Mr. Speaker, I am pleased to take part in the debate today about potash. It is a commodity that many people may not have heard much about, at least not until six or eight weeks ago. But since then, potash has become a symbol of how Canadians value and measure the public interest and the strategic interests of our country. That is not something they want sold out or taken over.
Potash is a mineral nutrient that is a vital ingredient in fertilizers, and 53% of the world's known reserves are located in Saskatchewan. Potash is used to renew and enrich arable farm lands. It is indispensable to food production worldwide and will be so for generations to come.
Our soil types here in Canada are different from many others around the world. We do not use a lot of potash in our country, at least not yet. One day we most certainly will. In the meantime, its strategic value in feeding a hungry world is indisputable and is growing more strategic and more valuable every day.
It came as a surprise to many, about two weeks ago, when the Prime Minister answered a potash question in this House in a remarkably superficial and dismissive manner. In reference to the hostile bid by the massive transnational BHP Billiton Corporation of Australia to take over the Potash Corporation of Saskatchewan, the Prime Minister said, essentially, “What is all the fuss? It is just an Australian company trying to buy out an American company, so who really cares?” That was the tone of the Prime Minister's answer.
As it turns out, millions of Canadians care, and they care deeply. The Prime Minister was wrong about the Potash Corporation. It is not an American company, 49% of its shareholders are Canadian and only 38% are American. More important, two-thirds of its directors are Canadian citizens and Canadian residents. Control of the company rests in Canada, in Saskatoon, Saskatchewan.
Beyond being erroneous, the Prime Minister's remark was taken by a lot of people in Saskatchewan as an insult, an indication that Saskatchewan was being taken for granted again and maybe taken to the cleaners, that Saskatchewan's interests could easily be sacrificed on the altar of ultra-Conservative ideology, sold out to Australia because the Prime Minister had a personal bias in favour of the proposed takeover.
That is how Saskatchewan read the Conservative position two weeks ago. The government was out of sync with a big majority of Saskatchewan people who did not want, and do not want, to stand by and see this transaction result in the biggest resource sellout in history. They do not want to lose control, permanently and irretrievably, over this strategic commodity and an entire industry.
Offended by the Prime Minister's foolish remark, public opinion galvanized and mobilized. The Saskatchewan government and the provincial legislature were of one mind on this issue. If anyone knows the politics of Saskatchewan, that is indeed a rare moment.
Premier Wall was buttressed by former premiers Calvert, Romano, Devine, and Blakeney, and the opposition accumulated far beyond Saskatchewan. Former Alberta premier Peter Lougheed weighed in, as did the current premiers of Alberta, Manitoba, Quebec, and New Brunswick. The Ontario finance minister warned the federal government to listen carefully to Saskatchewan. And as the official opposition in the House of Commons, we issued the same warning for six long weeks, day after day, question period after question period, .
The wave of common opinion rolled beyond politics. Icons of Canadian business became very vocal. Early out of the gate to oppose the deal was Stephen Jarislowsky of Montreal, who owns an estimated some 9 million shares of Potash Corp., and stood to make a tidy profit at $130 per share. He said, “No, do not do it.”
The same counsel came from the legendary Dick Haskayne of Calgary, the man for whom the business school at the University of Calgary is named. He, too, said, “No, do not do it.”
Then Roger Phillips of Regina, former vice-president of Alcan when it was a Canadian company and later CEO at IPSCO Steel, said no as well. From there, the list of those with substantial misgivings just kept growing. Norman Keevil of Teck Resources, Dominic D'Allesandro, Calin Rovinescu of Air Canada, Roger Martin of the Rotman School, Gerry Schwartz of Onex, Red Wilson, and many more.
The questions being asked were all much the same. If the Potash Corporation of Saskatchewan were to be sold out to BHP, control over the operation would move from a board in Saskatoon, where two-thirds of the directors are Canadian, to a very different foreign board in Australia, with maybe one Canadian director out of 11. So how is that a net benefit?
If Saskatchewan stands to lose jobs, investment, and provincial government revenues totalling between $3 billion and $6 billion, how is that a net benefit?
If the deal means the inevitable destruction of the Canpotex marketing group and the muscling out of other players like Agrium and Mosaic, how is that a net benefit?
If the biggest resources sell-out in Canadian history adds potash to the list of Alcan, Inco, and Falconbridge, all former Canadian champions now lost from Canadian ownership, lost from Canadian control under this Conservative government, how is that a net benefit?
If Saskatchewan and Canada lose all effective influence over one of the world's most strategic commodities in food production, especially in burgeoning markets in India and China at a time when these economies are poised to begin driving the global economy, if we give up that influence, how is that a net benefit?
If Canada's image is reinforced on the global stage as a corporate pushover, an easy mark for takeovers, or if people are led to believe, to use the words of none other than the former chairman of BHP, that “Canada's policies are the worst...Canada has been reduced to an industry branch office largely irrelevant on the global mining stage”, then where is the net benefit in letting BHP take over?
We asked all of these questions over and over again in the House of Commons. Business leaders asked them too, as did the province of Saskatchewan. After weeks of interrogation, the government has finally admitted that it cannot find any net benefit either. Because this was so obvious for so long, people are left to wonder what the government was really thinking during all that time.
It goes back to the answer from the Prime Minister two weeks ago. This is a government that wanted to say yes, that planned to say yes, until the Conservatives saw themselves threatened politically.
