Evidence of meeting #61 for Finance in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was transfer.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Glenn Campbell  Director, International Policy and Analysis Division , Department of Finance
Gilles Moreau  Director General, National Compensation, Royal Canadian Mounted Police, Department of Public Safety
Jonathan Roy  Senior Policy Analyst, Social Policy, Health, Justice, Culture, Department of Finance
Daniel MacDonald  Chief, Federal-Provincial Relations Division, CHT/CST and Northern Policy, Department of Finance
John Davies  Director General, National Security Policy, Department of Public Safety
Darryl Hirsch  Senior Policy Analyst, Intelligence Policy and Coordination, Department of Public Safety
Nigel Harrison  Manager, Legislative and Parliamentary Affairs, Department of Fisheries and Oceans
David Gillis  Director General, Ecosystems and Oceans Science Sector, Department of Fisheries and Oceans
David Lee  Director, Office of Legislative and Regulatory Modernization; Policy, Planning and International Affairs Directorate, Health Products and Food Branch, Department of Health
Samuel Godefroy  Director General, Food Directorate, Health Products and Food Branch, Department of Health
Alwyn Child  Director General, Program Development and Guidance Directorate, Department of Human Resources and Skills Development
Annette Nicholson  Secretary and General Counsel, International Development Research Centre (IDRC)
Lenore Duff  Senior Director, Strategic Policy and Legislative Reform, Department of Human Resources and Skills Development
Dominique La Salle  Director General, Seniors and Pensions Policy Secretariat, Department of Human Resources and Skills Development
Nathalie Martel  Director, Old Age Security Policy, Department of Human Resources and Skills Development
Bruno Rodrigue  Chief, Social policy, Income Security, Department of Finance
Annette Vermaeten  Director, Task Force, Special Projects, Department of Human Resources and Skills Development
Eileen Boyd  Assistant Secretary to the Cabinet, Senior Personnel, Privy Council Office
Neil Bouwer  Vice-President, Policy and Programs, Canadian Food Inspection Agency
Lynn Tassé  Director, Canada Gazette, Department of Public Works and Government Services
Gerard Peets  Senior Director, Strategy and Planning Directorate, Department of Industry
Patricia Brady  Director, Investment, Insolvency, Competition and Corporate Policy Directorate, Department of Industry
Andy Lalonde  Manager, Preclearance, Canada Border Services Agency, Department of Public Safety
Lynn Hemmings  Senior Chief, Payments, Payments and Pensions, Financial Sector Policy Branch, Department of Finance

8:35 p.m.

Conservative

The Chair Conservative James Rajotte

Thank you.

Ms. McLeod, please.

8:35 p.m.

Conservative

Cathy McLeod Conservative Kamloops—Thompson—Cariboo, BC

This is just a quick comment rather than a question.

I'm very appreciative of this particular measure. I know that there have been a number of circumstances in which the ministers have felt very challenged by not being able to disclose what's happening. I think parliamentarians have felt that frustration and Canadians have. So both the ability to disclose or publicly communicate and the ability to look at compliance issues I think should be welcomed by all.

8:35 p.m.

Conservative

The Chair Conservative James Rajotte

We'll go to Mr. Brison, please.

8:40 p.m.

Liberal

Scott Brison Liberal Kings—Hants, NS

Do you agree that foreign investors are prepared to do business in jurisdictions where rules are transparent and predictable?

8:40 p.m.

Senior Director, Strategy and Planning Directorate, Department of Industry

Gerard Peets

That would seem to make sense.

8:40 p.m.

Liberal

Scott Brison Liberal Kings—Hants, NS

Yes. When the government killed the bid by BHP Billiton for Potash Corporation in Saskatchewan, the minister at the time promised to clarify the net benefit determination. The ongoing failure to do that seems to indicate that there may have been other reasons for that decision. But without a clear definition of what net benefit is, we're still subject to a lack of transparency and predictability for investors.

According to media reports, the C.D. Howe Institute says that the changes proposed fall short of bringing our investment policy into the modern era because of problems with the interpretation of net benefit. I think the biggest deficit is around the interpretation of net benefit, or alternatively, the definition of it.

Given that the net benefit has been central to the review process under the Investment Canada Act, why have we still not clarified the meaning of net benefit?

8:40 p.m.

Senior Director, Strategy and Planning Directorate, Department of Industry

Gerard Peets

Certainly net benefit is central to the review process under the Investment Canada Act. I could reiterate my offer of going through what the factors are in current law.

8:40 p.m.

Liberal

Scott Brison Liberal Kings—Hants, NS

But there's still a lot of subjectivity in the determination of net benefit.

8:40 p.m.

Senior Director, Strategy and Planning Directorate, Department of Industry

Gerard Peets

The net benefit factors are.... Perhaps I'll let my colleague speak to them. She has her notes ready.

8:40 p.m.

Director, Investment, Insolvency, Competition and Corporate Policy Directorate, Department of Industry

Patricia Brady

The factors are set out in the Investment Canada Act. They are in section 20; there are six of them.

I see you nodding, so I needn't go through them.

I would suggest that these amendments will provide more clarity on how those factors are interpreted, in that they'll give more insight into the decision-making process and will allow the minister to communicate when he has sent an investor a notice that he's not satisfied of net benefit and why, provided it won't cause commercial harm.

These again build on amendments that were made in 2009 that allowed the minister to publicly disclose reasons for denying transactions.

In that way they will provide insight into the interpretation of the net benefit factors.

8:40 p.m.

Liberal

Scott Brison Liberal Kings—Hants, NS

Thank you.

8:40 p.m.

Conservative

The Chair Conservative James Rajotte

Could I just ask, for the record, Ms. Brady, that you list them so that we have on record what the factors are?

