- Member of Parliament
- Member of Parliament
- NDP
- South Okanagan—West Kootenay
- British Columbia
- Voting Attendance: 61%
- Expenses Last Quarter: $128,729.57
- Government Page
Mr. Speaker, I am very happy to rise here today once again to speak to Bill C-34, which would update the Investment Canada Act. I spoke to this bill on Monday. It is now Thursday and not much has happened in the interim. We did consider a report stage amendment and voted on it, an amendment that would have taken some of the powers vested in the minister in this new act and moved them to cabinet. That amendment was defeated, so we are basically back to where we were when it came out of committee at report stage. I will therefore be repeating some of my comments from Monday, naturally.
This act is designed to do two main things. It is designed to ensure that foreign investments in Canada have a net benefit for Canadians and that foreign investments are not detrimental to our national security.
As I said previously, many Canadians will know this act from its first iteration, back in the seventies, as the Foreign Investment Review Act. It was brought in at that time because there was a rash of foreign takeovers, predominantly American takeovers, of Canadian companies. American companies were moving in as the economy was booming in the fifties and sixties. There was money for these companies to expand. They moved north and started to buy up Canadian companies. I remember that at that time, to go way back, there was real concern in Canada about this trend of foreign companies taking over Canadian companies, sometimes moving their operations entirely out of the country, sometimes just keeping them as branch plants of larger multinationals.
The Foreign Investment Review Act was brought in then to deal with this situation. It reviewed these transactions as they took place, and the Foreign Investment Review Agency approved about 90% of them. Canadians are open to investment. We know that we need investment to grow our economy, but 10% of those applications were turned down by the Foreign Investment Review Agency in the seventies and early eighties. That brought criticism to the agency by both Liberals and Conservatives, who thought we should be open for investment and should not be turning down some of these applications.
In 1984, Brian Mulroney brought in this act, the Investment Canada Act, to replace the Foreign Investment Review Agency with Investment Canada, of course saying he wanted to welcome foreign investment. True to his word, under the Mulroney government, the new Investment Canada entity did not turn down any applications for foreign takeovers.
The Liberal governments that followed Mulroney's, those of Jean Chrétien and Paul Martin, had the same record, with not one application being blocked. The Harper government was a different story. Harper blocked the sale of British Columbia-based MacDonald, Dettwiler to the American company Alliance based on both financial benefits to Canadians and the critical technology argument.
On the other hand, in 2012, the Harper government allowed the $15-billion sale of Canadian oil company Nexen to the China National Offshore Oil Corporation, owned by the Chinese government, and the $6-billion sale of Progress Energy to Malaysia-based Petronas. Then, on the same day, the Harper government changed the Investment Canada Act to block state-owned foreign investments in Canadian oil and gas companies. It was a good thing but essentially closed the barn door after the horses had left.
Legislation regulating these foreign takeovers in Canada of Canadian companies has changed from time to time over the past few decades. Foreign investment trends have changed as well. The share of investments in Canada by the United States has declined over the past few decades, but it still leads the pack. It is still the main country, not surprisingly, dealing with foreign takeovers of Canadian companies because of its close proximity to us and the history of co-operation between our countries. It is followed by the Netherlands, the United Kingdom, Luxembourg, of all places, Switzerland, Japan, China, Germany, Brazil, France and Bermuda, although I assume, as I said on Monday, Bermuda and Luxembourg are there because that is where Canadian companies are sheltering their profits; they are not bringing investments from those countries. It is clear that we need to keep up with the times in regulating foreign investment, and Bill C-34 is another example of that.
Information and data are the new oil, and earlier versions of the Investment Canada Act were essentially blind to that. I have talked to numerous companies over the years, especially tech companies. At the natural resources committee and now at the international trade committee and the science and research committee, one story I have heard repeatedly from companies is that while small Canadian companies, especially tech companies, work hard to develop new technologies, say in hydrogen energy or AI advances, when it comes to expanding companies to get their products to market, they need investments. These companies develop technologies and do all the testing, and when they have a product that people want, they have to invest to expand their operations to get their products to market. We often call this stage the “valley of death” because so many companies fail at that.
In the Canadian tech ecosystem, we do not have big Canadian tech companies that can help invest in smaller companies, so too often the investment they attract is taken over by foreign companies from the United States, Europe or China. With those sales goes the intellectual property, the ideas behind that new technology, and the real core of the company's value disappears from Canada immediately.
