Mr. Speaker, I am pleased to rise today to talk about this report. It is a very important one. The discussion of the Investment Canada Act has been very lively for many years.
This report is the result of a motion from the member for Calgary Nose Hill, and there was much support to bring it to fruition. I want to thank all the witnesses who came forward to present and also those who made submissions. I also want to thank the staff. Our legislative crew is excellent. The researchers and analysts always did a good job during the process on a very complicated issue. We have a report that is quite extensive, about 50 pages of materials that have been condensed, reflecting some of the concerns that emerged from the sale of Canadian companies, but also the loss of sovereignty, in some respects, in the lost investments.
I will start, though, by discussing something that took place in the debate tonight that related to the parliamentary secretary. It will be interesting to see how the Liberals configure their position out of that. I asked about recommendation 2, which is, “That the Government of Canada introduce legislation to amend the Investment Canada Act so that thresholds are reviewed on an annual basis.” The Parliamentary Secretary to the Prime Minister, if we think it is significant, responded by saying he supported the recommendations of the committee, yet the Liberals put in a dissenting opinion. They could have put in a supplementary opinion, but they put in a dissenting opinion, which said, “Under the ICA, the annual net benefit review thresholds are reviewed and revised by the Minister on an annual basis, rendering the proposed legislative amendments unnecessary.”
Since the parliamentary secretary represents the Prime Minister, I am wondering whether he is having second thoughts to the committee members or to the Minister of Innovation, Science and Industry, who did not address this, or whether the parliamentary secretary is freelancing by himself on this issue. I do not know which it is, but it will be interesting to sort that out because that is the reality of what has been presented to us today.
The reality is that the thresholds have been raised over a number of years and have created quite a concern among Canadians and businesses. They have been raised because of the iconic ones that we have lost, Falconbridge, Inco, a whole series that are name- and brand-recognizable firms. However, what has been presented, and what the previous speaker so eloquently discussed, is that there are smaller firms right now that go under the radar of the threshold and are gobbled up on a regular basis. In fact, there has been an exponential increase.
Part of the discussion we had at committee and part of the report is that, under COVID-19, a lot of vulnerable businesses could be purchased by non-democratic governments. I do not want to speak to just one particular country at the moment, but the reality is that some countries are using their public assets to purchase Canadian companies. With the COVID-19 issue related to the vulnerability of businesses, we have a lot of start-ups and medium-sized businesses that are very vulnerable to this.
This issue goes back quite some time, at least from my perspective. I first raised it at the industry committee with regard to non-democratic governments buying Canadian companies back in 2004. I had discussed it before, but we actually had hearings at that time. There was a headline in The Globe and Mail, “Chinese bid prompts MPs to eye revising investment act”. That was because of Noranda being purchased by China Minmetals.
At that time, I raised the question as to whether it is appropriate to have that type of investment, because it is a non-democratic government. It is not necessarily that it is China, but there are others as well. China decided to go on a purchasing spree after 2000 across the globe, and that included Canada. If we look at the sliding scale of purchases and investments, they are quite significant. That brings up a lot of questions about privacy and control of ownership of different types of assets, and, I would say, it has played itself out in terms of the housing market and speculative approaches that have had significant consequences for Canadians.
I pushed for it, and it came back in Parliament again in 2007. A Toronto Star article said, “Security may be factor in buyout review”. When I pushed for Industry Canada to look at this again, it was about looking at a national security clause in review, which has now been introduced as part of it, because a lot of companies were being purchased that were important to our national security.
This comes from my interest in it representing Windsor, Ontario where the manufacturing centre has been part of our DNA since our establishment as a community and as part of Canada. During the First and Second World War and recently, manufacturing has been part of our heritage. In fact, during the Second World War, we were very much a logistics centre for producing materials to fight fascism.
I have always viewed manufacturing as part of our national structure of defence and also our national importance of connecting people to jobs and meaningfulness and also self-determination. If we did not have that capability, we would not be able to do the things that we do today. Back at that time, it was maybe more raw materials and turning them into things that were used, versus today where there is lack of that vision.
I will always remember and I reference quite often the Prime Minister going to London, Ontario and saying that we actually had to transition out of manufacturing. That was pretty offensive because we do not need to just do rip and ship. One of the tragic things about our oil and gas industry is that we do not have enough refining capacity. I have seen Oakville, for example, lose Petro-Canada. I have seen several other refineries close down as opposed to being invested in, often because of the loss of Canadian control or they no longer became investment opportunities because of a lot of different issues. We lost the capability there.
We have lost some of the capability right now for our forestry industry, as we have a lot of our industry co-owned between Canada and the United States. There does not even have to be collusion, there can just be a disinterest in competing against ourselves and lowering market prices because there is no real interest to do so.
Canada has had some of our natural resources purchased. I mentioned the mining industry to be prioritized because it goes to foreign markets for value-added manufacturing that the Prime Minister wants us to transition out of. That is unfortunate because the value-added economy of manufacturing is important today in this new age for innovation.
When we are looking at solar, wind, alternative energy and also the innovation that is taking place, I often point to what is taking place in Detroit, basically two kilometres from where I am right now. It has billions of dollars going into new electric vehicles and manufacturing there and we do not have the same here. We have some piecemeal and some very important projects taking place that are exciting, but we do not have a national strategy and we do not have the same type of investment taking place. In fact, in Detroit there was over $12 billion of investment in the last number of years and for all of the Canada in the last five or six years, we were at around $6 billion, which is basically not in the game any more with respect to where we should be.
