Thank you, Mr. Chair.
This amendment amends section 15(1) by adding a couple of things. Bill C-34 already does 15(1). We add a couple of a new sections towards the end of the clause. We add a section subsection 15(2) that says:
(2) Despite the limits set out in subsections 14(3), 14.1(1) and (1.1) and 14.11(1) and (2), an investment is reviewable under this Part if
(a) the non-Canadian making the investment is a state-owned enterprise or is controlled by a state-owned enterprise;
(b) the Governor in Council, on the recommendation of the Minister, is of the opinion that [the] review of the investment is in the public interest; and
(c) [that] the Governor in Council issues an order for the review within 21 days after the day on which the non-Canadian gives notice of the investment to the Director.
Bill C-34, in its current form, and the Investment Canada Act provide for essentially, in my understanding, two independent review regimes when a transaction comes forward: the national security review and the net benefit review.
The current threshold trigger of the net benefit review for a state-owned enterprise is a formula, as I understand it.
Mr. Schaan, at the previous meeting I think you said it's $512 million this year. In such cases where the investments are at least equal to that amount, the state-owned enterprise must file an application for a net benefit review, and the potential transaction must be approved by the Minister of Industry. That's my understanding if it's correct. If the Minister of Industry chooses—and it's a choice—the investment can also be sent for a national security review, if within the threshold, after the consultation with the public safety minister. That's my understanding of the way it works now.
The rationale for this amendment is that, in the current form, neither the Investment Canada Act nor Bill C-34 require an automatic filing for a net benefit review of a state-owned enterprise investment if it is below that formula—this year being a $512 million asset value... I think the threshold is on asset value. As a consequence of this, any state-owned enterprise investment made below the $512-million figure will not be subject to a net benefit review.
The proposed amendment seeks to exempt all state-owned enterprises from the threshold limit, regardless of the value of the investment, thereby ensuring that all state-owned enterprise investments will be required to file an application for a net benefit review.
This amendment was drafted based on the feedback received from our members after they expressed the need for a lower review threshold for state-owned enterprises to zero and to ensure greater security of any state-owned enterprise investments. It actually comes, as well, from the industry committee report, which was passed unanimously by this committee, on the review of the Investment Canada Act from a couple of years ago. I think it was actually recommendation one in that report that said this should go to zero.
Experience tells us that, in my province for example—and I think I may have mentioned this when officials were before us—state-owned enterprises, particularly from non-democratic countries, are buying a lot of Canadian assets below that and are getting control of industries. In my case, in the fishery industry, they have been acquiring a lot of the buyers of seafood in Nova Scotia and have been paying three, four or five times the value of the company in order to get access to, and control of, the supply chain of the product.
We know—I've had people contact me since we started to raise this issue in this committee on this bill—that in the Prairies, for example, on mineral rights filings and ownership there, state-owned enterprises and business entities from China have filed and have obtained a lot of mineral rights over land in the Prairies.
We also know from my western colleagues that we are seeing farmland being acquired in the prairies in particular.
All of these types of examples—just a few of these types of examples—are well below the formula limits, and we're being taken advantage of, in my view, for our kindness and generosity and our adherence to world orders when we're seeing companies and entities that do not operate on a fair and open market sort of profit motive. For example, if you look at Hytera.... Not to belabour Hytera, but Hytera rarely makes any money. That's the reason why their companies can win government procurement contracts by underbidding companies in Canada that have to be profitable. They buy them and pay four or five times, as they are in my province, for those businesses—which makes no actual business sense, because you can't get a return in any reasonable time—for purposes other than business.
That's all you can conclude when a company that has public documents like Hytera consistently loses money and continues to win these bids. The purpose of that business has to be something other than what we like to think is an open, fair and competitive market that allows fair and open competition to produce the best value for those who buy the products, based on the great joys of our capital system. That's not happening, because they're taking advantage of these high thresholds.
I think for that reason.... I wasn't part of the study, Mr. Chair, that happened and that was referred to here and was done I think over two Parliaments. I think at the last election it was picked up again, because at the front of the report it shows two different committee structures of members and two different chairs. They produced that report unanimously—I think Mr. Masse was part of that—and unanimously asked for this to go to zero.
I was surprised when BillC-34 was tabled to not see that. The committee recommendation was not included in what I think what was a genuine attempt to not only speed up the system but to give the minister more ability and flexibility to deal with some of these issues that I'm talking about, but it's still a too rigid thing in the sense that the formula on the threshold in our mind, and in this committee's mind at the time, is way too high, and that the only way to ensure that this doesn't happen is to not pick another formula that says, well, $220 million is the formula now for this year, or $100 million, because they will start acquiring businesses under that, and they will continue to do that, which they are doing in my province, well below that. I don't think you would ever say that the formula is $10 million.
I think the only way to get at this—and what is the purpose of the amendment here—is to implement what this industry committee said unanimously in its report, which is that the threshold should be zero. As officials, can you tell me why you think the current formula is more useful—this bill doesn't propose to change the current formula—to prevent what's happening below that number, that somehow that will happen anyway? I think the bill is a formula for the status quo to continue in this area.