Bill C-34

National Security Review of Investments Modernization Act

An Act to amend the Investment Canada Act

This enactment amends the Investment Canada Act to, among other things,
(a) require notice of certain investments to be given prior to their implementation;
(b) authorize the Minister of Industry, after consultation with the Minister of Public Safety and Emergency Preparedness, to impose interim conditions in respect of investments in order to prevent injury to national security that could arise during the review;
(c) require, in certain cases, the Minister of Industry to make an order for the further review of investments under Part IV.1;
(d) allow written undertakings to be submitted to the Minister of Industry to address risks of injury to national security and allow that Minister, with the concurrence of the Minister of Public Safety and Emergency Preparedness, to complete consideration of an investment because of the undertakings;
(e) introduce rules for the protection of information in the course of judicial review proceedings in relation to decisions and orders under Part IV.1;
(f) authorize the Minister of Industry to disclose information that is otherwise privileged under the Act to foreign states for the purposes of foreign investment reviews;
(g) establish a penalty not exceeding the greater of $500,000 and any prescribed amount, for failure to give notice of, or file applications with respect to, certain investments; and
(h) increase the penalty for other contraventions of the Act or the regulations to the greater of $25,000 and any prescribed amount for each day of the contravention.

National Security Review of Investments Modernization Act

[Damien Kurek, Conservative, Battle River—Crowfoot, AB]

Mr. Speaker, do members know what is tragic about the comments that member just made?

I agree with him that we do need to ensure that we protect the critical minerals that are essential to our economy. We need to ensure that Canada is the place where we have an abundance of those things, whether it is lithium from my home province that is in what is known as produced water, a by-product of oil.

Here is the tragedy. That member is talking about cobalt, a very important part of the modern economy. It is also that member who stands against Canadian oil and gas development.

He is concerned about human rights abuses when it comes to critical minerals and the abuses associated with that production abroad, yet he and his coalition partners in the NDP want to see energy production outsourced from Canada to jurisdictions where they do not care about human rights, where they do not care about LGBT rights, where they do not care about the dignity of humanity, and they would even go as far as to fund the war machines that would kill citizens in countries like Ukraine.

It is tragic that the New Democrats are either ignorant to that reality or they simply are intentionally conflating the fact that we could be a leader when it comes to all critical minerals, all energy, yet it is because of individuals like that and the ideology of that coalition that is holding Canada back.

[The Deputy Speaker, Chris d'Entremont]

This is just a reminder to keep our questions and answers as short as possible so everyone can participate in debate.

[Branden Leslie, Conservative, Portage—Lisgar, MB]

Mr. Speaker, it is an honour to rise today to speak to Bill C-34, otherwise known as the national security review of investments modernization act.

With it being so close to Remembrance Day, I too would like to offer my appreciation for all those who have served and continue to serve, and all the families that support them. I would encourage everybody to make sure they attend a ceremony this Saturday to honour and respect veterans for all of the work they have done.

Speaking of our security, the NDP-Liberal coalition has, for far too long, not taken our national security seriously, so it is good to see some efforts being made through the legislation before us. Unfortunately, our reputation on the world stage has taken a beating over the past eight years. We have seen numerous diplomatic debacles over those years, and a Prime Minister who regularly embarrasses Canada on the world stage. It seems that every time I go on social media, another country's news broadcast is mocking the Prime Minister. It is one thing to embarrass oneself with a tickle trunk of outfits to wear to another country or by wearing blackface more times than one can remember, but the Prime Minister has forced our allied nations to lose confidence in us as a partner.

Just this past July, Dan Sullivan, a United States senator from Alaska, called out the Liberal government for consistently failing to meet NATO’s 2% GDP target for defence spending. What is worse is that the Liberals are cutting $1 billion from our defence budget this year. While the American ambassador played it nice a few weeks ago and said he is not yet worried about our failure to meet our NATO targets, we all know and can recognize how our allies feel about Canada these days. If we had been taking our national security seriously, perhaps Australia, the United Kingdom and the United States would not have separated off from the Five Eyes alliance and created their own strategic defence partnership without Canada.

With regular disruptions to our ports and railways, we are losing the perception of us as a reliable trading partner that can deliver the goods we produce here in Canada to market. With a changing climate, our adversaries see the north as an opportunity. They see a wealth of resources and future transportation routes, and we are increasingly unable to protect our own sovereignty in the north. The sad reality is that under the Liberal government, we have become a bit of a laughingstock on the world stage, and it is disappointing to admit that. However, I cannot think of a single nation around the world with which our relationship has improved over the past eight years.