This report did get a response from the minister. There have been some modest improvements to the bill and there has been some strengthening related to national security review, but they did not make some of the bigger changes that we had asked for. I had done some work with Unite, a labour union in British Columbia. It represented a number of companies that had basically been taken over by the Chinese state. I will not get into the full details, but I am going to read this recommendation that has not been implemented:
That the government of Canada immediately introduce legislation amending the Investment Canada Act to allow for the establishment of a privacy protection review of and the ability to enforce Canadians’ privacy and digital rights in any ICA approved acquisition, merger, or investment.
That is the one that I want to talk about. The one that did get pushed through, which I am pleased about, also allows for divestment issues to take place and the minister did move on that. That is important.
I want to pivot because we are looking at some of our privacy laws right now and people need to be aware that we have a Privacy Commissioner in Canada. The United States does not have that; other places do not have privacy. Our privacy laws affect everything from our capability to be involved as a citizen and our own personal life, but also our businesses, and our ability to share information, to work collaboratively and to be connected in terms of mergers and so forth in a more modest way.
We have asked for this to be part of the actual law, because with those expectations we can keep data and information under a review process. I will give a specific example of the Canada census, which I had worked on, to show the vulnerabilities.
It is ironic, because the census is taking place right now, and I encourage everybody to sign up for it. My riding, for a lot of different reasons, has one of the lower rates of compliance, which needs to be improved. Often it is because of language, but there are other reasons as well. However, it is important to fill out the census for government supports and services, and a whole series of things.
At any rate, at the time, our census was actually outsourced to Lockheed Martin. It may sound bizarre to some people that an arms manufacturer would actually get hold of our Canada census, but it did. It had won the contract, and it did that in a number of places. However, because of the Patriot Act, it was going to assemble our data in the United States. It would have allowed all of our census information to be vulnerable to the Patriot Act.
The way the Patriot Act works in the United States is that we would not have control over our data. The U.S. can access that data and then the company that is actually giving it up through the act is not even allowed to report it to us. The act is a fallout from 9/11, when a series of laws were put in place.
The data was going to be moved from Canada, but we fought hard, and we were able to get the data to stay in Canada and actually be processed here, protecting the data from that.
Ironically, Lockheed Martin is no longer doing our census. It was one of those things where we outsourced to be “efficient”, but it turned out to be a loss, because we had to actually pay more money. On top of that, the company is no longer around, and we are back to where we started from, and so that shortcut did not work.
I really believe that there should be a privacy screen as part of takeovers. When we look at the complications that Facebook and other companies have had with some of the privacy breaches, even being held hostage, it is important to note that we are very vulnerable, but we still do not have laws to protect companies.
The University of Calgary had a security breach and actually paid money to have its privacy protected. We do not even have a sense of the entire situation right now, because a number of companies have compromised privacy. They make payouts and different types of restitution, but they do not have to make it public. Some of it does go public but some of it does not; it just depends upon the situation.
When we look at foreign takeovers and the Investment Canada Act, I would point to a few takeovers that have really affected people in their day-to-day lives.
My colleague raised Lowe's and Rona, and I thank him for that, but it is a great example of the consequences, because we have lost competition there. We basically had two competing companies that have been erased off the chessboard, so to speak. Now we are very vulnerable, and there is no motivation to compete. In fact, not only is there less competition, it has made housing more difficult, fixing up our properties more difficult and small businesses are more dependent upon one provider. It has had significant economic consequences.
I opposed that merger and appealed to the government to stop it, but the government refused. I think the parties signed a side agreement to maybe keep their headquarters here and that is about it. However, eventually the stores closed, and I cannot think of a worse situation that we have right now, because we are now dependent upon a one-source provider. We have lost those jobs, but more importantly, the competition.
Another example, which may seem less significant but true, is when Future Shop was taken over by Best Buy. Again, how did that benefit consumers? We lost another competitor, the Canadian franchise company of Future Shop, and for electronics, we are made very vulnerable to being one-source supplied. We have lost that competitive element.
One of the worst examples ever is Zellers being bought out by Target. Here we had Zellers making a profit during a time when chain retail was having difficulty. It had a union, wages just above minimum wage and benefits. Then Target came in, bought up Zellers and promptly shut the stores down in a failed operation. The jobs were lost, the workers lost their benefits, and we lost competition, and for nothing. We had a phony U.S. chain come in here and basically do a social experiment. We lost a significant part of our retail market economy. We have not recovered from that in many respects, because we do not have that type of competition any more.
I think about London, Ontario, where Caterpillar took over Electro-Motive. That was an important one, because those were good manufacturing jobs. That was about union busting and driving out competition.
One of the more iconic ones was when Stelco was taken over by U.S. Steel in Hamilton. We still are feeling the repercussions of that. We lost production capacity, which was an important part of our long-term history of manufacturing steel in the Hamilton region. An exceptional skilled-labour workforce was thrown out because U.S. Steel wanted to wind down operations.
I do not think we are going to continue having the type of situation we are seeing at the moment because of COVID. However, we have a lot of situations with smaller companies. There can be a better way.
I do not want this to be a negative speech because it is about raising awareness. There have been some wonderful cases where we have fought back and we have seen Canadian companies remain. I would point to the Potash Corporation of Saskatchewan. In 2004, the Australian company BHP Billiton was trying to take over the Potash Corporation. We fought that and were successful.
The second example I can think of is MacDonald, