Industry Committee on June 14th, 2023

[The Chair, Liberal, Joël Lightbound]

Thank you very much, Mr. Williams.

Are there any further comments or questions on amendment CPC‑8?

Go ahead, Mr. Perkins.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

I'll add that this is similar, I understand, to my presentation on the last one, but from the perspective of.... When the minister was here at one of the meetings, I said, you know, not all ministers are created equal, regardless of party. Some, perhaps, aren't as diligent as the current minister in that role. I know he has put out more stringent guidelines for some of these areas, particularly the critical minerals area. Clearly, the current minister is looking a little more rigorously at it than, perhaps, previous ministers. Still, those things are in guidelines, not in law.

With “shall”, the idea that he is required to have this in both net benefit review and national security ensures that the Governor in Council—cabinet and the minister himself—has the utmost detail available in making the final recommendation to cabinet or the final decision, to make sure the net benefit and security interests of our country are well regarded and well protected when there is an acquisition.

I believe this is essential. I think it's proven that ministers are not necessarily, in some instances, following the due diligence the public would expect. They may be getting advice from the department. The official process is, “Okay, we've done a first-level assessment and it looks okay” or “The Minister of Public Safety says it's okay” or “We don't think it's an issue on net benefit”, even though we don't have—not to mix bills—a real beneficial corporate registry that can give us clarity about the concentration levels of companies within particular industries or areas. As I have mentioned earlier, the fisheries department doesn't know who ultimately is the beneficial owner of a licence. It can't tell, on the west coast, for example, whether or not Jimmy Pattison has 50% ownership of all licences. The Competition Tribunal says that it shouldn't be over 30% in any industry, as we know from our discussions around Rogers and Shaw.

I know this seems a little circular, but I think it's incumbent upon us to make sure that whoever the minister is—ministers and governments change—the due diligence is done and that a minister has the full depth of information available to them, from all the security experts or competition experts in corporate concentration and net benefit analysis, before making that final decision, in certain circumstances, to ensure our interests are well protected.

I think the problem with the language of “may” is that it may be a minister who is not as diligent. They may be so in some circumstances, but it's left to chance and the vagaries of who will occupy the office. It has nothing to do with the current government. I could make the same argument about some people in the preceding government, too, who held this job. I'm sure the officials would never be so impolitic as to share their views on the long list of previous ministers and their diligence on some of these issues.

This takes the guesswork out of whether or not this happens, as well as the situation where we have, in Parliament, members of Parliament coming hard at the government of the day, questioning why it did not do this or why it didn't go in depth. It happened in the Tanco case, and it happened in the case of Hytera. I wasn't around at the time of the Nexen oil sands purchase, but I know Mr. Masse was. At least, I understand from him that he raised some of these issues in the House.

This would protect a minister, to a large extent, from making, perhaps, an error after the fact and being subjected to questioning about the decision without the proper information handed to them. They can't put the toothpaste back in the tube. Once it's approved, it's done. It's over. You can't go back. Having more information is only a good thing in this process. It is more certainty for ministers and governments to have more information in making that final decision.

As I understand the process, if there is viewed to be a national security issue or a net benefit issue out of that review, the minister, under the Investment Canada Act, has to go to the Governor in Council with a recommendation. The Governor in Council, for those who are watching and don't understand, is the cabinet. The minister has to go to cabinet to get agreement on the decision or recommendation he's making if there's an issue with the net benefit review or the national security review.

In my days when I had hair, I sat in the back as a staffer in cabinet meetings, so I saw some of that debate behind the curtain. Certainly, from my years at executive and board tables in the private sector, I know that in the decision-making process, a more robust and better decision is always made when you have a lot of people around the table with varying backgrounds who can give their opinion—not just the opinion of a single person, like the minister. That's why it goes to cabinet, to have those discussions, because while the minister may think that it is or isn't an issue, there may be a different perspective, such as a regional perspective or other perspectives from different backgrounds around cabinet. Quite often, the decision that comes out of cabinet may be a little different from what went in. However, it will never go there for that debate if the information and the depth that we're asking for here isn't there and, therefore, is not going to the minister to make sure that he or she has the full benefit of everything possible in making that recommendation.

It seems like a small change, from “may” to “shall”. I thought it should be “will”, but the lawyers told me we don't put that in the act. We don't use “will” to say that the minister will do something. Saying “the minister shall do that” is essentially “will”, apparently. The chair is a lawyer, so he knows this better than I do, but “will” is apparently not a word you use in acts.

