Industry Committee on April 26th, 2023

[Ryan Williams, Conservative, Bay of Quinte, ON]

To clarify—and I understand that contract because I think you've described that today—if the plant didn't get built, if we didn't have a battery produced for external reasons or for whatever reason, whether consumer choice or lack of critical minerals, what would Canada be in for in terms of the commitment we made based on paying out batteries?

[François-Philippe Champagne, Liberal, Saint-Maurice—Champlain, QC]

There is the production support. That's the $8 billion to $13 billion if and when a battery is produced and retroactively on the basis of the production schedule. On the capex, if you want, the capital investment for the building, the strategic innovation fund has provided $700 million for a $7-billion-plus plan. To your point, the $8 billion to $13 billion would never come to be payable because that is contingent upon the production and sale of batteries. You set that aside because that's production support.

[Ryan Williams, Conservative, Bay of Quinte, ON]

SIF is $700 million, and that's an upfront cost.

[François-Philippe Champagne, Liberal, Saint-Maurice—Champlain, QC]

I'm just trying to—

[Ryan Williams, Conservative, Bay of Quinte, ON]

Yes, I know that. Is it in the contract that there's a price if they don't get to production? The commitment per battery is $7,500, which matches the IRA. Is that correct?

[François-Philippe Champagne, Liberal, Saint-Maurice—Champlain, QC]

It's US$35 per kilowatt hour, but my point is to say, if you allow me—I know the time and I'm happy to extend because I think it's very important for Canadians to understand—the production support is only if and when the plant is built, they manufacture batteries and sell them subject to the IRA and all the decreases you could have in the IRA. If there's no IRA, there's no support, so that is that. That's the protection. It's in the contract.

For the manufacturing of the building, as SIF has always had as its condition, it's $700 million out of a $7-billion-plus plan, and we only pay an installment based on the schedule of production. You never give a cheque in advance. You pay an installment based on the construction schedule. As the building is built, you disburse the money. That's what the strategic innovation fund does in all the capital investments.

To your question, if the plant were not to be built, there would be no liability for the Government of Canada, because then the SIF money would not come into force because it's for the building, and the $8 billion to $13 billion is based on the manufacturing and sale of batteries.

[Ryan Williams, Conservative, Bay of Quinte, ON]

I know, but my question specifically was not if the plant wasn't going to be built. It was about if consumer behaviour changed. If we didn't have critical minerals and if batteries weren't produced, how much would we be on the hook for?

[François-Philippe Champagne, Liberal, Saint-Maurice—Champlain, QC]

I understand—

[Ryan Williams, Conservative, Bay of Quinte, ON]

Let's pretend that the plant is built, but we just don't have the production. I know it's in the contract, but do you know the specific terms? If the plant is built but batteries are not made, what are Canadians in for?

[François-Philippe Champagne, Liberal, Saint-Maurice—Champlain, QC]

Chair, if you'll allow me, assuming the plant is fully built, you would have the $7-billion plan and $700 million, because the plant is built. However, you'd have none of the production support because there would be no batteries manufactured or sold.

[Ryan Williams, Conservative, Bay of Quinte, ON]

In other words, if the plant is built and no batteries are made, Canadians won't be on the hook for anything, just the $700 million from SIF. Is that right?

[François-Philippe Champagne, Liberal, Saint-Maurice—Champlain, QC]

So again—

[The Chair, Liberal, Joël Lightbound]

My apologies, Mr. Williams, but I think that's been answered. It seems pretty clear to me. We're way over time for your questions, Mr. Williams, and over time also for the minister's appearance of one hour.

If you will allow, Minister, we will have one more round of five minutes.

[François-Philippe Champagne, Liberal, Saint-Maurice—Champlain, QC]

I spoke too long to try to explain, so I'm happy to stay.

[The Chair, Liberal, Joël Lightbound]

Perhaps we'll get another opportunity.

Mr. Van Bynen, you have the floor.

[Tony Van Bynen, Liberal, Newmarket—Aurora, ON]

Thank you, Mr. Chair.

I would like to get back to the purpose of this meeting, and that is to talk about the legislation and the new bill.

My first question is this: Were there consultations held? If so, how did the consultations in developing this bill help in the design of the bill?

[François-Philippe Champagne, Liberal, Saint-Maurice—Champlain, QC]

We had wide consultations, because there are two purposes within a law like that. First of all, I would say that it has to be the most significant update since 2009, so I think it's very much wanted based on comments not only from colleagues but from Canadian businesses.

