Mr. Speaker, my question relates to the one that the hon. member from the New Democratic Party raised, but I must say that I take somewhat the opposite approach to the question of foreign content.
It seems to me that on principle we actually could defend zero per cent foreign content if we believed in autarky and no trade and so on and so forth. We can and I think we should defend a complete openness so that as much as possible can be invested wherever the best investments are, without regard to any consideration other than producing the best rate of return for Canadian pensioners. Thirty per cent or any other arbitrary percentage is of course indefensible. It is merely an arbitrary decision based upon political considerations.
I have to talk about what this means for Canadians and for the rate of return on our investments. Keith Ambachtsheer, one of the leading actuaries in Canada, has said that in order to achieve the same rate of return on a purely domestic portfolio one must absorb substantial extra downside risk. That is the danger of trying to achieve a certain rate of return while excluding the 98% of the world economy that is not in Canada. If we do not accept that extra risk, we can expect to achieve substantially lower rates of return over a period of time.
In addition, and this is critical, when a large fund of over $100 billion is invested in a small economy such as our own, the result is that every time we try to buy equities we raise the price, thereby essentially finding ourselves guaranteeing a lower rate of return. Every time we try to sell the same thing happens in reverse. That is the critical argument for looking at the world economy. This is so important that I think we should look at broader diversification.
A final note is with regard to the question of displacement of assets. Just because this pension fund puts more than 30% into the world equities market does not mean Canadian companies will be deprived of that money. What it means is that this money will be moved where the investors think it will do best. Opportunities will be opened up as a result for well informed Canadian investors, and perhaps foreign investors as well, to invest in Canadian companies. We will see investment going to individual companies where it is best suited to produce the best rate of return. That is what we should support.