I would encourage all members around the table to think about that and to say why we would not want the minister to have the full breadth of expertise and information before him at the highest level of detail that we can get in this government on an acquisition on national security and net benefit.

In case you get a lazy minister—really, there are some lazy ministers—he may not really read the brief, may not do the due diligence in looking through all the documents and may not spend the time with officials to fully understand what this acquisition is about and what's happening. Therefore, the government, taxpayers and industry are exposed to things that we shouldn't be exposed to. One of the guarantees, I guess, against a lazy minister is turning “may” to “shall”.

I would ask you to support us in this proposal to protect us from lazy ministers and to make sure that all of the information that is possibly had is available to that minister, whether they are diligent or less diligent, going forward.

[The Chair, Liberal, Joël Lightbound]

That was fascinating, Mr. Perkins. Thank you very much. It was interesting.

Go ahead, Mr. Masse.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

I'll be supporting this as well. I think we can aptly name this amendment the “Maxime Bernier clause”, because he was minister at one point in time, and that should cause a lot of concern for Canadians.

These are just simple facts that I've lived through here. I'm not looking to attack anyone or anything. I didn't have any trouble with him as minister, but I can say that the current minister has actually—I'll be quite frank—worked a lot harder in many respects. I'd put that on the public record any time, any place, anywhere, as well as other ministers that I've had—

[The Chair, Liberal, Joël Lightbound]

It's already on Twitter.

[Brian Masse, NDP, Windsor West, ON]

It's already there. Absolutely.

I understand the clause about “shall” and “may” because I worked with then minister Cannon to change that language to ensure that the consultations under the International Bridges and Tunnels Act actually consulted the local communities where the municipality was hosted, whereas before they didn't have to.

I'll support this amendment for those reasons, and I appreciate the efforts of Mr. Perkins on this. I'm ready to support it.

Thank you.

[The Chair, Liberal, Joël Lightbound]

Thank you.

Are there any more comments on CPC-8?

Go ahead, Mr. Généreux.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

I agree with my colleague, Mr. Chair. We've heard from a lot of witnesses, and many of them discussed the effects of an automatic review triggering mechanism. I think that's a very important element.

If we change the words used in this section, will you also have to challenge it? Will that be automatic?

I'd like you to explain to me the difference between this one and the ones we previously discussed.

[The Chair, Liberal, Joël Lightbound]

Since it isn't beyond the scope or principle of the bill on which we have already voted on second reading, it is admissible.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

I'd like to ask the officials a question.

Do you think the new wording would give the minister more leeway on this?

[Mark Schaan]

This amendment would reduce the minister's discretion because it would require the minister to go to the second phase of the national security review, that is provided for under section 25.2. Consequently, that wouldn't give the minister more powers because it would reduce his or her discretion.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Is my understanding correct? It would reduce the minister's powers?

[Mark Schaan]

Yes, because the minister wouldn't have the authority to consider the national security implications step by step. Normally, the national security review is triggered, then the decision is made whether to go on to the second phase, the one provided for under section 25.2. Then the decision is made on whether to go to the phase provided for under section 25.3, and, lastly, an order may be made under section 25.4.

The amendment in question would require the minister to apply section 25.2, except for the information gathering process that normally takes place for the purposes of section 25.1 if the minister considers that the investment may be injurious to national security.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

I'm not sure I really follow you. Despite this change, in all the phases, the minister will nevertheless still have the freedom to decide whether or not he or she can extend the investment review.

[Mark Schaan]

The difference lies in the fact that one of the amendments concerns the Governor in Council. Although the minister has certain powers, the decision is already made for him or her because this amendment would require the minister to apply section 25.2.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

I see.

This becomes an automatic triggering mechanism, and I think it's necessary that this element in the bill be understood.

[The Chair, Liberal, Joël Lightbound]

To answer your question, Mr. Généreux, Mr. Schaan explained that the reason why amendment CPC‑8 was admissible and amendment CPC‑7 was not is precisely that amendment CPC‑8 concerns the minister, not the Governor in Council.

Go ahead, Mr. Perkins.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

I'll just follow up on Mr. Généreux's question, if I could.

Mr. Schaan, I get that it does remove that, so I agree that it's narrowing the process. It's doing the intent, which is to do a deeper dive into these issues for the minister. However, it doesn't change the ultimate decision-making process that the minister has from the results of the reviews by those agencies. The minister still has to review those. It doesn't restrict their ability, from my understanding. Once the recommendations come back from those reviews, the minister still has decision-making power. It hasn't changed what to do with that information and whether or not the minister believes that there is a net benefit issue or a national security issue and then makes the decision whether or not to go to cabinet with that.

