44th Parl. 1st Sess.
October 26, 2023 10:00AM
Mr. Speaker, I am pleased to speak to Bill C-34, as well as to the amendments being proposed today, amendments that are actually pretty important to consider. I will be considering them, as will the NDP.
The amendments pertain to the independence of the minister, in particular where the minister could have ultimate authority with less cabinet oversight. As industry critic for about 17 of my 21 years here, I can think of some deals that were not even looked at by certain ministers. I am not sure whether this would solve it, because I know they actually brought some of these things to the cabinet table in successive Conservative and Liberal governments and they were allowed to be taken over.
The reason I asked my previous question about natural resources, and I want to touch a little on that, is that the companies in the mining industry that are now owned by foreign conglomerates used to be Canadian champions. Now, the battery supply and different minerals necessary for electrification of vehicles in our corner of the world are very much affected by that. It is the same with the independence. What is also important and has not been taken much into account by either of these two parties in the last number of years is the number of tax subsidies, reductions and investments that those companies have gotten from Liberals and Conservatives that let them actually go out the door.
I want to talk about a more recent case, and then I want to get to natural resources. The most recent one is Nemak in Windsor, which is the Mexican-based company that got a series of investments. It was bought out, previous to that. It got a series of subsidies from the federal and provincial governments of the day, a federal Liberal government and a provincial Conservative government. There were no conditions on the investment of those subsidies. They went towards a new transmission update, a new motor update and other types of innovation. They then took that and put it in Mexico, and closed the Windsor plant down. We had to fight to get the workers' wages back. Our bankruptcy and solvency laws are actually very much against workers right now. We lost this opportunity, but we funded the loss of our opportunity after we let the company be taken over.
The reason I talk a little about the auto sector is that we had to have some foresight. Successive Conservative and Liberal governments have never had that. Some Canadians might remember Inco, Alcan, Falconbridge and Stelco. They are all gone. All were Canadian giants in natural resources, and the industry is now owned by Vale, Rio Tinto, Xstrata, and U. S. Steel. Some have even changed since then. All were foreign interventions in the Canadian system of natural resources.
Who owns the natural resources? We do, as Canadians. It is a privilege to be able to mine those resources. We are the ones who actually have the asset. It is no different actually from the spectrum that we have for our telecommunications industry, where successive Conservative and Liberal governments have taken in $21 billion from taxpayers and allowed companies like Shaw, Telus, Bell and others to charge some of the highest rates. From the year 2000 to this past year, we actually took in, under successive Conservative and Liberal government, $21 billion in spectrum auction of the airwaves above us that Canadians own. Then we let them charge us some of the highest prices in the world, with some of the worst practices.
That is important, because natural resources are at a premium now, especially when we are looking at lithium ion and different types of minerals related to the new economy and the emerging auto industry in electrification. It actually goes further than that. There was a big loss with respect to getting the next chips and innovation related to the electronics industry. The shortages were high. The U.S. is spending billions of dollars in investment. In microchips, we were actually a leader at one time, in Mississauga. We let that be bought out, closed down and shipped over to Taiwan. All of it was approved under Liberal and Conservative governments in the past, after policies of reducing corporate taxes and giving subsidies with no conditions and terms. Companies were bought up, closed down and, with less competition, moved out of the country.
Finally, and I have raised this in the past, when China Minmetals was on the lookout to buy Canadian natural resources in the oil patch, what is interesting about that is at that time, back in, I think, 2004, there was no national security review screening, and that was okay, if members can believe it. Paul Martin was the finance minister at the time, and he later became Prime Minister. It was okay with the Conservatives and Liberals for China's national industries to own Canadian natural resources, but it was not okay for Canadians to own Petro-Canada, so we sold off our shares in Petro-Canada. We took a bath on it because six months later, the prices skyrocketed, at a time when it was okay for China to invest. All the records are here. All the documents are here. At the same time, we could not have a national champion like Petro-Canada, heaven forbid, but at the same time we brought in investments from China. Now the Liberals are talking about concerns and reservations, but we do not have those resources under control anymore.
