything else, investment in those things is lower than it is in housing.
The goal of the Investment Canada Act is to deal with foreign investors controlling Canadian industry, trade and commerce. Foreign direct investment creates opportunities, stimulates economic development and introduces new ideas and innovation to Canada. For Canadians, this means more high-quality jobs and a stronger, more sustainable economy.
Billions of dollars of Canadian natural resources, ideas, IP and land are being controlled by foreign entities. Huawei, a state-owned enterprise that feeds intelligence directly to China, was still working with many Canadian universities as of this past summer.
Another example would be taxpayer-funded dollars at Dalhousie University that are funding Tesla intellectual property and research and that IP is all going back to California.
In 2017, the Liberal government allowed a telecom company from British Columbia called Norsat to be acquired by a company called Hytera, which is a Chinese-based state-owned company. Conservatives demanded at that time a full national security review. The Liberal minister of the day refused to do one and approved the acquisition.
This sort of lax attitude toward issues of national security is clearly a problem. After eight years of the Prime Minister, numerous foreign state-owned enterprises have acquired interests and control in many Canadian companies, intellectual property, intangible assets and the data of our citizens.
The future of Canada needs to be protected in the airwaves, AI and quantum computing. It needs to be protected in our farms, food-processing plants, oceans and fisheries, as well as in developing Canadian LNG, which the world so desperately wants. The government is doing too little to protect our national economic and security interests with this bill. Canadians know the Liberals do not take sensitive transactions seriously and have failed to fully review transactions involving Chinese state-owned enterprises, putting the security of Canadians and the government at risk.
The minister is the minister of broken bills, which is why Conservatives are having to make more amendments to this piece of legislation. On his other bill, Bill C-27, the digital charter implementation act, after a year and a half he was forced to make amendments.
The Liberals missed the chance to think big and understand what is going on in the Canadian economy. This bill does not go far enough to address the risks faced by Canadians. That is why Conservatives worked to pass four significant amendments to ensure a rigorous review process—
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Madam Speaker, I rise on a point of order. Conservatives go to great lengths to remind us of the ruling that was made by the Chair recently on what is expected with respect to decorum. In particular, one of the things the Speaker identified in that process was using fake names for people in this House. Therefore, when the member makes comments like the “minister of broken promises”, or whatever he just said, he is clearly violating the rules that you have put in place and I would ask you to ask him—
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We do not want to repeat what is incorrect.
The hon. member for Charleswood—St. James—Assiniboia—Headingley.
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Madam Speaker, in the House, I think the Speaker was asked a very similar question and said he has relented on that position.
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Let us try to be respectful and judicious in our comments.
The hon. member for Charleswood—St. James—Assiniboia—Headingley.
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Madam Speaker, the Liberals missed a chance to think big and understand what is going on in the Canadian economy. This bill does not go far enough to address the risks faced by Canadians.
That is why Conservatives worked to pass four significant amendments. For instance, Conservatives ensured that the threshold to trigger a national security review was reduced so that Canadian resources, including intellectual property, are safer.
Among the changes proposed by the government in the bill is the removal of mandatory consultations with cabinet in determining whether an investment is a threat to Canada's national security. This change is problematic given the number of state-owned investments made in Canada over the past eight years that have not undergone a security review because of decisions made by past industry ministers. By removing cabinet from the process, decisions over whether an investment is considered injurious will receive less debate and scrutiny.
These are decisions that should have a national perspective that only cabinet could provide. Foreign investments often have national impacts on our economy and on multiple regions. To leave the discretion in the hands of one minister from one part of the country will negate a broad national perspective. It is a problem that this bill is only as strong as the minister's scrutiny, whoever the 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.
As I mentioned, one Conservative amendment that was approved at committee was about reducing the threshold to trigger a national security review from $512 million to zero dollars for all state-owned enterprise investments made in Canada. Lowering that threshold was critical so that at least it would trigger and initiate a security review.
Another Conservative amendment that was passed would ensure that items reviewable under the national security review process include acquisitions of any assets by a state-owned enterprise. Until now, the review only applied to acquisitions of the controlling shares of an industry. That was a huge loophole, as it opened the door to circumvent a review where a deal was structured as an asset purchase. For example, buying the shares of a mining company could be reviewed but buying the mines themselves could not. This is a welcome change.
