Thank you, Mr. Dusseault.
Mr. Deltell.
Evidence of meeting #86 for Finance in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was health.
A video is available from Parliament.
Evidence of meeting #86 for Finance in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was health.
A video is available from Parliament.
4:45 p.m.
Conservative
Gérard Deltell Conservative Louis-Saint-Laurent, QC
Thank you, Mr. Chair.
Ladies and gentlemen, welcome to your House of Commons.
I would like to talk about national security. In this omnibus bill we made some changes on this issue. I would like to hear from you about those changes.
4:45 p.m.
Director General, Investment Review Branch, Innovation, Science and Economic Development Canada
The change related to the national security review provisions is just to require annual reporting on the administration of those provisions by the Minister of Innovation, Science and Economic Development. Right now there's very little public information about national security reviews other than what's in the law. This change would require annual reporting on how the provisions have been used each year.
We also issued guidelines in December 2016. That was not part of a legislative amendment, but those guidelines provided more practical guidance to investors and Canadians on the national security review process, and this is part of that transparency-related initiative.
4:45 p.m.
Conservative
Gérard Deltell Conservative Louis-Saint-Laurent, QC
No one is against transparency, but when it comes to national security, that's another matter. What studies have your department or the division of the Department of Finance done to make that decision?
4:45 p.m.
Director General, Investment Review Branch, Innovation, Science and Economic Development Canada
To be clear on what would actually be reported in the annual report, it would be high-level information on the number of reviews that have been conducted. It would not give information on the particular investments involved, to protect both national security and confidentiality. Numbers of reviews would be provided without specific information on the investor or the national security concern. The outcomes of those reviews would be provided at a high level.
This was actually done. There's authority for this under the act to be done voluntarily, but it's not required. Last summer in the annual report, the government issued that information on past reviews. It became public in the summer that eight formal national security reviews have been conducted under the Investment Canada Act, and the outcomes of those reviews at a high level were also provided. In five instances, the investments were either blocked or divestiture was ordered, and in two instances the investments were allowed with conditions.
It would be that type of reporting that would be envisioned going forward, always mindful of the need to obviously not disclose information that would compromise national security or confidentiality.
4:45 p.m.
Conservative
Gérard Deltell Conservative Louis-Saint-Laurent, QC
As we all recognize, when we talk about national security we are walking on thin ice.
Do you have a clear definition in your department about what is national security?
4:45 p.m.
Director General, Investment Review Branch, Innovation, Science and Economic Development Canada
The Investment Canada Act does not define national security. Cabinet is the decision-maker on the national security review portion of the act. It's left fairly open-ended to recognize the fact that threats to national security can evolve over time, and so to provide the flexibility to cabinet to recognize that national security threats may evolve. It's hard to fix them in time.
4:45 p.m.
Conservative
Gérard Deltell Conservative Louis-Saint-Laurent, QC
Do I understand correctly that the last call will be made by the cabinet?
4:45 p.m.
Director General, Investment Review Branch, Innovation, Science and Economic Development Canada
That's right. The cabinet has the authority to make the decision on whether or not to order a formal review, and the language in the act is that it has the authority to take any measures that it considers advisable following a review to protect national security.
4:45 p.m.
Conservative
Gérard Deltell Conservative Louis-Saint-Laurent, QC
Does it register somewhere instead of the cabinet?
There is a summary of the cabinet meetings.
Can we find it somewhere when the cabinet tables a decision that this is national security and this is not? Can we find it, not daily, but not have to wait 40 years? I think it's 40 years before we can know what has been said in the cabinet.
4:45 p.m.
Director General, Investment Review Branch, Innovation, Science and Economic Development Canada
We would never be able to disclose what was said in cabinet because it's a cabinet confidence. The reporting would be done annually on the numbers of reviews, but certainly not the details of cabinet's decisions.
4:45 p.m.
Director General, Investment Review Branch, Innovation, Science and Economic Development Canada
It's the Minister of Innovation who has the requirement under the act to make it public. The way we do that is to put it on our website.
4:45 p.m.
Liberal
The Chair Liberal Wayne Easter
Okay, thank you.
I didn't catch the number. How many reviews were there last year?
4:45 p.m.
Director General, Investment Review Branch, Innovation, Science and Economic Development Canada
Not last year, sorry, I wasn't clear about that. From 2009 when the national security review provisions actually came into force until 2015, there had been eight over that total period. Going forward, we would report on a yearly basis.
4:50 p.m.
Liberal
Greg Fergus Liberal Hull—Aylmer, QC
First of all, I would like to make a comment. I believe the provisions in this amendment to the bill are good. This reflects the scale of commercial transactions in a $2-trillion economy. It is only natural that we can review transactions valued at $1 billion.
Ms. Brady, we had the opportunity to work together. I have a brief question for the sake of transparency and for the benefit of my colleagues here. Can you specify how many reviews were undertaken or completed in 2015 and 2016, not just since 2009, but more recently?
4:50 p.m.
Director General, Investment Review Branch, Innovation, Science and Economic Development Canada
Are you talking about net benefit or national security reviews?
4:50 p.m.
Director General, Investment Review Branch, Innovation, Science and Economic Development Canada
I think 15 reviews were done in 2015. It's in our annual report.
If we're looking at the numbers in the last two years, there have been 28 acquisitions of control that were over $800 million, which is the current threshold. We looked at the number of those that were over $1 billion and there were 20 that were over $1 billion.
Based on historical numbers you would see that if the threshold had been $1 billion, then there would be about one-third fewer reviews, but of course we can't predict the number and values of future investments. By way of example, that would be the impact.
4:50 p.m.
Liberal
Robert-Falcon Ouellette Liberal Winnipeg Centre, MB
I'd just like to get a better idea or a handle of the evolution of the threshold. I just wonder how long the threshold has existed in legislation, and if you have any statistics you could provide the committee in the future—perhaps tomorrow or the next day—where I could actually see the evolution of the amount required. I'd find that really very interesting, and it would give a good consideration of where we're going.
4:50 p.m.
Director General, Investment Review Branch, Innovation, Science and Economic Development Canada
On the evolution of the threshold, the Investment Canada Act, in its current incarnation, has been around since 1985.
Jonathan is more of an historian on this than I am. I can go as far back as 2008, when the scheduled increase was first implemented. In 2008, the threshold was $295 million. The Competition Policy Review Panel is an expert panel charged with reviewing all of Canada's competition laws and frameworks with a view to making recommendations to make Canada more globally competitive. At that time, the Competition Policy Review Panel did work and recommended that the threshold in the Investment Canada Act be increased from around $295 million to $1 billion.
Its recommendation was that it happen immediately. That was based on its consultations across the country and on economic studies, etc., that assessed that Canada might have been putting itself at a disadvantage in competing for foreign direct investment because we had a net benefit review, and because the threshold was relatively low compared to the value of our businesses at the time.
The recommendation was made then, and legislation was passed in 2010 to introduce this scheduled increase to $1 billion. The policy then was to, again, remove a regulatory barrier for smaller transactions and focus net benefit reviews on those transactions that would be the most significant to Canada's modern economy. That was put in for those reasons. The initiative today is just to accelerate that final step in the increase to $1 billion as part of broader initiatives, some of which are in this budget implementation bill, to increase foreign investment and attract more foreign investment to Canada.