We are looking at the same thing with competition right now. If we look at the frustrations in the grocery industry and all the different consumer industries, they are of concern. There is a pattern here. All these industries I have talked about had to be approved by the minister and cabinet, so I am empathetic to the Conservatives' amendment here for a cabinet review, but when we have a party that is destined ideologically to sell off Canada, it does not matter if it is one person or 12 in the room making the decision to sell off those jobs and those investments. That is the problem.
When we look at some of the most historic ones, such as Lowe's buying Rona, how well did that work out? Now it is going back to the Rona brand, because people trusted it because it was a Canadian company. What did we do? We allowed Lowe's and basically Home Depot to be the competitors, and we eliminated the Canadian competitor by allowing it to be bought up. What Rona got as a condition and term was a supposed corporate office, I cannot remember if it was going to be in Quebec City or Montreal, but in one of those two places. We know that was a facade.
At the same time, we saw it in the retail sector, which is just as important, with electronics. We used to have Future Shop. It is gone. Now we have Best Buy, and that is it. It only had a limited market to begin with, but on top of that, Best Buy said it would sell off the Canadian component as well so that it would have no competition. If we wonder why we have less competition, it is because ministers and multiple cabinets are ideologically driven, not from a business sense, by competition or all the other things that are important to the consumer society. The United States has laws preventing that from happening. What we have are ideologically driven governments that want to sell off Canada and say it is okay because that is the way of doing business. However, it is not the way of doing business anywhere else but Canada. The United States has anti-competitive laws for those things that break up companies like Microsoft and others when they have gone too far. We do not have any of that stuff here.
There are so many cases it is unbelievable, but another one I want to note is Zellers and Target. It is one of the most eye-popping ones. During the retail market struggles when companies were losing money, Zellers was still making a profit, even with a union that provided benefits for its employees. What did we do? We opened the floodgates. We let Target come right in and take over Zellers and close some of them down. A few months after that, Target realized that maybe it was not so hot for the Canadian market, and after about a year it ended up closing those stores. The workers were gone. The pensions were gone. The benefits were gone. The stores were gone. Zellers is trying to make a return now, but what does it matter when we had a minister, cabinet ministers and parties in power who were ideologically driven to basically give Canada and the investments away?
It is not the same free market as in the United States. I live close to the U.S., and I know it has much stronger laws that protect consumers than in Canada. It is about time we got them here.
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Mr. Speaker, the member for Windsor West has been a long-time member of the industry committee and has a good knowledge of the various industrial sectors.
I want to ask him about the impact of foreign ownership on certain segments of the industrial sector. For example, almost every company in the steel or aluminum industry is foreign-owned, and none of those steel and aluminum sector companies have had any capacity during the last 20 years. The stagnation we see with this foreign ownership does not impact the economic security of Canada, which can also be related, in one way or another, to the national security of Canada.
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Mr. Speaker, my colleague has been on this committee and others as well. His question is a really good one, and I really appreciate it.
We can look at national security and a number of different things through the lens of Stelco in Hamilton, which was bought up by U.S. Steel. It actually moved some of the operations to Zug Island in Detroit, where its operations caused what was then called the Windsor hum, even though it came from Detroit. The operations there made vibrations and problems.
I will conclude by saying it is a great example, because we gave up the capacity to grow and expand our steel and aluminum industry, and then the company pulled it out because they wanted less competition. The end result was that we had a painful exercise with workers who lost pensions, jobs and so forth.
That is why I appreciate this question, because it is about national security, and it is also about personal security for our workers who are actually in these sectors.
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Mr. Speaker, during the clause-by-clause study at the industry committee, the government members voted against a Conservative amendment that would subject state-owned enterprises in countries like China to a mandatory national security review.
I would like to know what the member's thoughts are as to why the government would vote against such a common-sense amendment that would protect Canadian assets, especially in minerals and natural resources.
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Mr. Speaker, I was perplexed by that.