With Canadian businesses and how we attract investment in this country, it is stability and predictability and, I would say, the rule of law. It's very important for investors to know what we're going to do. That's why I've done a number of policy statements as well, to be very clear to investors about what we expect under the act and how the act is going to be administered.

We consulted widely, but I think that's why I am urging you, colleagues, and my colleagues from the other side, to really very quickly study this bill to its conclusion, because I have said—and I think some colleagues have had to apply this act—that we need more tools in the tool box. I think these tools would serve Canada well, not for me, but I would say probably for future ministers down the road to make sure they have more tools in the tool box.

We consulted with a lot of industry, and I would say, Tony, that one thing that came up—and I think Mr. Lemire mentioned it—was all around intangible assets and IP.

People are saying, “Minister, in an IP-rich world, how do you protect that under the act?” I would say that the measures we have put in terms of the pre-implementation filing but also the measures that we put in place during the time that we review the transaction are the best safeguards. Because today, again, for colleagues to know that today, if we come to a national security review, there are no interim measures that could be applied.

As you know, in IP, it's not like with physical assets. If people start talking to each other and exchanging trade secrets, even if we block a transaction, it's probably too late. That's why I am urging colleagues to really say that we need that, because from the get-go, if it's a IP-rich company.... Let's say that you have a foreign company that wants to buy a company that does quantum computing. I would want to impose interim conditions to say that no one should talk to the employees of that company until the time that we have decided that it's in Canada's best interests to allow that. No one should be talking to each other, but today I don't have that authority under the act. I think this is missing to better protect the economy of the 21st century. It's no longer bricks and mortar. It's about IP. That was some of the strongest feedback we received from the community.

[Tony Van Bynen, Liberal, Newmarket—Aurora, ON]

We heard earlier questions about economic and business risks. We're in a global environment, so what are the other jurisdictions doing to address national security concerns in foreign investment reviews?

Does our approach align with our international peers such as our Five Eyes partners?

[François-Philippe Champagne, Liberal, Saint-Maurice—Champlain, QC]

Colleagues would know that one thing that is lacking today is undertakings. The Americans deal with national security on the basis of undertakings. To say, for example, “We will allow a certain transaction to go forward, but,” for example, “you're not going to take contracts from the defence department” or “you're not going to do certain things that would be harmful to national security.”

The Americans use that very much, in the sense that they would allow a transaction but then it would have a set of undertakings to say, “You can do this, but you can't do that; you can do this, but you can't do that.”

Today our system is binary. Either we approve or we don't. Sometimes, in the interests of Canada, you would say, “I want to approve it, but,” for example, “you're going to keep a majority of Canadians on your board” or “you're not going to deal with sensitive technologies” or, for example, “you're not going to share technology with foreign parties.” That's part of the challenge that we have under the act, that we cannot impose undertakings, which I think our American partners do all the time. That is really something that is lacking today.

To be honest, when I say, “for future ministers”, I think they would want to have that in their tool box to say, “That might be good, but,” for example, “you're not going to do this or that.” Today we can't, so—

[An hon. member]

[Inaudible]

[François-Philippe Champagne, Liberal, Saint-Maurice—Champlain, QC]

I'll stay as long as the chair wants me to.

[An hon. member]

[Inaudible]

[François-Philippe Champagne, Liberal, Saint-Maurice—Champlain, QC]

I'm very happy as well. Life is a long journey.

[The Chair, Liberal, Joël Lightbound]

That concludes your time, Mr. Van Bynen.

Minister, this is the end of the hour we had scheduled for your appearance at the committee. Of course, I won't prevent you from staying.

We thank you for your time, Minister. It's much appreciated.

I've been very generous, colleagues, because I thought the exchanges were enlightening.

Thank you very much, Minister, for your time.

I will suspend briefly so we can resume with officials.

Thank you.

[The Chair, Liberal, Joël Lightbound]

Dear colleagues, we are now reconvening this meeting of the Standing Committee on Industry and Technology.

We are now welcoming two senior government officials, Mr. Vincent and Mr. Burns. Thank you for being with us for the second hour of this meeting, which will be shorter than planned, because we have only 30 or 40 minutes left.

We will now continue our discussion of Bill C‑34.

Mr. McLean, you have the floor for six minutes.