The present version of the Canada Investment Act allows companies to report takeovers after the fact, so a foreign takeover could happen and then it is reported to Investment Canada. However, when that happens, for instance with a tech company takeover, we need some way of reviewing the takeover before the transfer of intellectual property happens.
Bill C-34 has a pre-implementation filing requirement for certain investments to give early visibility to situations where there is a risk that a foreign investor will gain access to sensitive assets or information immediately on closing a deal, because if critical intellectual property is involved, it is usually too late to stop the transfer of that information if it is done after the fact. It is not like the old days when the main value of a company was in the factories it owned or in the rights to natural resources, that sort of thing. This new pre-implementation filing could help put a stop to that, where necessary.
As an aside, on top of this, we really need to develop domestic measures to help develop and protect intellectual property here in Canada so that companies are better prepared when they get to that stage and can keep intellectual property in Canada, where it can be used to help grow our economy. Canada is the leader in many areas that are now very important in the world of technology, such as AI and, as I mentioned, the development of hydrogen energy and fusion. There are various technologies that we are the leader in, and we risk losing that leadership position if all of this intellectual property gradually leaks away.
What are some other things that would make this bill even better? First, the act should mandate the review of an acquisition by a state-owned enterprise of a company previously reviewed by the ICA. This refers to situations where a foreign company takes over a Canadian company and Investment Canada reviews it, finds the company is okay, as it looks like Canadian interests would be protected, and then okays it. After that happens, sometimes the foreign company is taken over by, say, a foreign state.
This has happened several times with Chinese companies, and I will talk about a couple of them. It is a real concern. I mentioned Monday the story of a company called Retirement Concepts, which owns and operates seniors residences in British Columbia, Alberta and Quebec. These are long-term care homes taking care of our seniors. I have told the tragic story of a family's loss of both parents to inadequate care in the Summerland Seniors Village, which is one of the Retirement Concepts care homes in B.C. that is very close to where I live. Suffice it to say that Retirement Concepts has a checkered history of investigations for its operations.
Even after that, in 2016, Chinese insurance giant Anbang, then a privately held company, bought Retirement Concepts. The transaction was reviewed and okayed by Investment Canada, but less than a year after that purchase was okayed, the Chinese government seized the Anbang company and jailed its chairman for fraud. Perhaps it knew something the Canadian government had missed when that review was carried out.
Suddenly, we have the Chinese government owning a company that is one of the largest providers of long-term care in Canada, and certainly the largest in British Columbia. Not only is it one of the largest providers of long-term care for our seniors, taking care of our mothers, fathers, grandfathers and grandmothers, but it is known to provide very poor care for seniors in many situations. In fact, in 2020, the British Columbia government had to seize management control of four care homes run by Retirement Concepts because of continuing problems of poor care. It returned that control just over a year later, but it is an indication of the lack of priority Retirement Concepts has placed on the care of seniors.
At present, I do not see any direct provisions in the ICA that would allow Investment Canada or the minister to review the subsequent acquisition by a state-owned enterprise of an ICA-approved takeover or merger by a foreign private company. We have to change this.
The NDP put forward an amendment that would allow for the review of a takeover by a state-owned enterprise of a previously approved acquisition of a Canadian firm. This could be done by establishing the power to require a mandatory divestment of all Canadian assets by entities in these specific circumstances. This is an example of where we could and should take a big step in that direction.
I have been told the NDP amendment to fix this was ruled out of order because the government claimed it now has the power to enforce the divestment of any state-owned purchase. If that is the case, then it should act on Retirement Concepts without delay. This would not only take the Chinese government out of the business of taking care of our seniors, but would be a step toward taking all for-profit enterprises out of seniors care. There is not place for profit in our health care system, and that includes seniors care.
Anbang also features in another cautionary tale about foreign takeovers in Canada, one that highlights the risk of exposing Canadians' privacy and digital rights. This was again in 2016. Anbang was very busy in 2016 buying up Canadian companies. The Chinese company Bluesky Hotels took over InnVest, a Canadian real estate company that invests in hotels and owns over 100, in a deal worth $2.1 billion. It was the biggest owner of Canadian hotels.
It is alleged that Bluesky is just a front for Anbang, because that company initially wanted to acquire InnVest, and the executive in charge of Bluesky is a former employee of Anbang. However, Investment Canada reviewed and approved the takeover. As I mentioned, a few months later, Anbang was seized by the Chinese government.