8:40 p.m.

Director, Investment, Insolvency, Competition and Corporate Policy Directorate, Department of Industry

Patricia Brady

Certainly I will.

Again, it's section 20 of the existing Investment Canada Act. The factors that the minister must consider are the impact of the investment on the level and nature of economic activity in Canada; the degree and significance of the participation by Canadians in the investment; the impact of the investment on the productivity, efficiency, technological development, product innovation, and varieties—all of those things; the impact of the investment on competition in Canada; the compatibility of the investment with national industrial, economic, and cultural policies, including those of the provinces likely to be significantly affected by the investment; and Canada's ability to compete in world markets.

Those are explicitly set out. I'm paraphrasing a little bit, but they are in section 20 of the Investment Canada Act.

8:40 p.m.

Conservative

The Chair Conservative James Rajotte

Just to emphasize this point, which Ms. McLeod raised, what you have said is that the minister will be able to state that he or she is not satisfied and why he or she is not satisfied. It will obviously be against the backdrop of the criteria you just outlined.

So actually parliamentarians on all sides will be able to have a fairly good understanding of where the minister sits in terms of the decision-making process and why the minister is at that point in the decision-making process.

Mr. Peets.

8:40 p.m.

Senior Director, Strategy and Planning Directorate, Department of Industry

Gerard Peets

The only thing I would add to that is that the reasons would only be disclosed to the extent that they don't harm the commercial interests of the Canadian business or the investor.

8:40 p.m.

Conservative

The Chair Conservative James Rajotte

I see that in the amendment clearly, but clearly all of us as parliamentarians would have a much better understanding as to why a minister is making a decision and the reason for the decision that is ultimately made.

8:45 p.m.

Senior Director, Strategy and Planning Directorate, Department of Industry

8:45 p.m.

Director, Investment, Insolvency, Competition and Corporate Policy Directorate, Department of Industry

Patricia Brady

That's the intent.

8:45 p.m.

Conservative

The Chair Conservative James Rajotte

Thank you.

I have Mr. Marston.

8:45 p.m.

NDP

Wayne Marston NDP Hamilton East—Stoney Creek, ON

I welcome you here today.

You are probably aware of the U.S. Steel purchase of Stelco in Hamilton and the complicating factors that occurred in that particular situation. The promise was that certain levels of employment would be kept, and that didn't happen. There was a court case. The government ultimately seemed to collapse in the court case. I'd have to know more detail to really prejudge that one. But for the people involved in that, it was the fact that they couldn't access the terms of the deal, that the government wouldn't release them to them so that workers would have an understanding. In fact they got a copy of the deal because of a lawsuit in New York State.

In 2010 Parliament voted unanimously on an NDP motion identifying some of the serious problems relative to the Investment Canada Act. I would suggest, and I'm not asking you for a political commentary here, that the government, by voting with the opposition, at least gave the impression that it was committing to in due course make some changes to the investment act, and we don't see them here in Bill C-38. They certainly don't live up to the promise that we thought would be there.

Do you have any thoughts as to why there are no specific amendments that would address the situation the government was in during that particular deal and also to allow for public hearings to allow input from people? The minister is making the determination of the value to Canada, but you would think that part of that might involve hearing from the people involved.

If you could, answer please.

8:45 p.m.

Senior Director, Strategy and Planning Directorate, Department of Industry

Gerard Peets

I certainly appreciate the question and that there's an understanding I can't speak to political issues. I also would have to say respectfully that I can't speak to individual cases or examples out there.

I can touch on the point with respect to public information and how the Investment Canada Act operates with respect to the issue of confidentiality.

Under section 36 of the act, all information that's obtained with respect to a Canadian business or a non-Canadian investor in the administration or enforcement of the act is privileged and can't be disclosed.

There are limited exceptions to this general restriction. For example, the minister may disclose that an application has been filed, provided that doing so doesn't prejudice the investor or the Canadian business.

The basic policy reasoning for this is to provide an environment that's conducive for investors to provide the information that's needed to conduct the reviews and to prevent commercial harm that could come from its disclosure—

8:45 p.m.

NDP

Wayne Marston NDP Hamilton East—Stoney Creek, ON

Sorry to interrupt you, but we have a reasonable handle on that side of it. What we're looking for here is maybe you could offer an opinion. In essence, what we're talking about is increased disclosure.

Our belief is that increased disclosure puts that much more pressure on the parties, but particularly on the company involved, to keep to the arrangement. I won't ask you to comment on the situation. I have made enough comments on it myself to make it clear to anybody watching. But my question still is, do you think increased disclosure would give more strength to the act?

8:45 p.m.

Senior Director, Strategy and Planning Directorate, Department of Industry

Gerard Peets

These amendments do provide for increased disclosure in the sense that—

8:45 p.m.

NDP

Wayne Marston NDP Hamilton East—Stoney Creek, ON

Aspects of them do, I agree with you, but I'm really talking about the arrangement between the purchaser and the government. What measures are there to hold the purchasers accountable should they default or not follow through on their commitments?

8:45 p.m.

Director, Investment, Insolvency, Competition and Corporate Policy Directorate, Department of Industry

Patricia Brady

We call the commitments “undertakings”. There are provisions in place now for the enforcement of undertakings. The minister can issue a demand when he is not satisfied that the commitments are being upheld. Then he can make an application to a court, as he did in the U.S. Steel case, to compel the investor to comply with the undertakings.

There's another amendment in this bill, in clause 479, that is intended to promote compliance with undertakings. It would allow the minister to accept a security along with the undertakings he accepts from investors, and that security would be realizable in the event that an investor breached his undertakings and court-ordered penalties. There is something in clause 479 that would address some of the concerns you're raising.