Industry Committee on May 25th, 2020

[Jim Balsillie]

It's a very small step. I think it was very limited because it was temporary. When you look at Canada's peer countries around the world, you see that they've created very systemic and ongoing evaluations of their investment acts.

I would turn this question back to your committee. Have you defined the sectors that are strategic to Canada for investment purposes, and have you defined the technologies, companies and researchers that underlie those? You'll find that in any form of review, virtually all of them never hit the threshold of evaluation when the activity happens, whether it's a partnership, a licence or a small acquisition. You have to understand that the way you approach the ICA is anachronistic. It's very much for a tangible manufacturing economy, not for an intangible economy based on value chains and sovereign economic freedom to operate.

[Ali Ehsassi, Liberal, Willowdale, ON]

But surely you would agree, because you're asking our committee whether we've actually come up with a list of critical supplies, that if we do not have a specific list, that leaves the government a much wider scope to stop an acquisition. Is that not correct?

[Jim Balsillie]

In the famous phrase of Joni Mitchell, “You don't know what you've got till it's gone.” Canada spent 30 years funding fundamental IP—

[Ali Ehsassi, Liberal, Willowdale, ON]

That's not what I'm asking, Mr. Balsillie. I'm saying that if we had a defined list, a positive list, of what we consider to be the critical sector, that would actually mean that people could take advantage of it. When you don't have a definition, it gives you more latitude, does it not?

[Jim Balsillie]

When you don't have a definition, you find out after it's gone, or you never find out what you lost. The overwhelming majority of the transactions that most peer countries would consider strategic never hit the threshold of evaluation of our traditional framing of the Investment Canada Act.

[The Chair, Liberal, Sherry Romanado]

Thank you very much.

Unfortunately, that's all the time we have for that round. As a gentle reminder, when you see the yellow card, it means there are 30 seconds remaining. When you see the red card, the time is up.

Mr. Lemire, you have six minutes.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Thank you, Madam Chair.

There are some extremely interesting concepts here. This raises the matter of the sovereignty, autonomy and self-sufficiency of our industry, and therefore of our supply chains. There has been a reduction in exports and imports and a disruption in the movement of our goods and services. The overwhelming majority of manufacturing companies have seen an impact on their operations. They have had to organize themselves differently and innovate.

The reliability and predictability of supply chains are critical to the competitiveness of the Canadian economy. We have to see to the visibility and traceability of elements throughout the supply chain, hence the importance of our infrastructure, data, trust and security. We need to ensure that our supply chains are both reliable and flexible enough.

I'm going to direct my question to Mr. Buhagiar of Supply Chain Canada.

What measures and decisions must the federal government take within its territory so that Quebec and Canadian businesses can improve the performance of supply chains?

[Christian Buhagiar]

Madam Chair, through you to the member, in my remarks I mentioned a few things. You also used some of the words that we would: predictability, traceability, reliability, agility. I would use visibility. I would use resiliency.

The challenge for us now—and this point was raised by a few other speakers—is that in order to be agile and resilient, in order for our supply chains to be nimble and responsive, we need to reduce latency. Latency is the time it takes from a market or a consumer change in demand to a company being able to respond. Right now the latency time for most supply chains is relatively lengthy. The ability to be nimble and more resilient will require that we reduce that latency so that corporations and supply chains can react more nimbly so they can change to address consumer behaviour.

We saw that play out. We're seeing that play out in the crisis. It's that dichotomy between shortages in some products and excess in others.

What we've suggested is digitization, an area where some of the large companies that are represented as witnesses today have done a very good job. The majority of supply chains in Canada, however, are not digitized. They do not have that visibility across supply chains. That is where we think government can help to move Canada. David Montpetit talked about a national supply chain strategy, and the digitization element of supply chains needs to be a part of that conversation.

Like David and his organization, we support the necessity of a federally regulated—

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

That's very interesting. I'm sorry to interrupt, but I'd like to put some other questions, particularly to Mr. Balsillie, whom I consider to be a defender of our national autonomy. We need only think of hockey clubs.

