Industry Committee on March 3rd, 2011

[The Chair, Conservative, David Sweet]

I call the meeting to order.

Good afternoon, ladies and gentlemen. Welcome to meeting 60 of the Standing Committee on Industry, Science and Technology.

We have five witnesses before us and two panels of witnesses, so we need to be expeditious today in our business beforehand.

I'll introduce our guests right now. From the Canadian Bar Association, we have Oliver Borgers and Anthony Baldanza. From the Communications, Energy and Paperworkers Union of Canada, we have David Coles and Guy Caron. We also have Calvin Goldman, who is a partner at Blake, Cassels and Graydon.

I'll start from my left to right for opening remarks. It'll be by organization, with five minutes each for opening remarks. I'm going to stick to that pretty closely, particularly because we only have one hour for this panel, but first we have a bit of business to clear up.

Mr. Rota, you gave notice of a motion. You may speak to the motion now.

[Anthony Rota, Liberal, Nipissing—Timiskaming, ON]

I don't have a copy of the motion with me.

[The Chair, Conservative, David Sweet]

Everybody has a copy of your motion.

[Anthony Rota, Liberal, Nipissing—Timiskaming, ON]

I'm the only one who doesn't have one. Thank you for the advance notice on that, Mr. Chair.

[Voices]

Oh, oh!

[Anthony Rota, Liberal, Nipissing—Timiskaming, ON]

Basically, the motion is very straightforward. It asks Minister Clement to join us here on March 10 to go over the estimates. I don't think there's anything controversial or unusual there. It's something we do every time the estimates come up. That's basically all it is asking for.

[The Chair, Conservative, David Sweet]

Thank you very much, Mr. Rota.

I believe I looked around the table last time, when you introduced the motion, and there seemed to be a consensus. Do I have that right now? Is there consensus on that?

Go ahead, Mr. Wallace.

[Mike Wallace, Conservative, Burlington, ON]

I don't have any issue with inviting the minister and I love estimates, but I'd rather deal with the bureaucratic level after you have done the political stuff. Do they also get invited to come?

[The Chair, Conservative, David Sweet]

The officials as well as the minister will be here. We're hoping it will be for two hours, but it may only be for one hour. We'll see about their availability.

[Mike Wallace, Conservative, Burlington, ON]

I may have some difficulty being here next Thursday. Are you hell-bent for that day, or can we do it next Tuesday?

[Siobhan Coady, Liberal, St. John's South—Mount Pearl, NL]

No, Tuesday is when we're doing the census.

[Mike Wallace, Conservative, Burlington, ON]

Okay. Why don't we vote on the census now? I'm opposed and you guys are in favour--it's done.

[Anthony Rota, Liberal, Nipissing—Timiskaming, ON]

If we can stay with the March 10, I think that would be best.

[The Chair, Conservative, David Sweet]

Go ahead, Mr. Lake.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

I just want to clarify the schedule again. Will this push back the Investment Canada Act study even further? Is that as per our discussion last time?

We may want to consider cancelling what will probably be more of a redundant meeting on the census, since we've already had hours and hours of meetings on it. Maybe we want to push that back to put give priority to this Investment Canada Act study. Everybody seems to say it's important, but nobody seems to actually put any importance behind it.

Can we get some clarification on the schedule again? When would the next Investment Canada Act meeting be if we did this?

[The Chair, Conservative, David Sweet]

The next one after that would be on the 24th. There's a week in our constituencies between that.

Just for the committee's knowledge, there's also a meeting removed on the private member's bill, because the budget day is the 22nd. Both are set back, for different reasons: one is for the supplementary estimates, and the other is for the budget.

On what we have conceptually in front of us, on the 10th will be supplementary estimates, on the 22nd will be the Minister of Finance's budget, and on the 24th will be ICA.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

So it will be on the 24th.

In January we moved a motion, which everybody supported, to have an immediate study. Now we're on our third meeting, two months later, at the end of March. I just want to clarify that for the record. It seems as though....

The supplementary estimates are obviously important, but the committee might want to consider moving the study of the private member's bill on the census, which isn't really due to be finished until May. We may want to put that at the end of the Investment Canada Act review, which we all seem to talk about as being important, but only one party seems to treat it as being important.

I'm just throwing that out there.

[The Chair, Conservative, David Sweet]

If you're saying that your support for the supplementary estimates on the 10th is based on that, maybe we should put it back to the opposition parties.

[Anthony Rota, Liberal, Nipissing—Timiskaming, ON]

I'd like to thank the honourable parliamentary secretary for bringing that up, but no, we'd like to keep it on March 10. I think it would work well for all of us. I do appreciate his bringing that up, because I know it is important to him. We'll just leave it at that.

We already had this discussion a couple of weeks ago or a couple of sessions ago. If we can just stay with what is proposed, that would be ideal.

[The Chair, Conservative, David Sweet]

I sense that Mr. Lake has more to say about that.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

No, I'm okay.

[The Chair, Conservative, David Sweet]

Is there any other debate? Seeing no other debate then, those in favour of supplementary estimates on March 10?

(Motion agreed to)

Thank you very much, ladies and gentlemen.

