Evidence of meeting #71 for Industry, Science and Technology in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was bruce.
A recording is available from Parliament.
Conservative
Rick Perkins Conservative South Shore—St. Margarets, NS
That was just one example below $415 million—
Associate Professor, Graduate School of Public and International Affairs, Faculty of Social Sciences, University of Ottawa, As an Individual
No, I understand.
Conservative
Associate Professor, Graduate School of Public and International Affairs, Faculty of Social Sciences, University of Ottawa, As an Individual
The issue—and I've said this in other instances—is that sometimes the ownership itself is not the problem. It's the risks associated with that ownership. Obviously, on national security grounds, people will say, “A state-owned enterprise that buys a lobster company or the freight forwarding is not really a national security issue,” although maybe in Nova Scotia it might be considered national security, and I respect that. However, to me this case seems to be much more of a competition issue.
The big question, as you mentioned, in terms of SOEs or others is that, obviously, the thresholds create this kind of problem. If we think that SOEs are a problem—again, what kinds of SOEs are we talking about?—then it's a little bit like the bill here, Bill C-34. We think that anything in terms of either assets or technical information that might be a risk to national security needs to be notified. Ultimately, the minister has to decide whether this flies or not.
Now, if we think that state-owned enterprises in and of themselves are a menace to our economy or to our national security, the same logic should apply. Any state-owned enterprise, regardless of where it's from in the world, should notify an acquisition to the minister. The minister should then decide whether this flies or not, and again be able to justify, if there is a decision, to not investigate or to allow the acquisition to go through.
If the risk is there, why the threshold? You're absolutely right. They might say, “We'll just buy below the threshold and end up exactly where we want to be.”
Conservative
Rick Perkins Conservative South Shore—St. Margarets, NS
Thank you.
Dr. Lee, I have a couple of questions for you.
Associate Professor, Sprott School of Business, Carleton University, As an Individual
Can I just respond to that quickly?
Conservative
Rick Perkins Conservative South Shore—St. Margarets, NS
Let me ask the question, and then maybe you can build it into where we're going, because it's sort of linked.
We've had a chat about the speed. A primary purpose of this bill is to make the process quicker. I've sat around C-suites for 25 years as a business guy. I know that I made brilliant decisions in the things I was responsible for, but I always had to bring them to the executive table for a discussion. Generally—as you know as a business professor—you get better decisions out of the team's scrutinizing that then you do out of one particular individual making the choice on their own.
By the same token, what the current Investment Canada Act requires is that when the review, either on net benefit or national security, is done, the minister has to go to the Governor in Council, to the cabinet, with a recommendation and get their judgment. I've talked to a number of former ministers about those discussions that have happened on this, and they said that they got better decisions because they had a multitude of perspectives at the table. I'm a little concerned about removing...which this bill does. It removes that part of it and leaves it solely to the minister.
Like any executive and like any minister, some are better than others, and if you leave it solely to the minister, you lose the importance of that corporate executive decision-making process.
Associate Professor, Sprott School of Business, Carleton University, As an Individual
I agree with what you just said, that you're going to lose that and that more voices are better than a single, solitary voice.
The larger issue with SOEs—I've made a very similar argument for years, similar to Jack Mintz—is that it's unfair competition. It's not a level playing field for everybody. They do not play by the rules. If they lose money, they go to the government and say, “Give me more money.” It's the same problem I have with commercial Crown corporations. When it was still owned by the government, Air Canada would.... Guess what. If it lost money, we gave it more money. That's not competition. That's just going to your sugar daddy, the Government of Canada, and digging into the deep pocket of the taxpayer.
The whole point, if you believe in the level playing field and if you believe in the Competition Act of Canada and the Competition Tribunal, is that we want more competition on a level playing field. Any SOE—I don't care if it's Chinese or Canadian or if it's British or French—does not compete for capital. They do not compete for anything because, at the end of the day, if they need more, they go to the government that owns them and they get it from the government. That's the problem. All SOE transactions should be scrutinized.
Conservative
Rick Perkins Conservative South Shore—St. Margarets, NS
I agree. They have a different cost of capital, which is very important.
With regard to the industry list, the U.S., as you've said, is a very dynamic and open market for attracting foreign capital. It's not just about the foreign direct investment rules. It's also because of the size of the market. It has an industrial list that says that it's identified certain segments, like telecommunications, as strategic. Now, that doesn't mean that it's regulated. It means it has to go through a review. It's not saying that you can't do it, just that it has to go through a review.
This bill does not give the minister the authority to do that. I believe it should give the minister the authority to create a regulatory list of industries that the government thinks are strategic and that should go to a review if they're bought—biotech may be one, that kind of thing.
I'd like your comments on that.
Associate Professor, Sprott School of Business, Carleton University, As an Individual
I agree with you.
By the way, if I can just give a sidebar, the United States is as attractive as it is because it is seen—and you know this as a former CEO—as having the most risk-free rate of return in the world. In other words—and I heard this when I was teaching in Russia, imagine, or in Ukraine, where I have taught, and in China—if you are a smart person and you have this brilliant new technology, where are you going to try to develop that new company and IPO? Is it Mongolia? Is it Russia? Are you dreaming? You want to go to Silicon Valley because you know that the government is not going to expropriate you because it's not Putin, and it's not going to regulate you to death because it's America and [Technical difficulty—Editor].
Liberal
The Chair Liberal Joël Lightbound
Thank you, Mr. Lee. You're on mute, but that's convenient.
I was about to add that if you're a bank, they're going to bail you out.
Liberal
Iqwinder Gaheer Liberal Mississauga—Malton, ON
Thank you, Mr. Chair.
I just want to get a question in before we conclude for the day.
With regard to Mr. Perkins' point, I think the regulatory list actually already exists in the guidelines on the national security review of investments.
Conservative
Rick Perkins Conservative South Shore—St. Margarets, NS
They're guidelines. They're not regulations.
Liberal
Iqwinder Gaheer Liberal Mississauga—Malton, ON
But the regulatory lists do exist within the guidelines.
I want to ask a slightly related question about lists themselves.
This has been touched on a little bit in this committee. We've heard suggestions that there should be a list or a guide of threatening state actors or authoritarian regimes included in this legislation. My personal view is that this would be too rigid because authoritarian regimes do evolve over time. However, how could this impact Canada's reputation as a destination for foreign investment?
Mr. Lee or Mr. Bruce...?
Chief Executive Officer, Edmonton Global
I'll start.
I don't think anybody was suggesting that we list hostile state actors in the legislation. What we were thinking about was things like the precondition lists that are proposed as part of this bill, and we're not sure what they're actually going to mean at the end of the day.
Some of the things we think should be considered are things like sensitive technologies, where we provide more transparency to potential outside investors into this country so that they know what processes they have to go through, depending on what sector they are going to invest in. That's really the recommendation I would have.
Associate Professor, Sprott School of Business, Carleton University, As an Individual
I can't add to that. I agree completely.
Liberal
The Chair Liberal Joël Lightbound
Thank you, Mr. Gaheer.
If there are no other questions, that concludes our two hours of committee work for today.
Before we adjourn, I want to thank our witnesses. It's been very interesting. I speak on behalf of all members when I say that was an enlightening conversation. We appreciate your taking the time, and for some of you, it was at the very last minute. We appreciate your presence here this afternoon.
Before we adjourn, though, members, we have budgets to adopt.
You have received the relevant material from the clerk.
I therefore move the adoption of the budgets for the consideration of Bills C‑34 and C‑27. Is there unanimous consent to adopt these budgets?