BlackBerry has a very secure system, and I would have liked to ask him how he sees the current challenges with respect to the security of our data. However, I'm going to talk to him about the topic of the day, which is the economy and our security. What legislative and economic measures should we put in place to promote our self-sufficiency and autonomy?

Also, what would be the advantage of investing in our local innovation companies, rather than in foreign companies to have them come here to Canada?

[Jim Balsillie]

I would draw your attention to figure number 3 of the appendix that I supplied to each one of you. The challenge for Canada is that we misunderstood, in the era of liberalization of tangible trade, that we also needed a hands-on approach for intangibles. We have a 20- to 25-year backlog of strategies that we need to take, not the least of which are investment review, regulation of data, protection of sovereignty, protection of culture and protection of the economy. There is a large list of things that we need to do. Digital policy infrastructure, I think, is the urgent priority for Canada.

If you look at figure number 2 in my appendix, you'll see that in Canada's economy, the proportion of intangibles has not grown in 20 years, while it has soared around the world. I tie those two things together, and they imperil our sovereignty and our prosperity.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Thank you.

I'd like to take this opportunity to address Mr. Paterson of General Motors. This may be a comment rather than a question. I just want to mention that I drove from Rouyn-Noranda to Ottawa with my 2020 Chevrolet Bolt. I only needed to recharge the battery twice, 30 minutes each time. I'm very happy about that. I hope you will take advantage of the current situation to ask for more subsidies to make the shift to green energy.

[The Chair, Liberal, Sherry Romanado]

Thank you very much. Your speaking time is over.

The next round of questions goes to MP Masse. You have six minutes.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Madam Chair.

Thank you, Sébastien, for reminding me. I showed Who Killed the Electric Car? back in 2006. David remembers that.

At any rate, I do want to ask a question. I'll start with Mr. Balsillie.

Items 3 and 4 in your presentation go together: a national data strategy and then adoption of national standards, just to quickly summarize, to remind everybody about that. I would see those things as important priorities. We even heard testimony from other witnesses here today about a standardization process.

What are your thoughts about how the Privacy Commissioner might be a proper enhancement at the moment to help bring confidence in sharing more data and the rules around it for companies—not only domestic but international ones looking to invest here in Canada—and a set of common rules and expectations for the consumer and also the private citizen to protect their personal information as well? Do you have any comments on that?

[Jim Balsillie]

I think you've hit on a very important point, because a big part of a national data strategy is indeed regulations and standards. I would put all of that within the great big bucket of a digital policy infrastructure.

What's particularly important about data is that it's crosscutting. It affects our values, our security, our economy, our mental health, the competitiveness of our economy and our democracy, so I can only say that we need urgent action there.

I think we have an excellent Privacy Commissioner. He has implored to be given more enforcement powers. I would commend the Competition Bureau commissioner last week. The Competition Bureau moved into the privacy violation realm and said that it's a violation of consumer rights. Really, you need to think of this as a whole tool kit to address the secure sovereign prosperity of a nation; it's not a single-point approach. The tool kit's very different from the traditional neo-liberal tangible economy set of tool kits we've used.

[Brian Masse, NDP, Windsor West, ON]

It's fortunate that this could be an efficiency for our country for investment if we do it right and do it quickly.

I want to move to Mr. Paterson with regard to one of your suggestions about a scrappage fee. We've talked in the past about this.

I've long advocated a national auto strategy. I believe that it's important for our national security as much as it is for innovation in the sector. We have just underperformed as a country. You can't look at the plant expansions happening across the globe and look at Canada. I'm across from Detroit, Michigan, here. They're up to $8 billion in investment in Detroit alone. Our government has only secured $6 billion in the last five years.

That needs to change, in my opinion. I've seen, Mr. Walker, your work at CAPC. It is far from the days of the robust CAPC in my opinion, quite frankly, when it was more of an activist base that had working groups that followed through on a regular basis. There's terrific work. I follow it all the time, and I thank you for that work.