I want to thank the member, who actually came to the committee. The committee is known to try to work together to improve the bill.
There are several amendments in here, and I want to commend the member for working through a process where one of his amendments that was supposed to go through, was sabotaged.
People should know that the member brought forth a compromise, a specific related amendment that really should be in his name. I want to say publicly that I appreciated that approach.
I do not know why they would have these mandatory things not necessarily part of it right now, especially because there has been growing consensus.
I referenced China Minmetals in the past, but now we have come to a point where people understand that the national security clause is a paramount part of what we do.
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Mr. Speaker, I thank my colleague for his impassioned speech.
I would like to know whether he would be open to creating another bill or at least finding some way to do more to protect our high-tech sectors as well as the head offices of our small businesses. What I would like to say to my colleague is that the Quebec economy in particular is made up largely of SMEs. The thresholds are not reviewed very often.
Does the member think it is important to try to protect our small businesses?
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Mr. Speaker, this is an excellent question as well, and I will tell members why.
The small and medium-sized businesses that the member references often get out of the discussion points, but they are also some of the start-ups, the other ones we are trying to incentivize to get to the next level, from small to medium to growing. Then what happens is they are gobbled up. I would be open to looking at that.
I think the member brings up an excellent point that gets really lost. We are spending a lot of time, money and energy in proponents to help venture capitalism and grow Canadian companies, companies in Quebec as well. The member brings up an excellent point. Sometimes we do those investments, as I mentioned at the beginning of my speech, and then they get gobbled up later and that is at a discount for those foreign nationals.
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Mr. Speaker, I am thankful for the opportunity to speak to Bill C-34, an act to amend the Investment Canada Act.
Today the House of Commons will vote unanimously to support this bill's objectives. This bill was studied at the Standing Committee on Industry and Technology, and we encourage those members to send this bill to the Senate for its consideration.
Members all know very well this legislation plays an important role in our economy and that it helps in making Canada a destination of choice for foreign investments. This legislation will ensure there are favourable conditions for a trade based on a stable regime and clear regulation.
This legislation encourages economic growth and employment. The legislation allows for a government intervention only if an investment would harm Canada’s national security. Bill C-34 allows the government to act rapidly if the circumstances require it, and this is exactly what we intend to do with these proposed amendments.
In fact, it is clear the time has come to modernize the ICA and ensure Canada is aligned with the rest of the world. Our industry remains one of the most dynamic in the world, but as members all know, Canada is facing unprecedented geostrategic challenges and national security issues.
Canada’s foreign investment regime must adapt to the speed of innovation. In recent years, intangible assets in the knowledge economy, like intellectual property and data, have grown in importance in defining Canada’s economic strength and at the same time pose new challenges in terms of how these are to be managed to ensure the benefits accrue to Canada and Canadians.
Our government recognizes the value of the intangible economy, its growth and the relevant opportunities for all Canadians. These new innovations are driving new ways of doing business and with huge opportunities for Canadians. Our government will support this growth as it helps drive Canada’s economy and supports highly skilled, well-paying jobs.
To do so, tools such as the ICA must also be modernized to offer additional protections considering changing geopolitical and technological advancements, and to prevent hostile actors from exploiting Canada’s expertise and capacity for innovation.
Geopolitical risks and instability are now fixtures in our operating environment. Hostile state and non-state actors pursue deliberate strategies to acquire goods, technologies and intellectual property. They do so in ways that are fundamentally incompatible with Canada’s interests and principles. We also know that foreign investments can be used as a conduit for foreign influence activities that seek to weaken our norms and institutions. The nexus between technology and national security is clear and here to stay.
Rapid technological innovation has provided Canada with new opportunities for economic growth, but it has also given rise to new and difficult policy challenges. More and more, Canada is the target of hostile threats. This threatens both our national security and our prosperity simultaneously. That is why our government must adapt our tools to better defend ourselves against current and future threats.
All over the world, foreign investments have been the subject of many investigations, with a specific focus on national security. These investigations focused on several angles, such as the impact of the COVID-19 pandemic, the security implications of climate change, disruptions to global supply chains and shifting geopolitical considerations. Hence, by amending this legislation to stop the threats of tomorrow, Canada will remain a destination of choice for foreign investments.
The time is right to pursue modernization of the Investment Canada Act. Now more than ever, we need to make sure we are doing everything we can to foster an innovative, healthy and growing economy. 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.
Allow me to repeat that these types of investments in sectors deemed sensitive currently face enhanced scrutiny under the ICA. Our government believes an effective review regime must be robust, transparent and flexible to adapt to a changing world and that it is now time to make these changes. That is why we stand today in favour of this bill, which represents the most significant update to the Investment Canada Act since 2009.
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 that our assessment of risk keeps pace with evolving economic and geopolitical considerations.
The ICA already gives us much of the authority we need to intercede and address national security risk that can arise from foreign investment. These amendments build on the solid foundation and will improve the mechanics around the national security review of investments.
Now is the time to act decisively so we can make sure that Canada will continue to gain the economic benefits of investments while strengthening our ability to address threats to our country and ensure its future prosperity. It is clear to everyone that the proposed amendments in Bill C-34 would ensure an important equilibrium. They would protect Canadians and Canadian enterprises while making sure that investors will continue to view Canada as their first destination of choice.
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Mr. Speaker, one thing that is happening in Canada is that hundreds of millions of dollars of investment are leaving the country because we do not have a competitive landscape here. We have higher taxes, carbon tax 1.0 and 2.0, long approval processes in our regulatory process and uncertainty. We see that we would have to give away $31 billion to incite people to come to Canada and open up a business. Why was none of that put into the bill?
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Mr. Speaker, the amendments to the act are really designed to ensure national security and that Canadian interests are reflected in the act. When foreign investment is coming into the country, it would be subject to a national security review. We have actually seen quite a significant amount of that coming into Canada in recent years. I think giving the minister the powers and authority to be able to react and trigger those reviews are extremely important to protecting our national interests.
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Mr. Speaker, my question for my colleague is very simple. We sat on the Standing Committee on Procedure and House Affairs together for several months, and in light of everything we learned about ineffective measures for countering foreign interference, when we talk about industrial looting in this case, we want to ensure the viability of our industry.
Based on the conclusions we have drawn in recent months, can my colleague confirm that this amendment and this bill are valid?
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Mr. Speaker, the amendments that are being proposed by this side of the House are designed to ensure that the bill is consistent. They are amendments that were actually subamendments in our committee put forth by the Conservative Party and the NDP. In essence, the amendments we are making are to ensure that the bill is consistent. I agree with the hon. member that, for our work on the procedure and House affairs committee on tackling foreign interference in Canada, this bill is certainly a step in the right direction. It would essentially subject a lot of the foreign investment in Canada to a national security review, which we can all agree is a positive step in the right direction.
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Mr. Speaker, I would like to clarify two specific amendments that were actually rejected by the government. Regarding subsection 15(a) of the act, we wanted to list specific sectors necessary to preserve Canada's national security rather than the systematic approach that was recommended by the public servants. We wanted to do that specifically in relation to the testimony given by the member for Whitby. We need to be very careful in light of the strategic and geopolitical issues we are facing. The second amendment relates to section 25.4 of the act, and that would have allowed the Government of Canada to maintain ownership of intangible assets that have been developed in whole or in part by taxpayer-funded research.
Why did the government vote against those two common-sense amendments?
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Mr. Speaker, I am not really sure what the member is referring to, because the amendments that we have put forward and we are debating are ones that make the bill consistent. There were subamendments put before the committee that were from the Conservative Party and NDP.
I do not know what the member is bringing forward, but my understanding is that the additional amendment that the Conservatives brought forward is designed to gut this bill and take away the minister's power and discretion in order to trigger a national security review. That would greatly reduce the speed at which that can happen, which I think is contrary to the whole intent of this particular piece of legislation.
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- Oct/26/23 4:09:20 p.m.