Given all of the failures internationally, one would assume that perhaps we would want to take care of our domestic economic needs here at home, but we have not done that. Although we are taking a good step with this legislation, after eight years, foreign state-owned enterprises, particularly those connected with the Communist regime in China, have heightened their influence in Canada. I will provide a few examples. In 2017, the government allowed Hytera Communications, a firm with ties to China, to acquire B.C.-based satellite communications company Norsat International. In 2020, Nuctech, a company owned by the Chinese government and founded by the son of a former Chinese Communist Party secretary general, won a bid to, get this, provide security equipment to over 170 Canadian embassies around the world. Imagine that. The government was going to entrust the security of Canadians stationed abroad to technologies linked to the Chinese Communist Party.

I know there are a lot of examples like this, but I will end with one more. Just last year, the CBC revealed that in 2017, the CBSA began using radio equipment and technology from Hytera, the company I just referenced. It was quite literally using the technology at our borders while our main ally, the United States, was indicting the company for 21 espionage charges. It banned the company from operating and doing business because it posed an unnecessary risk to national security. At the same time as our border guards were using the equipment, our American counterparts and friends were kicking the company out of their country.

It seems as though often the current government is focused on political interests and not our national interests. We should not be surprised. We all remember when the Prime Minister alluded to his level of admiration for China's basic dictatorship. It is perhaps why the Liberals have given China so many passes and why they have allowed Chinese-linked companies and agencies to infiltrate our university campuses, co-opt our research and take our technologies that innovative Canadians, innovative students and innovative companies in Canada have been spearheading.

We could talk about all these failures all day, but I want to address specifically some pieces of Bill C-34. I was pleasantly surprised that the Liberals brought the legislation forward, because it is an important idea to try to always enhance our national security, particularly as things evolve and our competitors become our allies and our allies become our enemies in the global world.

The goal in the legislation of amending the Investment Canada Act to protect our national security is not a bad one at all, but I really thought that for once, the Liberals had come up with their own idea. However, looking back to our 2021 platform, I noticed we had pledged to do the same thing: “Canada's Conservatives will: Protect Canadian intellectual property with a strengthened Investment Canada Act”. As the old proverb goes, imitation is the highest form of flattery, and there has been a lot of mimicking going on lately. My first speech in the House was just last month, about the affordable housing and groceries act, which was plagiarism, effectively, of two Conservative bills, Bill C-356 and Bill C-339. Of course we also saw, just last week, a climb-down on the carbon tax for home heating for some Canadians in some parts of the country.

Not all mimicking is bad, but at the end of the day, as my fellow Manitoban colleague from Selkirk—Interlake—Eastman said, “The Liberals are tired, they are weary and they do not have anything else to bring forward”. This seems to be the case. While I would prefer an election so we can put forward a strong platform that will include enhancements to the Investment Canada Act, among many other things, I do hope the current Liberal-NDP coalition keeps copying a few of our ideas. It can start with axing the carbon tax in its entirety, but I am not going to hold out a lot of hope.

Overall, Bill C-34 needs to go further. It does not go far enough to address the risks faced by Canadians. By and large, the largest threat we have to investments here in critical services is by state-owned or state-connected enterprises from authoritarian regimes like China and Russia. Canadians are rightly concerned about this problem. Foreign direct investment is a good thing. We should want to draw investment dollars into our communities. However, we should also want to maintain our sovereignty and our national interests. The reality is that we have become a place where people do not want to do business. Investments in our natural resource sectors, among many others, are flooding out. Our counterpart, the United States, which does not have a carbon tax, is more appealing to do business with. Companies would rather go just south of the border, south of my riding, and set up business there.

The bill does not include the ability for the government to create a list of authoritarian countries that are prohibited from owning Canadian companies or assets, which I think it should do. The Conservative team, at the committee stage, did a great job of bringing forward common-sense recommendations for changes to the legislation. Not as many were adopted as should have been, but Conservatives did work hard to fix some of the flaws.

One last issue that is becoming increasingly important and visible, particularly in my area in the Prairies, is the increased buying of farmland by Chinese-linked companies and organizations. Not only does this threaten our long-term food security but it also significantly increases prices for young farmers who are trying to enter an already very difficult industry to get into. It is important that we enable the Investment Canada Act to be broad enough and flexible enough to have cabinet be able to make important decisions on whether a takeover or change in ownership is in the best interest of Canadians. This seems like common sense to me. We know it is something only Conservatives can provide.