Another amendment would ensure that an automatic national security review is conducted whenever a company has previously been convicted of corruption charges. Another change would require the minister to review any investments or acquisitions made in Canada that exceed $1.9 billion in enterprise value instead of it being an option.
Conservatives could have improved this legislation further had the NDP-Liberal government not rejected many notable Conservative improvements to this legislation. Among the common-sense Conservative amendments that failed to pass committee was one that would have modified the definition of “state-owned enterprise” to include any company or entity headquartered in an authoritarian state such as China.
Another amendment that was defeated would have exempted non-Canadian Five Eyes intelligence state-owned enterprises from the national security review process to prevent any overly broad review processes. Another amendment would have ensured that an automatic national security review is conducted whenever a company has previously been convicted of corruption charges. One other amendment would have implemented a requirement for the minister to trigger a national security review automatically whenever the investment review threshold was triggered. The last would have required the minister to conduct a national security review by changing the word “may” to “shall” to ensure a review would be triggered whenever it is in the new threshold.
It is important that we get this right. Recently at the ethics committee, there was a study on foreign interference and the role that nations, particularly China and Russia, are playing as state-owned actors in making investments in our economy for the purpose of control, including controlling Canadian businesses, Canadian minerals, Canadian resources and, in many cases, some of our northern and offshore areas.
Therefore, it becomes critically important for the government to keep a keen eye, and multiple eyes in fact, on what is happening with foreign investment and approvals. We believe that Conservatives have improved the bill dramatically. We are trying to improve it again in the spirit of good public policy for Canada and protecting our economy against hostile interests, which the Liberals seem not to be that interested in.
I urge the House, including all members of the Bloc Québécois, the NDP and the government, to recognize that cabinet's decision-making process is essential to understanding the national impacts of foreign investment. I urge members to vote for our amendment. By removing clause 15 from the bill, all security review decisions would remain reviewable by cabinet and not just by the ministers of industry and public safety. This is all about protecting Canadians and protecting our valuable assets, our businesses, our national security and certainly our interests.
We must take sensitive transactions seriously, and we have failed to fully review some transactions, particularly as they relate to Chinese state-owned enterprises of the past. A Conservative government would not only protect Canadian investment but build Canadian companies and attract investments to grow them.
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Madam Speaker, we know that Parliament significantly reformed the ICA in 2009. That was of course done under a majority Conservative government led by Prime Minister Harper. At that time, a very ill-advised step was taken. The Conservative government raised the thresholds that would trigger a net benefit review of an investment under the act and eliminated most sector-specific requirements, with the notable exception of cultural businesses. At the same time, Parliament enacted provisions that granted the federal government more extensive powers to screen and potentially block any foreign investment that could threaten national security.
Does my hon. colleague know how many investments have been blocked since 2009 under the foreign investment national security criterion?
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Madam Speaker, I always find it interesting that the NDP is stuck in the past. Its members want to keep talking about the last Conservative government or Mr. Harper. My recommendation is that the member and his party start thinking about their future, because it is dismal to tie their wagon to this calamitous Liberal government.
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Madam Speaker, I would like to give the hon. member an opportunity to comment on the issue we are debating, which he did extensively. A lot of the questions from the government and the NDP are not about what we are debating today, which is whether cabinet should be included in the decision-making process.
I would like the member to comment in particular about the members from the Bloc, who seem to think it is okay for cabinet to be eliminated and therefore have no Quebec input on acquisitions made of Quebec companies. Does he thinks it is hypocritical of the Bloc to not express itself on whether it thinks cabinet decision-making should be there in any foreign takeover of a Quebec company?
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Madam Speaker, it is a very large concern. One person should not have that much power in a democratic government, period. For example, let us say that the minister of the day is from Ontario and a foreign investor wants to come along from an authoritarian state and spend $30 billion buying a Volkswagen electric battery plant. The minister from Ontario would be under a lot of pressure to allow that type of investment to proceed, but it might not be in the national interest. That is why it is important to have multiple perspectives at the table when decisions are being made about investments that are national in scope and could have major effects on our GDP, our economy and our national security.
I agree that the Bloc is being hypocritical on this. It should support our amendment.
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Madam Speaker, is the member saying that because a minister might be from one province, they would not have the capacity to represent the entire country and the interests of the entire country? Are we led to believe it is impossible for somebody who represents one particular region to represent the entire country? Is that not how we have been operating since Confederation?
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Madam Speaker, I question the capacity of every minister in the government.
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