Industry Committee on June 18th, 2020

[Michelle Travis]

The subject was not about the Marriott cyber-attack.

[Ali Ehsassi, Liberal, Willowdale, ON]

Thank you.

I'll now go to Mr. Marc-André Viau.

Mr. Viau, as you know, on April 18 Industry Canada issued a policy statement, and in that policy statement it acknowledged the fact that some Canadian companies may be distressed and there may be incidents of predatory investments. As a result of that, on April 18, Industry Canada announced that the government will subject “all foreign investments by state-owned investors, regardless of their value...to enhanced scrutiny under the Act.”

Are you in favour of that statement?

[Marc-André Viau]

I am not in a good position to assess the information available to Industry Canada to make this analysis. I will therefore rely on their expertise and competence in this area.

[Ali Ehsassi, Liberal, Willowdale, ON]

But, sir, that's not analysis. They're telling Canadians that going forward during this period, every investment by state-owned enterprises will be subject to enhanced scrutiny.

Is that a good step, in your opinion?

[Marc-André Viau]

As I said, this must be based on information that demonstrates that this recommendation should be made. If it's a recommendation—

[Ali Ehsassi, Liberal, Willowdale, ON]

As I understand, sir, you said you were in favour of a moratorium on foreign investment by state-owned enterprises. Is that correct?

[Marc-André Viau]

No. What I said was that I was inviting committee members to assess the appropriateness, as part of the study we presented, of basing the acquisition of certain strategic businesses on the nature of the political system involved. Are there other factors that should be included? Yes, perhaps.

[Ali Ehsassi, Liberal, Willowdale, ON]

Thank you. I appreciate that.

Now I'll go to Professor Houlden.

Professor Houlden, as I understood, you said that the U.S. CFIUS process is more robust than ours. Can you provide us with an example of why CFIUS is more robust than the Investment Canada Act?

[Prof. Gordon Houlden]

CFIUS has changed dramatically in the last two years. Previously, security was the only thing they could look at. They couldn't even look at anything approaching our net benefit.

When I spoke to the congressional economic and security commission, they were envious of what we were doing. Now they've come up with a mark two, which allows them to look at the same kinds of principles as Australia and Canada. Is this really good for us? That is the big question. But they have—

[Ali Ehsassi, Liberal, Willowdale, ON]

But from a substantive standpoint, would you agree that the Investment Canada Act is just as robust as the CFIUS process, or the amended CFIUS process?

[Prof. Gordon Houlden]

Properly followed, the full capacity is there. My concerns lie in the analysis: Is it sufficient?

[Ali Ehsassi, Liberal, Willowdale, ON]

Thank you.

You've also stated that, in your opinion, our bureaucracy doesn't have sufficient resources to screen and look into investments. What is that based on?

[Prof. Gordon Houlden]

Well, my experience in my adult life has been almost entirely China, so when I speak about that issue, I'm thinking only of China. In that regard, there are linguistic challenges and cultural challenges. You can't come into an organization like Public Safety and understand the nuances and complexities of how SOEs operate and how the party operates, party committees and private companies.

That is where I think we need that cadre. I don't know the numbers, but I have some reasons to believe that we need to build capacity. That starts in our universities. Unfortunately, you can't take—

[The Chair, Liberal, Sherry Romanado]

Unfortunately, that is all the time we have for this round.

We'll now move to MP Gray.

You have the floor for five minutes.

[Tracy Gray, Conservative, Kelowna—Lake Country, BC]

I want to ask some questions today of Mr. Houlden.

This afternoon, another witness went into detail about how the foreign takeover of nursing homes by Anbang has gone wrong. It owns Retirement Concepts, a company with private long-term care facilities throughout the country, 20 of which are in British Columbia. This takeover was approved by the federal government and by Minister Baines himself, who scrutinized it under the investment review division because it exceeded the dollar threshold. We heard from other witnesses and we know that, as part of the Investment Canada Act, reviews can occur at the discretion of the minister.

Considering this, and based on your experience, is there a lot of subjectivity around this? Are there other parameters that we should be considering when we're looking outside of the dollar value for consideration?

[Prof. Gordon Houlden]

You raise a very important point. I think even the Chinese government, quite frankly, had cracked down hard on Anbang. It began to realize there was capital flight. SOEs were investing in things that had nothing to do with their core business.

I would argue that from the ICA perspective—this is in retrospect, which is not really the way one wants to be looking at it—yes, this question might have been raised. Does this company have the capacity, the experience and the know-how to be looking after aged people across the Pacific? That's a question, looking back. At the time, I didn't think [Technical difficulty—Editor], but it's probably crystal clear now that it was out of their area of expertise.

That would mean changing the way in which the review process is done. You'd have to look at the qualitative capacity of the incoming company to manage something sensitively. I can see where it also might need to be done in environmental terms. Can this company manage an environmentally delicate space in, let's say, the Arctic? Are they up to it?

Those are the sorts of broad questions that I wouldn't want to see abused, but they're the sorts of questions that might well be posed if you're looking at the full effect of that FDI.

[Tracy Gray, Conservative, Kelowna—Lake Country, BC]

Thank you.

Moving forward, using that as an example, or perhaps other examples, do you think there should be some type of standards for these state-owned enterprises that should result in some type of action if there are issues that come out of previous investments from these companies? Is there some type of recourse or action down the road for future investments that you would consider?

[Prof. Gordon Houlden]

I would think that would be reasonable. In other words, if you've done badly and you want to come back to the well, we may be concerned that you would do badly again.

One small point is that I think you'd have to be just as hard on Canadian companies. Otherwise, you get into difficulties with discrimination under international trade agreements. We don't want a situation where you give the Chinese a good excuse to beat up on a company; they may anyway. We need to have high standards for us and high standards for them.

[Tracy Gray, Conservative, Kelowna—Lake Country, BC]

Thank you.

I have a couple of questions for you, Ms. Travis. In your testimony and in some of the other questions, you went into the issue of the hotel industry and a cyber-attack. You went into some explanation there. I'm wondering, from the perspective of your members, how this affects them from a worker's point of view, from a business point of view and also from a customer's point of view.

Knowing that you have a hotel chain that might potentially be owned by a state-owned enterprise, if there's a cyber-attack, what are the various concerns you've seen around that?

[Michelle Travis]

I think it's one of the things where people want to have their information secure. They want to make sure—

[The Chair, Liberal, Sherry Romanado]

I'm sorry, Ms. Travis, but could you put your mike a little closer, please?

[Michelle Travis]

Sure.

Can you hear me now?

[The Chair, Liberal, Sherry Romanado]

Yes, thank you.

[Michelle Travis]

In terms of the Marriott situation, to use that as an example, it was alarming for folks, I think, to understand the scale and reach of that situation. Now, the folks who hacked Marriott didn't own Marriott, but I think in a case where you have a company like Bluesky, where we don't know whether Anbang really owns that company or not, there is a question about how your information is at risk if, in fact, the Chinese government does have a role in that company.

I think once an attack happens, people are naturally concerned about how their information is being used. We're dealing with the risk of our information being used in ways that we don't expect every day, whether it's using an iPhone...or the company that owns the hotel we work in.

That's just to say that it's always a concern, but I think it's one of those things where we have to be proactive about it to avoid a situation happening rather than react to it after the fact.

[The Chair, Liberal, Sherry Romanado]

Thank you very much. That's all the time we have for that slot.

We will now move to MP Longfield.

You have the floor for five minutes.