[Mark Gerretsen, Liberal, Kingston and the Islands, ON]

Mr. Speaker, Ontarians are very familiar with the Conservative slogan “common sense”, because the former premier Mike Harris, when he brought along common sense, ended up with unsafe drinking water and a countless number of problems based on his common-sense revolution. Therefore, it is pretty clear where the common sense from Conservatives is.

I want to go back to the member's comment, specifically when he said that $1 billion was being cut from the defence budget. His implication was that this was going to affect the CAF. No member of the Canadian Armed Forces is going to be affected by this. As a matter of fact, what is going to be affected by what is being talked about by the minister is reducing the number of outside contracts and the number of third party agreements that the government has. Ironically enough, the member then went on to criticize this later in his speech.

Would the member agree with me that, at least as it relates to government business, finding savings in terms of less contracting out, which is what that $1 billion is about, is a good thing?

[Branden Leslie, Conservative, Portage—Lisgar, MB]

Mr. Speaker, what a weird time it is to cut $1 billion. I am all for finding efficiencies in government, and after the last eight years of absurd inflationary spending, we absolutely can find billions of dollars to cut. I find it interesting that we are finding cost savings by going to a third party consulting company and paying it $660 million to give us advice on how we can best stop spending money on consultants.

It is important, at the end of the day, that when my colleague criticizes common sense and links it to the Mike Harris days in Ontario, my constituents, my friends and my neighbours have common sense. They know it when they see it, and they know they do not see it in the current Liberal government.

[Heather McPherson, NDP, Edmonton Strathcona, AB]

Mr. Speaker, I congratulate my colleague on taking a seat in the House.

One of the things that the member spoke about today was the idea that over the last eight years, Canada has become diminished on the world stage. I would say that while it is true that Canada is diminished on the world stage, it is not something that happened just in the last eight years. In fact, the cuts that we saw to official development assistance under the Harper government were directly responsible for Canada's not being able to get a security seat when we tried for that seat. The cuts by the Harper government and the failure of the Liberal government to reverse those cuts were a huge part of that, as the continent of Africa saw that we had stepped back from participating in a meaningful way with it.

The member also spoke about the need to not invest in China because of the human rights abuses that we are seeing in China and with China being a belligerent on the world stage. I wonder whether the member has any comments to make about the fact that we have a new Indo-Pacific strategy and that India, under the Modi government, has shown itself to be belligerent and not to be following human rights as well. Therefore, are we not taking our eggs from one basket that is not adhering to our beliefs as Canadians for human rights, and putting them into another basket where human rights are also not being protected?

[Branden Leslie, Conservative, Portage—Lisgar, MB]

Mr. Speaker, I thank my colleague across the way for the well-wishes.

I will start by saying that there has been a shift over the past eight years. We had a previous prime minister who was strong and principled on the world stage. I think back to the moment when he told Putin to get out of Ukraine the first time that he invaded. That is the Canada I want to be a part of. I want to have a strong foreign policy vision for our nation.

In terms of India and China, the member is right: Our best strategy is diversification. We are an export nation. We are a natural resources-based nation. We are a trading nation, and it is something we should be proud of. A pan-American agreement is a good approach. At the end of the day, we need to make sure we are doing things in the best interest of Canadian companies and of Canadians themselves.

[Elizabeth May, Green, Saanich—Gulf Islands, BC]

Mr. Speaker, it is the first chance I have had to address the hon. member for Portage—Lisgar since his win in the by-election. I would like to congratulate him. I look forward to working with him in this place, as I did with his predecessor.

In terms of the piece of legislation before us, I am very concerned that we apply a new lens to foreign investment in Canada, from a national security point of view and from a national sovereignty point of view. We have had the recent experience, which I have mentioned in this place, of something that did not ring any bells or raise any flags as it began, which is a company called Paper Excellence. It is owned by one billionaire from Indonesia who has now bought up the majority of the pulp and paper sector of our economy: Resolute Forest Products, Catalyst paper and Domtar. How do we track that? What triggers an investigation when we start seeing the Canadian economy bought up and held in countries like Indonesia where we do not at this point have a relationship that would let us track that?

[Branden Leslie, Conservative, Portage—Lisgar, MB]

Mr. Speaker, that was a very good question. The fact is, it took eight years. That is too long. We do need to act and to make sure we have the flexibility to look at evolving national interest issues and track them better so we can be more flexible and responsive in identifying problematic investors.

[Dave Epp, Conservative, Chatham-Kent—Leamington, ON]

Mr. Speaker, I am going to be splitting my time with the member for North Okanagan—Shuswap.

It is always an honour to bring the voices of Chatham-Kent—Leamington into this chamber. Today, I look forward to addressing the third reading of Bill C-34, an act to amend the Investment Canada Act, with the aim of protecting Canada’s national security. That is the important part.

