Finance Committee on May 30th, 2012

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Thank you very much. I am an economist and I have a master's degree from UQAM. So we can have a talk between economists on the Investment Canada Act.

Mr. Bergevin, we have a problem right now. The House of Commons has unanimously passed a motion asking us to review the Investment Canada Act and to clearly define what a net benefit means for Canada. In your presentation, you are trying to reverse the onus. You are asking the government to provide evidence that it is not a net benefit for Canada.

In your view, under what circumstances, would an investment be a net benefit for Canada? Are there circumstances that would enable the government to describe it in a way that could justify its decisions?

[Philippe Bergevin]

It is important to note that Canada is one of the few countries to systematically apply a test to any investment over the required minimum, which is $330 million at the moment. This is not about whether an investment is positive for the Canadian economy. It rather has to do with the government. We have to ask ourselves what public policies would encourage the government to take action to stop a transaction. That does not take any of the government's power away, since it will still have all the latitude it needs to intervene.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

To follow up on what you are saying, what are some public policy issues that would justify action on the government's part?

[Philippe Bergevin]

We are talking about national security and culture. There are many issues related to state-owned businesses. That raises questions as to their ultimate motive.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Mr. Weir, what is your definition of a net benefit for Canada?

[Erin Weir]

It would certainly include a broad range of constituencies, including, first and foremost, the workers employed at the facilities being taken over. I think that is a really crucial component of net benefit.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Mr. Bergevin, you said that you did not necessarily agree with the use of securities. In the case of U.S. Steel, Electro Motive Diesel or even Rio Tinto Alcan, the conditions are not being met.

What would you do for the Canadian government to have some weight to ensure the commitments are met once those companies have finally received approval?

[Philippe Bergevin]

Asking for securities against the promises made to the government sends a negative message to foreign investors. Clearly, this makes the promises more credible. The original question was not well put. Canada is one of the very few countries that ask companies to provide detailed plans on job creation and the level of investment. Those are very strict regulations. In addition to putting money aside, that makes the system a bit more cumbersome compared to that of other countries.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

I am going to give Mr. Weir 30 seconds to answer as well.

Mr. Weir, can you reply to this?

[Erin Weir]

I think it's important to review these takeovers to make sure they're beneficial to Canadians. A lot of other countries have similar processes. Australia, for example, certainly has some regulations around foreign ownership. So I don't think there's anything especially unusual about what Canada does. In fact, I would like to strengthen the process.

[The Chair, Conservative, James Rajotte]

Mr. Adler, please.

[Mark Adler, Conservative, York Centre, ON]

Thank you, Mr. Chair.

I would like to direct my questions to Mr. Wright.

I understand there are currently no seismic-capable vessels in Canada—no company that's able to provide that service. Is that correct?

[Richard Wright]

That's correct.

[Mark Adler, Conservative, York Centre, ON]

How many vessels worldwide could provide seismic data in Canada?

[Richard Wright]

There are about 150 presently.

[Mark Adler, Conservative, York Centre, ON]

Where are they geographically?

[Richard Wright]

They are scattered around the globe. They're primarily concentrated in the North Sea, the U.S. Gulf of Mexico, the northwest slope of Australia, and Southeast Asia. They're built for certain purposes. For any given survey you may have only 10 or 15 vessels pertinent to that type of acquisition: 2D versus 3D versus harsh environment, etc.

[Mark Adler, Conservative, York Centre, ON]

So amending the Coasting Trade Act is a positive thing, in your opinion.

[Richard Wright]

That's correct. Part of the reason is it will give companies vessel choice, looking in a global marketplace for the best available technology. On some of the earlier comments raised in relation to the environment, some of these very modern boats are better for the environment in terms of their sound mitigation, and so on. That gives the operators the choice to look for vessels that can have less impact on the environment, as well as meet their technological needs.

[Mark Adler, Conservative, York Centre, ON]

Who has the best technology right now in terms of building seismic data vessels?

[Richard Wright]

Which company? I'd probably get in trouble if I said that. We deal with a lot of them.

[Mark Adler, Conservative, York Centre, ON]

Okay, so what two or three countries would produce the best for Canadian purposes?

[Richard Wright]

A lot of the technology that we're using offshore in eastern Canada is coming out of Norway, a similar kind of environment. Norwegians historically have been very progressive on technology development. They've used a lot of their oil revenues to funnel into technology that they're now exporting around the world.

[Mark Adler, Conservative, York Centre, ON]

What is the potential for Canada to get into that business?

[Richard Wright]

In terms of having Canadian-flagged seismic boats that could be used around the world, it's a difficult proposition. In Norway, most of the vessels are not Norwegian flagged. They're flagged in different countries around the world. Again, they import those foreign-flagged ships.

The challenge we have in Canada is a limited acquisition season. If you had a Canadian-flagged vessel, it could only be used for maybe six months, the May to October or November timeframe. In the winter months the sea state is too high to use the vessel safely and to get good data quality. Then that vessel would have to find work in other parts of the world. That's the challenge.