The Conservatives polled furiously over this past weekend. They leaked a bunch of trial balloons to the news media to see what might fly. They tried to test what would sell, so that they could ride a horse in two different directions at the same time, but the reaction was all consistently negative. They could not make a silk purse out of this sow's ear.
In the end, they had to be dragged kicking and screaming to get on the same side as a strong majority of Canadians and an overwhelming majority of Saskatchewanians, and just say no. Even then, their position remained a bit vague. Yes, the rules require a 30-day response period for BHP, but in fairness to the corporation, it should not be drawn into some kind of wild goose chase.
The people of Saskatchewan have not said maybe. They have unequivocally said no. The Premier of Saskatchewan has not said, “Make me a better offer”. He has said unequivocally no.
BHP officials should know what is in their power to address and what is not. Could they do better on the share price, jobs, investment, provincial taxes and royalties, or the size of their Saskatoon branch office? Maybe. But as Premier Wall points out, how could they address the fundamental strategic considerations that go far beyond merely haggling over the price?
In other words, Saskatchewan's potash resources are clearly so strategic, how does BHP officials render those resources unstrategic? In a hungry world in which soil fertilization is vital, how do they diminish control over 53% of the global supply of potash to nothing more than the routine marketing of axe handles? If it is special and it is strategic and BHP cannot change that, then why lead it on? Yes, give the 30 days that the law requires, but do not raise false hopes on the part of the bidder and do not cause doubts among Saskatchewan people about what the answer is. When it comes to potash, no means no. That is what 80% or more of Saskatchewan people want to hear.
They do not want to be told that they are bad or weak people because they expect their governments to stand up and safeguard a strategic resource. Some of the extremist commentary that has been pedalled about Saskatchewan being a banana republic and the premier being some kind of Hugo Chavez of the north is just ideological claptrap. The cream of Canada's business leadership says that standing up for a strategic resource and standing against this particular transaction is not anti-business and not anti-investment, it is simply the right thing to do.
Canada's global reputation is not that we are too tough on foreign direct investments. It is that we are too soft, to the point where even the former chairman of BHP was making fun of us. Neither Australia nor any other sophisticated economy would rubber-stamp a deal like the foreign takeover of PotashCorp. The right-wing Conservative elites who make the contrary argument are the same people who opposed robust financial regulations and promoted big bank mergers about a decade ago. If their bad advice had been followed then, Canada's financial system would have suffered the same big trouble as the American system that so damaged the U.S. economy through the recession of the last two years. A strong legal framework and robust oversight are not bad for business but the Investment Canada process does need to be improved.
Early in this debate, several weeks ago, the Liberal official opposition made that very point and we called for four types of changes. The first one was that there needed to be more precision in the definition of what constitutes a net benefit under the Investment Canada Act. Right now it is a bit of a moveable feast. It is vague, it is whatever the minister says that it is from time to time and it changes from time to time. For all sides in the debate about foreign direct investment there needs to be more clarity about what net benefit means. To this very moment, BHP still believes that it passed the test. To a big majority of Canadians, it is beyond doubt that it did not pass the test and perhaps could not. Such ambiguity is not helpful to any side in a large, complex commercial transaction. So number one is that there be greater certainty in the definition of net benefit and the factors that determine it.
The second change concerns transparency. As it exists today, the Investment Canada process is a totally secret black box. No one knows the information that goes in or the arguments that are exchanged. No one knows what analysis if any gets done and no one knows the basis upon which recommendations are made. We have the bizarre situation here in the BHP case where the minister says that there was an analysis but that there were no recommendations. Well, how silly is that, an analysis without recommendations? Equally silly is that any conditions attached to any government approvals are also secret. Now that is ludicrous. If the public cannot know what the conditions for an approval are, then how can there be any measurement of performance? Provisions need to be embedded in the legislation to ensure proper public disclosure of necessary information and a more transparent procedure in the public interest.
The third change concerns enforcement. As we have seen all too often since 2006, big promises are too often made by takeover bidders in order to close their deals, only to be broken within a few scant months thereafter.
The practical experience on this front has been bitterly disappointing to a great many Canadians. It is not good enough to say “then sue them”. Where would that get us? Litigation would be tied up in the courts for 10 years or more while Canadians lose their jobs. The act needs to be amended to include practical, timely, readily available remedies to enforce any promises that are made.
Fourth, as we have seen in the Potash case, this federal jurisdiction over foreign direct investment can impinge squarely upon provincial constitutional jurisdiction over natural resources. Premier Wall was prepared, if necessary, to take that question to court as the people of Saskatchewan would have expected him to do.
While the Investment Canada Act cannot resolve every question of constitutional jurisdiction, it can at least obligate the federal authority to consult more closely and to keep profoundly affected provinces more effectively in the decision-making loop. They deserve some recognized status in this whole procedure.
The motion before us today is by no means a panacea. Some of its proposals are useful while some may not be workable or even desirable, but at least a discussion needs to begin on how to improve the Investment Canada Act and its procedures as we called for about a month ago. That discussion needs to get going before there is another megatakeover looming on the horizon. The Potash case has demonstrated that the present regime is not adequate, so let us get it fixed.
In the meantime, this motion in its last sentence says clearly that the BHP takeover bid needs to be stopped. That is the primary message in this motion today that I hope all members will endorse.