After eight years of the Prime Minister, numerous foreign state-owned enterprises have acquired interest and control in many Canadian companies, intellectual property, intangible assets and the data of our citizens. As usual, the government has done too little, too late, to fully protect our national economic and security interests.

While Conservatives are pleased that four of our amendments were passed at committee, we are a bit bewildered as to why the Liberal-NDP government would want to water this legislation down. It defeated 10 amendments that would have made Canadian interests more fully protected by having better legislation. Why?

One of the amendments defeated at committee would have modified the definition of a state-owned enterprise to include any company or entity headquartered in an authoritarian state, and of course, one of the main ones there is China.

The House of Commons Special Committee on Canada-China Relations presented an interim report to the last May that was entitled “A Threat to Canadian Sovereignty: National Security Dimensions of the Canada–People’s Republic of China Relationship”. This report offered an in-depth review of the national security implications related to the PRC’s actions. It addressed key national security topics, including the safeguarding of Canadians from foreign interference, preventing threats to Canada’s democratic institutions and elections, defending intellectual property and research, enhancing cybersecurity, combatting organized crime and money laundering, addressing global health governance threats and scrutinizing the PRC’s intentions in the Arctic. This report should serve as a warning. We need to align ourselves with our allies.

The U.S. has created a committee on foreign investment in the United States, or CFIUS, which is an inter-agency committee authorized to review certain transactions involving foreign investment in the U.S. and certain real estate transactions by foreign persons, to determine the effect of such transactions on the national security of the U.S.

Have we not learned our lessons, through COVID, by allowing critical elements of our economy to be put under foreign control? A recent CBC article said, “Casey Babb, an international fellow with the Glazer Centre for Israel-China Policy and an instructor at Carleton University in Ottawa, said China uses foreign investment as a strategic tool.”

I am going to quote him from the article: “They use foreign investment as a door, as an entry point, to gain access to markets, to gain access to government, to investors as well”.

He goes on to say, “It's a great way to sort of use licit means to carry out illicit, or even legal but injurious, activities.” Dr. Babb also said that “China is looking to tap into [Canada's] natural resources, including oil, critical minerals and fish.”

The government’s “soft on China” policy must end. One of the amendments it refused to pass sought to list specific sectors necessary to preserve Canada’s national security, rather than using a systematic approach.

Let me provide a personal example of a sector-specific area. On our own farm in Leamington, in the years prior to the Ukraine-Russian war, we actually used more Belarusian potash on the farm than our own Canadian Saskatchewan potash. Why? Sea freight is relatively cheaper than rail freight. Why is our rail freight so expensive? Because it is being tied up hauling crude oil to eastern refineries, rather having that oil flow through an energy east pipeline, which is lowering our rail capacity for moving potash and other goods that cannot move by pipeline. Supply and demand drives up the cost of freight.

In addition, 660,000 to 680,000 tonnes of nitrogen fertilizer, mainly urea, were imported pre-war into eastern and central Canada. Why is western natural gas not flowing through a pipeline to fertilizer manufacturing plants here in eastern Canada? Again, Russia's invasion of Ukraine should teach us a lesson. Where we have critical inputs in Canada, we should ensure that we have the infrastructure that could be used domestically so that we would have competitive prices vis-à-vis foreign options.

Another Conservative amendment that failed to pass would have exempted non-Canadian Five Eyes intelligence state-owned enterprises from this national security review process to prevent an overly broad review process. This, unfortunately, sends all the wrong signals to our Five Eyes partners with whom the Liberal government's policies have been at odds.

Canada needs to be seen as a reliable player in this partnership. Under the current government, this has not been the case. Canada needs to restore its trustworthy reputation with the U.K., the U.S., Australia and New Zealand so that critical intelligence information gathered by one member can be confidently shared with other members.

Again, the failure of this amendment to pass sends all the wrong signals to our allies.

Amendment 25.4(1.1) would have allowed the Government of Canada to maintain ownership of intangible assets that have been developed in whole or in part by taxpayer funding. An example of an intangible asset, which I learned in preparation for this speech, is a radio frequency filtering system for our Mounties. What is that? It is a filter circuit made up of capacitors, inductors and resistors that is used to filter the signal frequency in communication channels.

What is behind this? Let us think back to 2017 when the China-based Hytera acquired a telecom company from B.C. called Norsat. This company has significant Chinese government ownership, but it does not make any money. Does that not send a signal that this should be looked at? This company significantly lost money for six years.

