Industry Committee on May 3rd, 2023

[Dr. Patrick Leblond]

That is a good question.

In general, it is up to the government that issues the tender to take into account things that might represent a threat to public security, whether national or regional.

In the case of a public tender for rebuilding subway cars in Toronto, the public security aspects do need to be taken into account. If we can think that a business, Chinese or otherwise, presents risks because of a close connection with the Chinese government, that absolutely has to be taken into account. It presents risks relating to access to critical information or to information about a critical technique or infrastructure.

What I understand at the moment is that things like these are not covered by the Investment Canada Act. They are the responsibility of the government that issues the tender. The question to ask ourselves is: does a municipal government or regional authority that issues this kind of tender have to take those elements into account? I don't have the answer. You would have to ask them.

In cases like that, we can ask ourselves what powers are given to the federal government or the provincial governments to impose criteria like this in awarding contracts. One thing is certain, when it involves a subway, it involves potentially critical infrastructure.

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

Exactly.

[The Chair, Liberal, Joël Lightbound]

Do you want to continue, Mr. Lemire?

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

I would be curious to ask Mr. Lee or Mr. Bruce the same question, if they wanted to add something.

[Dr. Ian Lee]

You can go first, Mr. Bruce, but I will add.

[Malcolm Bruce]

Thank you.

It's an interesting question because when you think of what international needs are.... In China, they have an aging population. What they want to do is learn how our seniors system, believe it or not.... I know many of us in this country believe that it's broken, but in many cases, countries like China that are experiencing a vast aging of their population are looking to Canada for solutions. One of the ways they learn is to acquire assets that are in this country to figure out how we're actually conducting independent living, assisted living and dementia living all in the same complex. The Chinese are looking to us for help.

The question, then, that you have to ask yourself is.... They will, then, continue to provide that service when they acquire that particular facility or those facilities or a company that delivers those facilities. Is that considered a net benefit to Canada? Is it a threat to security? I would suggest that it's probably not a security threat, but it is going to be a net benefit for Canada. We're helping them solve a problem, which will build good relationships with the people we want to in the Chinese economy.

[Dr. Ian Lee]

I'll add to that very quickly.

I'm not one of those people who think we should ban all Chinese investment. I hope the Chinese import a lot of LNG from Canada so that they can reduce their dependence on coal as the number one emitter of GHGs in the world. I'm not going to be unhappy if they're importing wood or agricultural products because these are products that are not sensitive—I don't think they're sensitive—to national security.

There are industries we know.... A moment ago I was dismissive of the idea of strategic industries. I did not say that certain industries aren't a greater risk. I think the issue—and I think both of the other witnesses have mentioned this or focused on this—is the degree of risk involved in terms of the particular industry or the particular asset that we're discussing.

I don't see any risk in exporting agricultural products to China. I hope that we can trade a lot more and export a lot more. However, there are other industries wherein we don't want to have any relationship, especially in the high-technology realm.

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

Thank you.

Thank you, Mr. Chair.

[The Chair, Liberal, Joël Lightbound]

Thank you, Mr. Lemire.

Mr. Masse, the floor is yours.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair. I'm going to table a motion with my time.

Before I do that, I just want to note that, in Windsor West, we actually had to call the army in during COVID because the private sector was killing our residents by not providing proper services. They also had the Salvation Army in. It's interesting. I hope we don't teach others the wrong things.

With regard to my motion, I'll use my time here so we don't take up witness time. I move:

That pursuant to standing order 108(2) the committee undertake meetings to study the proposed takeover of HSBC’s Canadian division by the Royal Bank of Canada (RBC), which is the largest proposed acquisition in the banking sector since RBC’s proposed takeover of the Bank of Montreal was rejected by regulators.

The reason I'm tabling that is that we will have some business coming up. I'm hopeful that we can actually have some discussion on this.

The Competition Bureau has asked for further information with regard to this takeover. It was in the early 1990s that the Bank of Montreal was actually not consumed by a takeover because of regulator decisions. This obviously has significant consequences for consumers and also for small businesses and medium-sized businesses in particular.

With that, I'll table the motion and leave it for the committee for the next date that we have business, please.

Thank you, Mr. Chair. That's the end of my intervention.

[The Chair, Liberal, Joël Lightbound]

Thank you, Mr. Masse.

I understand that you don't require us to vote on your motion at this point. You're just tabling it for future discussion.

[Brian Masse, NDP, Windsor West, ON]

I don't like to ambush members at the last minute and so forth. I want to get it....

[Some hon. members]

Oh, oh!

[Brian Masse, NDP, Windsor West, ON]

I have learned from somebody else's practices.

[The Chair, Liberal, Joël Lightbound]

Thank you very much.

I understand for the benefit of members that you're not pulling what's called “a Brad Vis” here in this committee.

Thank you very much.

I'm sorry to our witnesses for this interruption, but this is part of committee business.

I appreciate your motion, Mr. Masse. We'll look at it at the first opportunity when we do committee business.

We'll now turn to Madam Lapointe for five minutes.

[Viviane LaPointe, Liberal, Sudbury, ON]

Thank you, Mr. Chair.

My question is for Mr. Bruce.

I'm an MP from Sudbury. Critical minerals are very important to our region. We know that critical minerals present a significant opportunity for Canada.