Now we'll move on to our witnesses. First we'll hear from Mr. Borgers of the Canadian Bar Association. Please go ahead, sir, for five minutes.

[Oliver Borgers, Chair, Foreign Investment Review Committee, Competition Law Section, Canadian Bar Association]

Mr. Chair and honourable members, good afternoon.

My name is Oliver Borgers. I am a partner in the competition law group of McCarthy Tétrault in Toronto. I am here today as the chair of the foreign investment review committee, also known as FIRC. The committee focuses on the Investment Canada Act, which is part of the national competition law section of the Canadian Bar Association.

I am appearing with my vice-chair and friend, Tony Baldanza. Tony is chair of the antitrust, competition, and marketing law group of Fasken Martineau DuMoulin LLP. Both Tony and I are regularly involved in providing legal advice in relation to major transactions that are subject to the Investment Canada Act.

The CBA, as you probably know, is a national association that represents some 37,000 lawyers, judges, notaries, law professors, and law students from across Canada. The CBA’s primary objectives include improvement in the law and in the administration of justice.

We thank the committee for inviting the CBA to appear before you and hope that we can be of assistance. We understand that you are undertaking a study of the Investment Canada Act to determine potential approaches to three issues.

In this opening statement we will briefly address each of those three points. Then we would welcome any questions that you might have.

Your first question is whether restrictions on the public disclosure of the rationale behind decisions to approve or reject an application under the act serve Canada’s interest, and what form that disclosure might take.

We are of the view that transparency and predictability are very important elements in the proper and fair administration of the Investment Canada Act. It is therefore in the interest of Canada and future potential investors to learn of the rationale behind a minister’s decision to approve, and particularly reject, an investment.

The goal of transparency and predictability should not, however, result in any disclosure of an investor’s or a target’s confidential or competitively sensitive information--unless, of course, they consent. The minister should also not be required to reveal reasons that might be based on national security concerns.

We believe that public disclosure of a minister’s rationale on a general level would suffice to build an inventory of decisions that would give future investors and their advisers direction and guidance. As an additional note, we submit that the minister should have an obligation to disclose his or her rationale if a decision is made in the first instance, even if the investor subsequently withdraws the application.

You have also asked whether the act provides for effective enforcement mechanisms and how they could be improved.

The enforcement mechanisms in part VII of the Investment Canada Act are robust and do not, in our view, need improvement at this time. To date we do not have many examples of the government’s enforcement activity in relation to the Investment Canada Act. There is therefore no basis to conclude that the current mechanisms are insufficient. The discretion of the enforcement officials determines how often the provisions are utilized, of which there have only been a few to date. In our respectful view, only once there is a body of decisions under part VII of the Investment Canada Act would we be able to assess whether they are sufficient.

We would remind the committee that the current provisions provide for the court to make any order as, in its opinion, the circumstances require under subsection 40(2), including divestment, injunctions, directing an investor to comply with an undertaking, and penalties of $10,000 for each day of contravention. These enforcement mechanisms are, as we said, robust and are likely adequate to ensure adherence to the act.

You have also asked whether consultation with provinces affected by a decision would serve Canada’s interest and what form those consultations might take.

It is our understanding that the government divisions that administer the review of investments--the investment review division of Industry Canada and the cultural sector investment review division of Canadian Heritage--do currently consult with all affected provinces in respect to any investment that is subject to review under the Investment Canada Act, consistent with the investment review factors set out in paragraph 20(e) of the act.

We are of the view that the confidential consultation process currently in place is appropriate. The competition law section would not advocate public consultations. We would suggest, however, that the feedback received by the government in the consultations be communicated to the investor, which is currently not the practice.

We hope that our brief opening statement was helpful. As indicated, we would be pleased to respond to any questions you might have.

Thank you.

[The Chair, Conservative, David Sweet]

Thank you very much, Mr. Borgers.

Now we'll go to the Communications, Energy and Paperworkers Union of Canada. Is it Mr. Caron or Mr. Coles who will make the opening statement?

[David Coles, President, Communications, Energy and Paperworkers Union of Canada]

We're going to split it, sir. I will present for two and a half minutes in English, and then Mr. Caron will do it en français.

We are not going to bore you with all the details in our written presentations. I think they're in both languages. I'll make some remarks on the highlights.

Who are we? We are a national union that represents industrial and private sector workers in many of the key sectors of our economy, from the bitumen sands to potash to telecommunications and so forth.

We see a number of problems with the current legislation. One is transparency. There were approximately 18,000 foreign investments made, of which 14,000 were takeover bids and 1,600 were reviewed. The question has to be, “Why?”

We suspect the reason is that the thresholds are too high. Since 1985 or thereabouts, approximately $1 trillion in foreign investment has been made, of which only $21.5 billion has not been for takeovers. Foreign investment means, with a few exceptions, foreign takeovers.

Why should we care? The answer is that 50% of all investment was for takeovers of resource-based primary industries in Canada: oil and gas, mining, and primary metals. We find that problematic when those are, in fact, the key sectors of our economy, which we believe should be under the control of Canadian companies for a whole series of reasons. A strategic investment strategy based on our own resources, controlled by our own companies, has to be a cornerstore of that strategy and of our economy.

I'll now turn it over to Guy Caron to talk about telecommunications.