We rightfully called for a full national security review, but the industry minister refused, and he approved the Chinese acquisition that provided the RCMP with telecom equipment. Incredibly, the federal procurement department awarded a $550,000 contract to Ontario-based Sinclair Technologies to build and maintain the radio frequency filtering system for the Mounties. By the way, Sinclair Technologies is the parent company of Norsat International.

In 2022, Norsat was charged with 21 counts of espionage in the U.S., and President Biden banned it from the U.S. Just eight months later, the RCMP awarded China's Hytera subsidiary, Norsat, the contract to install telecom hardware in our RCMP communications systems.

When questioned at committee, the RCMP was asked if it knew whether Hytera was charged and banned from the U.S., and the answer was “no”. How can the Liberal government continue to let such enormous security breaches happen?

We all know how important lithium is for our economy. It is needed to make the batteries for our EV vehicles. In 2019, the Liberals approved the sale of Canada’s only lithium-producing mine to the China state-controlled Sinomine Resource.

Every ounce of lithium mined in Canada right now goes to China, while Canadians are unable to supply lithium to our own growing electric vehicle industry, which is putting our nation in a potentially vulnerable situation.

Again, in 2019, Conservatives demanded a full national security review. The “soft on China” Liberals ignored it. I guess this would explain why the NDP-Liberal coalition voted down amendment 25.3(1), which would have allowed the minister to go back and review past state-owned acquisitions through the national security review process, which would have allowed a more fulsome review.

Last week, the Prime Minister did show us that the Liberal government can go back, as it adjusted the carbon tax on home heating fuel in Atlantic Canada and in rural Canada. The government demonstrated it can reverse course after identifying a mistake. That, of course, was in response to polling, not in the interests of national security.

It is time for a common-sense government, a government that would allow our nation to prosper while at the same time protecting its citizens. Conservatives will continue to use our voices to ensure that both the prosperity and the protection of our citizens is defended.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

Mr. Speaker, I thank my colleague for his speech.

I would like to know what he thinks about something specific. Earlier, I asked a question about whether enough is being done to protect our head offices. The member told me that he agreed with me but that there must be balance in all things. What we want to do locally—

[The Deputy Speaker, Chris d'Entremont]

Sorry, I think there is a problem with the interpretation. We will wait for that to be sorted out. It's done.

It is my duty pursuant to Standing Order 38 to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for Saanich—Gulf Islands, Emergency Preparedness; the hon. member for Yorkton—Melville, Carbon Pricing; the hon. member for Abitibi—Témiscamingue, Sport.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

Mr. Speaker, I will start from the beginning. I was thanking my colleague for his speech and telling him that a little earlier, I had mentioned that the Bloc Québécois members feel that this bill does not go far enough in protecting head offices.

However, as in everything, there needs to be balance, reasonable measures. We cannot shut down all outside investment. Several MPs have reiterated today that there needs to be outside investment as well. It is a question of striking the right balance. How do we implement good measures that preserve jobs, to try and maintain our technological innovation, but without blocking all outside investment?

I would like my colleague to share his thoughts with us. Where do we find the balance to be able to export, too, at some point?

[Dave Epp, Conservative, Chatham-Kent—Leamington, ON]

Mr. Speaker, I agree with my hon. colleague. We do want the investment here. Actually, some of the amendments proposed were going in the direction of allowing a less rigorous process for our Five Eyes allies, who have better processes in place than we have right now, to have reciprocity in the approval process. In addition, one of the amendments targeted only authoritarian states, which tend not to be our allies. There was differentiation, if we look at all the amendments, that allowed for a differential process depending on where a potential investment was coming from.

[Heather McPherson, NDP, Edmonton Strathcona, AB]

Mr. Speaker, my hon. colleague is a new member, as am I, of the international development caucus, and I enjoy working with him very much on that work.

I have a couple of things. First of all, he talked about the need for Canada to play a bigger role in the world so that our allies share intelligence with us. However, I cannot help but point out that the leader of his party, who is hoping to be the prime minister of this country, refuses to get top security clearance and in fact would not be able to benefit from their intelligence in any way.

The other thing he spoke about was the need for us to invest in energy infrastructure. My friend, the member for Timmins—James Bay, and I were in Germany meeting with the Chancellor and the head of the chancellery at this time last year, and they spoke to us about the need to translate their energy sources. They wanted their energy sources to become green. They were not interested in a long-term investment in fossil fuels. They wanted to get off fossil fuels, so building the infrastructure for fossil fuels that, in fact, the rest of the world is already moving away from does not seem like a very smart strategy.

I am wondering if he could comment on that.