We know in the past we had the ecoAuto “feebate”. That was when Toyota took the safety bags out of the back seat to get the gas mileage to go up and got $1,000. That was about 10 years ago. They got a lot of that money. Most recently, we have a government program that left off the only domestically produced hybrid vehicle, the Chrysler, and the full electric vehicle here in Windsor, which we had to fix.

How could we tailor-make a scrappage program to more domestic needs? I'll be quite frank that I don't want to do an incentive to have people buy foreign vehicles that don't have any connection to North American manufacturing right now.

[David Paterson]

The problem with that approach is that we would only be promoting a handful of vehicles when the market buys hundreds of vehicles from different people all around the world.

I'd say a couple of things. I think we can design a scrappage program that will give us a dividend in greenhouse gas reduction, and we should take that advantage if we can do it. I think we can have one that inspires people who have older vehicles. When you replace any vehicle right now that is 12 years old with something new, you're going to get a 35% improvement in greenhouse gases at least. We've done the analysis and we're happy to share it. Then you have options in terms of electric vehicles that are coming.

The other thing I want to say apropos of some of the things Jim has said is that the automotive industry is not standing still and just doing the same things we've done in the 1900s. This is an industry that is going through rapid technological change, and there are huge opportunities for us here from CAPC's point of view. We've hired 1,000 engineers who are working on autonomous technology and on electric vehicles. There's going to be massive change coming forward in the auto industry.

I think Canada has fantastic opportunities to be part of the intangibles global economy that Jim's talking about, and to do it and grow up domestic suppliers that can have real competitive advantages, but we need to have a strategy to do that. I would welcome the chance to sit down and talk about that further.

[Brian Masse, NDP, Windsor West, ON]

Yes, and I know that you guys had your car heaven program.

I only have a few seconds, as Madam Chair has given me the yellow card. It's a soccer thing, I think.

At any rate, I do want to say that what's taking place just across the river here is incredibly exciting, and I wish more of it were in Canada.

[The Chair, Liberal, Sherry Romanado]

Thank you, MP Masse.

We'll begin now our second round of questions.

The first question is for Madam Rempel Garner. You have five minutes.

[Michelle Rempel, Conservative, Calgary Nose Hill, AB]

Thank you, Madam Chair.

I want to start by following up with thecomment that Mr. Walker made, I believe. I will direct the question to Mr. Paterson as well.

Mr. Walker, I believe you said we need to get the dealerships open. I'm curious to know what your demand forecasts are. Let's say we would use May, 2019, as a year-over-year benchmark.

When do you anticipate those levels of demand coming back within the Canadian market, and what assumptions would you be using to make that projection? If you haven't done that forecasting yet, that's an acceptable answer as well.

[Donald J. Walker]

I wish I had a really clear view of this aspect.

Everybody around the world is looking at this question. We've looked at what's happened in China, as there are some differences there, but the demand is coming back. It has been slower to come back in Europe, and I think there are some different dynamics over there. From talking to our customers—I'll let them speak about what they want to do and maybe David can add some colour—it looks to me as though there's a fair amount of demand right now for the next three or four months, because cars haven't been being produced. We need to get the dealerships open.

[Michelle Rempel, Conservative, Calgary Nose Hill, AB]

Mr. Paterson, please answer very briefly.

[David Paterson]

I can add to that.

There is some pent-up demand in terms of people returning leases and other things that will help in the very short term. All the regular crystal ball tool kit has kind of been thrown out the window right now. We need to see what behaviour is going to look like.

[Michelle Rempel, Conservative, Calgary Nose Hill, AB]

Thank you.

I wish I had more time.

I'll ask you both very briefly a yes-or-no question. Are your companies pursuing the federal government for direct support, either through a credit facility or a direct subsidy?

[Donald J. Walker]

Yes. Magna is, not through liquidity but for their employees.

[David Paterson]

General Motors is in the same area, yes.

I think you'll find that right across the auto sector.