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We have time for a short 15‑second question.
The hon. member for Saint‑Hyacinthe—Bagot.
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Mr. Speaker, you picked the wrong member for a short 15‑second question. You know me. The time is already almost up.
We welcome the progress and the improvements that the bill makes to the current act, but why are the rules still so slack, and why is there so little scrutiny?
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Mr. Speaker, you will not be surprised, that, unfortunately, I disagree with the hon. member that this is slack. I do not think that is the case. This is a very strong piece of legislation that was agreed to by committee members.
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Mr. Speaker, Bill C-34, otherwise known as the national security review of investments modernization act, seeks to update and strengthen the Investment Canada Act with the aim of protecting Canada's national security when it comes to foreign investments in our country.
As tensions rise around the world, Canadians, our businesses, our intellectual property, our private data and our natural resources must be protected from bad actors who seek to undermine our sovereignty and exert influence on our institutions and way of life in Canada. For eight years, the NDP-Liberal government has not taken sensitive transactions seriously and has failed to conduct full reviews of transactions involving Chinese state-owned enterprises, which has seriously jeopardized the security of Canadians and our government.
According to Statistics Canada, China's share of Canadian assets under foreign control doubled from 1.9% to 3.8% between 2015 and 2019. Large shares of key industries are also under foreign control, including 40% of all assets in Canada's oil and gas industry, 48% of wholesale trade, 44% of manufacturing, 30% of mining and quarrying and 25% of professional, scientific and technical services. With so much of Canada's economy controlled by foreign companies and governments, it is crucial that we ensure foreign investments do not pose a threat to our national security and prevent bad actors from weaponizing Canada's economy and our own resources against us.
Let us take a look at some recent examples of investments the government missed.
One example is the Neo Lithium Corp. and Zijin Mining. In March 2021, the minister of industry updated and enhanced guidelines for transactions involving critical minerals and state-owned enterprises. Just 10 months later, the minister ignored those new guidelines, allowing a Canadian mining company, Neo Lithium Corp., to be acquired by Zijin Mining, a Chinese state-owned enterprise, without a security review.
Another example is Sinclair Technologies and Hytera Communications. In December 2022, the RCMP awarded a contract to supply sensitive hardware for its communications systems to Sinclair Technologies, which is directly linked to Hytera Communications, a company partially owned by the Chinese government and a major supplier of China's public security ministry. It was revealed in December 2022 that the CBSA used Hytera's technology and communications equipment in 2017. Hytera has been charged with 21 counts of espionage in the U.S. and banned from doing business in that country. In 2017, when Hytera acquired B.C.-based telecommunications company Norsat International, the parent company of Sinclair Technologies, the minister of industry failed to request a full national security review.
Conservatives have long called on the current government to take swift action to ensure that, any time a foreign state-owned enterprise seeks to invest in a Canadian corporation or asset, the government conducts a thorough review. At second reading of this bill, Conservatives voted to advance the proposed legislation to the industry committee, upon which I sit, with the clear expectation that significant amendments would be made. At industry committee, Conservatives tabled a number of amendments to ensure these reviews would take place and to strengthen this legislation as a whole.
Some of the amendments tabled by my colleagues and me at industry were adopted. However, many more were voted down by the government.
We wanted to modify the definition of “state-owned enterprises” to include any company or entity headquartered in an authoritarian state. We wanted to list specific sectors necessary to preserve Canada's national security rather than the systematic approach applied or recommended by public servants. We wanted to exempt non-Canadian Five Eyes intelligence state-owned enterprises from the national security review process, to prevent an overly broad review process for an ally such as the United States or Australia. We wanted to allow the Government of Canada to maintain ownership of intangible assets that have been developed, in whole or in part, by taxpayer-funded dollars. The committee members rejected those things.
We wanted to allow the minister to go back and review past state-owned acquisitions through the national security review process, allowing for a flexible review process. They rejected that ministerial power.