It doesn't remove his or her discretion on that, I believe. Is that correct? It forces a process, but it doesn't predetermine the result.

[Mark Schaan]

It's important to note that there are two aspects to this.

As you note, there's the process that follows from the decision, but the process is based on the information. Therefore, the movement from section 25.1 to 25.2 to 25.3 is an escalating view of the national security evidence. It moves from a concern that there is a national security consideration worth evaluating—and that's the beginning of the process—and that it could be injurious. It's the information that makes the determination on whether or not it moves to the next step. What this does is that, essentially, in process, it makes a determination without the information that it must proceed to the next step.

You are correct, though, that it does not bind the minister to an outcome based on that information. However, normally sections 25.1 to 25.2 to 25.3 are additional information and further scrutiny on the basis of the new information that follows, because the information is actually a further assessment.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

I would think that's a good thing. It doesn't bind the minister to the outcome that they, as a minister, want to have and to recommend going forward, but it does ensure that the minister has a deeper level of information than the first level of review would probably give them. It may or may not, I guess. It will all depend on the situation. It may confirm that it's not an issue, for example. You might have been able to get that from the first level, or you might not. It may provide a more robust amount of information, so it guarantees that there's a little deeper dive on the information that goes in. It may result in the same information going back, but we don't know if it would result in more, unless the process makes the minister go to that level.

Is that correct, if you can follow? I don't know if people are following; it may sound a little circular.

[Mark Schaan]

I am following.

Right now, the movement from one level or one stage of the national security review to the next is premised on the analysis of the information. By essentially assuming a section 25.2 review, one is presuming that the information necessitates it, whereas the analysis in the current format is this: Here is the information; an assessment is made as to whether or not we believe that it could be injurious; further analysis and assessment are then done to move it to the next level, where it's believed that it would be injurious.

By moving to section 25.2, it's not following the information escalation that currently happens, where essentially we're coming to a series of cascading decisions: Is there a national security concern? Is that national security concern founded? Could it be injurious to the national security of Canada? Would it be injurious to the national security of Canada?

By jumping through to the next set of questions, we have presumed that the answer is yes and yes. In our current world, we allow the information to speak as to whether or not the answer is yes.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

But if you skip to that, you're still going to presumably have the information from the other two levels, in the sense that at that next level, it would say.... Let's take the case that you've determined it's not.... You would still get that at this level, even though it's a little deeper, and you say, “Okay, this isn't going to take long.”

[Mark Schaan]

You'd be asking the national security community to further assess something they do not believe to have national security risk. It would now further assess it as to whether or not it really doesn't, because you've asked it to basically have a “could” test.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

I know you can't divulge the past decisions, but my understanding of the cases I mentioned, going by the public information available from the minister at the time, is that for some reason, in the case of Tanco, for example, it was determined at the first level that there wasn't a national security interest. We never went any deeper or into any deeper thought, when obviously we knew that our only lithium mine was being bought by essentially a Chinese state-owned enterprise.

What I'm struggling with is that I think the process doesn't work. When that happens at the first level—according to Minister Bains and according to all the media I've read on it, that's as far as the analysis went in that case—it doesn't work if that level alone says, “Okay, we don't think there is, so go ahead.” Then, of course, it turns out that the company and the plan and everything they're doing is—to me—injurious to our net benefit and national security, because 100% of what's coming out of that mine is going straight to China and not being managed at all here.

The motivations of the company buying, the intent of the company buying, all those things clearly weren't exposed in that first level, or one might have thought that it should automatically go to the second or third level. I actually haven't seen this, because this level of stuff was long before I ever sat as a staffer in a cabinet meeting. The world didn't have much in the way of free trade of anything back then.

My concern is that the mistakes are...and maybe this is armchair quarterbacking post this thing, but to me, this is suspenders and a belt. I think you asked the other day, on the other bill, if we wanted suspenders and a belt. I think sometimes I do want suspenders and a belt in a law. I wouldn't wear it personally in a fashion sense, but in terms of legislation, I don't think there's anything wrong with having suspenders and a belt so that the minister has clear powers to do what he or she needs to do.

I don't know. Am I missing something? You probably can't speak to the Tanco case.

[Mark Schaan]

No. I can't speak to specific cases.