This development has raised significant concerns regarding privacy issues, among other things. China's Ministry of State Security was reportedly behind the massive cyber-attack against the Marriott hotel chain, compromising the personal information of 500 million guests. This has heightened the concerns of the employees and guests of InnVest hotels. Therefore, we need to amend the Investment Canada Act to allow for a privacy protection review.
Another factor to consider in investment reviews is preventing publicly funded research and development from leaving the country, resulting in the loss of jobs and, basically, the theft of taxpayer dollars. A company called Nemak received $3 million from the government's automotive supplier innovation program. However, in 2020, Nemak closed its plant in Windsor, where those funds had been used to create new products for General Motors, and transferred the technology and those jobs to its operations in Mexico.
An NDP amendment passed in committee would allow for the review of a foreign takeover, which would consider intellectual property that was developed with funding from the federal government and issue remedies to retain the benefits in Canada. Therefore, a situation such as that of Nemak would not happen again. The foreign investment review would now also include the effect of the investment on the use and protection of personal information of Canadians. This would help prevent such situations as the one we saw with Bluesky and Anbang. The federal and provincial industrial, cultural and economic policies affected by foreign investment would now be included in the review as well.
I will conclude by running through some of the amendments that were passed at committee that strengthened the bill or, at least, changed it.
One amendment was to allow the investment made by a foreign entity, especially state-owned enterprises, to be fully reviewable, regardless of the size of the investment. Before, there was a lower limit that would trigger a review. In addition, in clause 8, there was the NDP amendment, which I mentioned, that would trigger a review on a takeover of a company by a foreign company that would see the loss of intellectual property and technology that had been funded by the federal government.
There is an amendment that would expand the investment review to include partial investments by foreign entities; another amendment would include a non-Canadian who has been convicted of an offence involving corruption as part of the investment review process. Hopefully, if they found out that the head of a company such as Anbang was charged with fraud, that would trigger a review right away and probably result in the cancellation of that transaction.
There is another amendment to impose interim conditions on both the foreign entity and the target Canadian business during the review process, as long as national security risks are not increased. Another amendment that involves national security instructs the minister to provide copies of any order concerning a foreign investment review to the National Security and Intelligence Committee of Parliamentarians and the National Security and Intelligence Review Agency.
I will finish by saying that, in this new world where ideas and data are more valuable than the natural resources we have so long relied on, we need a new regulatory framework to protect our industries, our workers and our companies.
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Mr. Speaker, I am happy to rise today to speak to Bill C-34, which would update the Investment Canada Act. This act is designed to do two main things. The first is to ensure that foreign investments in Canada have a net benefit to Canadians. The second is to ensure that foreign investments are not detrimental to our national security.
Many Canadians, especially Canadians of my age, might know this act better by its former name, The Foreign Investment Review Act. In its early days in the 1970s, it was brought in to deal with a rash of foreign buyouts, mainly American, of Canadian companies.
The Foreign Investment Review Agency approved about 90% of the transactions it dealt with, but was criticized by both Liberals and Conservatives for actually doing its job by blocking some proposals that did not show a benefit to Canadians.
Therefore, Brian Mulroney brought in the Investment Canada Act in 1984. He replaced the Foreign Investment Review Agency with Investment Canada, saying that he wanted to welcome foreign investment. True to his word, under his government, Investment Canada did not block a single foreign investment transaction, not one. The Liberal governments that followed Mulroney, under Jean Chrétien and Paul Martin, had the same record, not one application blocked.
The Harper government was a different story. Harper blocked the sale of British Columbia-based Macdonald, Dettwiler to the American company Alliant based on both financial and critical technology arguments.
On the other hand, in 2012, the Harper government allowed the $15-billion sale of Canada oil company Nexen to the China National Offshore Oil Company, owned by the Chinese government, and the $6-billion sale of Progress Energy to Malaysia-based Petronas. However, the same day, Harper changed the Investment Canada Act to block state-owned foreign investment in Canadian oil and gas companies, essentially closing the barn door after the horses had left.
Therefore, legislation regarding regulating foreign takeovers of Canadian companies has changed from time to time over the past decades. Foreign investment trends have changed as well. The share of U.S. investment in Canada has declined over the past few decades, but it still leads the pack followed by the Netherlands, the United Kingdom, Luxembourg, Switzerland, Japan, China, Germany, Brazil, France and Bermuda, although, I suspect the high placement of Luxembourg and Bermuda reflects more where Canadian companies are hiding their profits than real sources of investment.