We know that public servants do take a risk-adverse approach in crafting regulations and providing advice during the legislative process. That is not necessarily a bad thing. That is a good thing. However, politicians must be willing to make the tough decisions, weighing the potential benefits against the repercussions of any decision.
Going back to that first rejected amendment, Conservatives moved to include companies headquartered in an authoritarian state in the definition of state-owned enterprises to ensure that they are automatically subject to security reviews. We just want to protect our sovereignty.
Public servants warned against calling out certain nations like this, as it could conflict with WTO obligations. However, when we look at the 2019 annual report from the national security committee of Parliament, NSICOP, it highlighted activities carried out by the People's Republic of China in Canada, stating, “they are a clear threat to the security of Canada.” The report also stated that “foreign interference represents a significant threat to Canada's society and fundamental institutions.”
The government's own Indo-Pacific strategy reads:
China has benefitted from the rules-based international order to grow and prosper, but it is now actively seeking to reinterpret these rules to gain greater advantage. China’s assertive pursuit of its economic and security interests, advancement of unilateral claims, foreign interference and increasingly coercive treatment of other countries and economies have significant implications in the region, in Canada and around the world.
Despite all that, the Liberals and the Bloc members voted down our amendment. Frankly, it is not surprising, given how long this government has ignored the 2019 NSICOP report, which called for a foreign agent registry, and given the fact that our Prime Minister has said that he admires the basic dictatorship of China.
The question I want the government members to answer is this: Do they really believe that, without the amendments we put forward in good faith, which they rejected, this bill is as strong as it could be to protect Canadian assets, companies and, most importantly, our sovereignty? I do not believe they can answer with a yes.
Thankfully, a few of our common-sense Conservative amendments were passed.
Number one was to reduce the threshold to trigger a national security review from $512 million to zero for any investment by a state-owned enterprise. I think if there is one thing to note from the work the Conservative Party did it would be our standing up for Canadian sovereignty by changing this fundamental aspect of the Investment Canada Act. Moving forward, when this is passed, when China is looking strategically to take an asset in Canada, say mining rights or a small mine that would fall under the threshold, which I believe this year is at $512 million, that strategic move to try to make its way into the Canadian economy would be subject to a security review. That would be thanks to the hard work of the Conservative members.
Number two was to ensure that items reviewable under the national security review process would include acquisitions of any assets by state-owned enterprises. Number three was to work to ensure that an automatic national security review would be conducted whenever a company had previously been convicted of corruption charges. Number four would require the minister to conduct a national security review by changing “may” to “shall” to ensure a review is triggered whenever it is in the review threshold.
That brings us to today. Conservatives have brought forward a common-sense amendment here at report stage that would protect the system of checks and balances in place on the minister's power to undertake, or not undertake, a national security review. Our amendment would remove clause 15 of Bill C-34, which would revert the language back to the existing text in the Investment Canada Act. This would ensure that cabinet continues to play an active role in ensuring regional representation and in making major decisions about foreign investment in our country.
In conclusion, I understand what the Liberals are trying to do here by streamlining decisions through the minister of industry and the minister of public safety, but we must ensure that regional representation plays a role in national security reviews moving forward.
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Mr. Speaker, I appreciate the amendment to bring the threshold to zero dollars with respect to state-owned enterprises.
I would like to ask my hon. colleague's opinion about the investments done by multinational companies where they come and capture an entire sector, as it is today with the steel and aluminum sector being entirely foreign owned. They just become the branch office of the foreign multinationals, focusing only on the North American markets, and never attempting to export the talent, resources and expertise that is available in Canada to the countries with which we have free trade agreements across the world.
Does that not also fit into the definition of economic security which, in my view, is the same as national security?
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Mr. Speaker, I missed the first part of that question, but I will note that the member for Nepean actually stood alongside Conservative members in the House during second reading when he called for some of the changes to the national security review.
More broadly to his point, I think when we look at the Investment Canada Act, the Government of Canada needs to be looking very closely at protecting strategic interests, and that is what we were trying to do. That is not just from foreign state-owned actors, but that does include multinational companies as well.
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