Mr. Speaker, I am pleased to rise in my place to respond to the motion tabled by the hon. member for Toronto—Danforth, concerning foreign investment in Canada and the Investment Canada Act.
I would like to take this opportunity to speak to my constituents and thank them for their patience and for their support over these past few weeks.
The Minister of Industry announced last night that, in his opinion, the BHP proposal was unlikely to provide a net benefit to Canada. I fully support him in his decision and would like to thank him for his diligence and hard work on this very important issue.
I would also like to thank my colleagues for their tireless efforts over the past number of weeks to ensure that the people of Saskatchewan and, indeed, all Canadians were effectively represented.
Canada has had a longstanding debate, and some would call it a perennial debate given the length of time it has been ongoing, over the benefits and costs of both inward and outward foreign direct investment.
Fears about foreign investment in Canada are rooted in protectionist thinking from bygone days. This type of thinking does not reflect the new realities of globalization, whether it is in relation to trade or investment flows. In a word, these fears are outmoded.
The idea that foreign-controlled companies operating in Canada will turn our economy into a branch-plant economy is simply not based on fact.
Open markets and globalization have disaggregated production processes to the point that supply chains are now global. Our challenge is to ensure that Canadian businesses can maintain and enhance their positions within these global supply chains, so that they can be cost-effective and successfully compete against competitors from other countries. In order to be successful in today's globalized economy, Canada must attract more inward foreign investment and Canadian businesses must continue to invest abroad.
The concern for Canada is not too much inward foreign direct investment in Canada or too much outward Canadian investment abroad. Rather, the real concern is to ensure that Canada is not falling behind other countries with respect to attracting foreign direct investment. Canada has to maintain and improve its share of investments to secure associated benefits.
In today's globalized economy, investment is linked to trade, and we all know that our economy is heavily dependent on trade for our prosperity and standard of living. We cannot be complacent and rely on outmoded policies, which impose undue cost on Canadian businesses and Canadians. We simply cannot afford this. We must ensure that Canada remains an attractive destination for foreign investment.
In fact, based on data from the World Investment Report 2010, over the period 2003 to 2009, Canada was the world's seventh-largest recipient of the global foreign direct investment flows, attracting more foreign investment than Germany and Italy among the G7 countries; Canada attracted some 3% of global inward foreign direct investment flows, well above its share of global GDP of 2.3%; and Canada also ranked second only to the United Kingdom among G7 countries in terms of foreign direct investment flows per capita.
Access to foreign markets is essential for a small economy such as Canada's. We are working aggressively to open markets in foreign countries for Canadian goods, services and investment through trade negotiations and free trade agreements.
I would now like to speak briefly about foreign direct investment in Canada and some of the benefits that are associated with it.
Until as recently as the late 1970s, many countries were highly suspicious of foreign investment, particularly from large multinational enterprises. Indeed, many countries limited foreign investment or banned it entirely in key sectors.
Canada was also cautious of foreign direct investment. In fact, in 1973, Canada created the Foreign Investment Review Agency to screen inward direct investment.
However, in today's global economy, countries have taken a completely different and new tack, as is the case for Canada.
Countries now seek, and in fact compete, to attract foreign investment as they recognize its many benefits. This is why it is important for Canada to maintain its open policies and continue to welcome foreign investment. Foreign direct investment contributes positively to Canada's economy and is critical to our long-term growth and prosperity.
Let me be more specific about some of the benefits of foreign direct investments in Canada. First, foreign direct investment is a key source of jobs, especially those that are highly skilled and pay high wages. Studies have shown that 1 in 10 jobs in Canada can be attributed to foreign investment. Moreover, foreign-controlled firms in Canada pay higher wages than their Canadian-controlled counterparts.
Second, foreign investors make strong contributions to the Canadian economy, including the much-needed capital for our Canadian economy to grow. While the majority of capital is sourced domestically, a growing proportion comes from international sources. Foreign investment provides much-needed additional capital that would otherwise not be available. Canada is competing with other countries to attract foreign investment, and we are successful at it in light of our fair, predictable and stable business environment.
Third, foreign investors provide access to new goods and services and exposure to different management styles and processes. Foreign investors often do bring innovative marketing strategies and new perspectives on management, people and technology. This expertise is often passed on to Canadian firms. This ultimately enhances the ability of Canada's business to compete and raise the overall level of productivity of the economy.
Fourth, foreign investment is also an important source to access new technologies. Considering the high costs of research and development, Canada must recognize the role foreign investment plays to ensure that Canadian firms continue to have access to leading-edge technologies.
Finally, foreign investment contributes to Canada's success in international trade. Foreign firms often produce goods and services not just for their domestic market but for their international affiliates. Research has shown that foreign firms operating in Canada are more export-oriented. In 2002, foreign-controlled establishments operating in Canada accounted for only 9% of the total number of exporters but contributed almost half of Canada's exports.
I am thankful for this opportunity to address my colleagues in the House and to articulate the importance of foreign investment in our economy.