However, it is clear that we need to keep up with the times in regulating foreign investment, and Bill C-34 is another example of that.
Information and data are the new oil, and earlier versions of the Investment Canada Act were essentially blind to that. The bill before us introduces a pre-implementation filing requirement for certain investments to give earlier visibility to situations where there is a risk that a foreign investor would gain access to sensitive assets or information immediately on closing.
I have talked to numerous tech companies over the past few years. One story I hear repeatedly is that small Canadian tech companies work hard to develop a new technology, say in hydrogen energy development or AI advances. However, when it comes to expand their companies to really get their product to market, they need investment. Too often in the Canadian tech ecosystem, these companies simply get bought out by bigger companies from the United States, Europe or China. With those sales go the intellectual property that represents the core of their company's value.
The present version of the Investment Canada Act allows companies to report takeovers after the fact. However, if critical intellectual property is involved, it is usually too late to stop the transfer of that information, if we find out about the transaction 30 days later, for instance. It is not like the old days when the main value of a company was in the factories it owned. This new pre-implementation filing could help put a stop to that where necessary.
There are several other improvements that provide more flexibility for the minister to act and better manage the entire process.
What would make the act even better? First, the act should mandate the review of an acquisition by a state-owned enterprise of a company previously reviewed by the ICA, and I would like to spend some time on a story that illustrates why this is needed.
There is a company called Retirement Concepts that owns and operates a number of seniors residences in British Columbia, long-term care homes. One of them is the Summerland Seniors Village just outside the federal riding I represent but within the provincial riding I live in. When I first sought to enter politics 10 years ago, I was involved in a provincial election in that riding.
The Summerlands Seniors Village was involved in a tragic story of a local family that lost both its mother and its father in 2012 to poor care and accidents. I met with members of the family and heard the heart-wrenching story of neglect that had taken the lives of their parents.
After that incident, the provincial government demanded that Retirement Concepts hire more staff, but managers claimed that no one was applying. I am guessing that a combination of low wages and overworked conditions had a lot to do with that.
In 2016, Chinese insurance giant Anbang, then a privately held company, bought Retirement Concepts, a transaction that was reviewed and okayed by the federal government's investment review process. Less than a year after that purchase was okayed, the Chinese government seized the Anbang company and jailed its chairman for fraud. Perhaps it knew something that the Canadian government missed when that review was carried out.
Suddenly, we have the Chinese government owning a company that is one of the largest providers of long-term care in Canada and certainly the largest in B.C.. Not only is it one of the largest providers of long-term care, it is known to provide very poor care at times for our seniors.
In fact, in 2020, the provincial government in British Columbia had to seize management control of four care homes run by Retirement Concepts because of the continuing problems with poor care. It returned that control just over a year later, but it is an indication of the general lack of priority Retirement Concepts had placed on the care of seniors.
At present, there are no provisions in the Investment Canada Act that would allow Investment Canada or the minister to be able to review the subsequent acquisition by a state-owned enterprise of an ICA-approved takeover or merger by a foreign private company. We have to change this.
The NDP put forward an amendment that would allow for the review of a takeover by a state-owned enterprise. This can be done by establishing the power to require a mandatory divestment of all Canadian assets by entities in these specific circumstances.
As an aside, in the case of long-term care homes, the NDP is very much in favour of a move to a future where seniors' care is given the same respect that all health care gets, a future where no long-term care homes are owned by private companies that put profit ahead of the well-being of our seniors.
This is an example of where we could and should take a big step in that direction.
Another factor to consider in investment review is to prevent the loss of publicly funded research and development from leaving the country, resulting in the loss of jobs and, basically, the theft of taxpayer dollars.
A company called Nemak received $3 million dollars from the government's automotive supplier innovation program. However, in 2020, Nemak closed its plant in Windsor, where those funds had been used to create new products for General Motors, and transferred that technology and those jobs to its operations in Mexico.
An NDP amendment, passed in committee, would allow for the review of a foreign takeover to consider the intellectual property whose development was funded by the federal government and to issue remedies to retain the benefits in Canada. Therefore, a situation like that of Nemak would not happen again.
I do not have time today to go over all the improvements this bill would bring to the foreign investment space in Canada or to go over all the improvements that we had hoped it would bring but fell short.
In this new world, where ideas and data are often more valuable than the natural resources we have so long relied on for our wealth, we need a new regulatory framework to protect our industries, our workers and our companies. Bill C-34 is a step in that direction.
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