If we focus on the minerals only without developing the infrastructure around it, like refining, processing and mining innovation, we'll have lost a significant portion of that economic opportunity. I found it interesting when you talked in your opening statement about how we need to ensure that the processing is being done here in Canada.

What does the government need to do to ensure that this occurs and that we build that chain here in Canada?

[Malcolm Bruce]

The first thing is that, if we agree that this is critical to our national interests, we need to look at the entire value chain and figure out where our friction points are and then mitigate against those so that we are able to build them here.

I'll give you another example of the reason why we want to process material in Canada.

We ship most of our critical minerals out for others to process on our behalf. There are residual outcomes from these processes. In one case, critical minerals that are processed produce another critical mineral. Maybe 30 tonnes are produced globally. Every single pair of night-vision goggles produced globally has this critical mineral in it. Canada could be the main provider of it, but we're not anymore because we ship it all out.

When you talk about national security and national interests, one would think that, if we can get the foundries and the value added here, then we're not only becoming a valued ally or exporter, but we are also providing great high-paying jobs and all the rest of it for economic benefit to Canada.

[Viviane LaPointe, Liberal, Sudbury, ON]

Thank you.

Mr. Lee, do you want to add to that?

[Dr. Ian Lee]

Yes.

Pardon me for invoking academic theory from time to time, but Einstein said theory can very practical.

Porter talked about this in his idea of cluster theory. It's had a huge impact at the United Nations. Developing countries have taken very it seriously. It's the idea that you don't just want to have one company that's very successful; you want to have that constellation of companies and the full value chain system that Mr. Bruce was referring to.

I completely agree. Porter argued that the wealthiest countries in the world—Germany, Japan and U.S.—have more clusters. Hollywood is a cluster. Silicon Valley is a cluster. Banking in New York City is a cluster. It's not just the bank itself; it's all of the suppliers. In Hollywood, it's the scriptwriters and all the people who win Academy Awards. That's the cluster. That's what you're referring to.

Where I'm going with this is that I don't think we can legislate it. I think what we have to do is create the conditions necessary to encourage companies to come here.

Mr. Bruce said to identify the friction points. I think we should, and I hope you MPs ask the questions: Why are they not coming here right now? Why are they going somewhere else? They come here, get the minerals and ship them out. The first and most obvious question is why.

Given all the advantages that we have, there's something missing. That's why we have this capital outflow, which has be documented. More money is flowing out in FDI than is coming into Canada. People are voting with their feet because there's something that they see that's remiss or not going in the right direction. I think we have to zero in on that to fix those problems or, what Mr. Bruce called, friction points.

[Viviane LaPointe, Liberal, Sudbury, ON]

Thank you.

Mr. Bruce, you also talked about your travels across the globe and how investors want to invest in Canada. I can tell you that I've had that experience too. I attended the prospectors and developers conference in March this year. It was very clear from talking to investors across the world that they want to invest in Canada.

You said that we need to ensure that they can. What do we need to do to be successful on this front?

[Malcolm Bruce]

We need to be providing an enabling framework and not a constraining one. I say that in all sincerity. In the example I cited in my opening remarks, this company tried for four years to get through the regulatory process to be able to open a foundry. They spent millions of dollars trying to do that. In the end, he gave up and went down to Tennessee, where he's spending over a billion dollars to process raw materials that are coming out of our mines in Canada.

This is just one of a number of issues that we continue to impose on ourselves, this uncertainty, and the fact that we don't get bipartisan agreement on big, major national projects that are important to our national security and our national health. I think there are things we could do better as a collaborative to be able to create far better outcomes than what we're achieving.

We have all the inputs in the world. I'll give you an example in the agriculture industry. The Dutch have 4.4 million acres in agriculture. They produce about $150 billion of GDP out of their ag sector. Canada, just in the three prairie provinces alone, has 78 million acres of arable land. The total output for Canada's ag sector is about $136 billion. The Dutch do better on their 4.4 million acres than we can do on our entire land mass.

You tell me why we can't do better. Some of it is that we're constraining, not enabling.

[Viviane LaPointe, Liberal, Sudbury, ON]

My last question is for both Mr. Lee and Mr. Bruce.

In your opinion, will this bill help mitigate potentially harmful foreign investments in critical minerals?

[Malcolm Bruce]

I'll let you answer first, Mr. Lee.

[Dr. Ian Lee]

Thank you.

Yes, I think it probably will. I'm saying that with hesitation, because it's mixed up in this instance. There's national security mixed up with net benefit. As I keep saying, these are two very different animals. The animal I'm much more familiar with is net benefit, which is not the language I use. I talk about sustainable competitive advantage. Sustainable competitive advantage is just the business strategy term for net benefit, so we're just using synonyms for the same phenomenon. There are others here far more versed in national security, but it seems to me that with critical minerals it's both, so this is making it devilishly complex for you, the legislators. I'm very sympathetic to you, but I think this is going to slow it down at a time when we need to speed it up.

It's not just lithium. It's the other critical minerals. I think there's an increasing world shortage of copper. Copper's the backbone of decarbonization. The studies I am reading—serious studies, really good international studies—are saying that there's a huge shortage of copper. I think this is going to possibly slow things down.

[Malcolm Bruce]

My only comment is that we have to do better than what we're doing now. I'm interested in seeing where this goes. The jury's still out, so to speak.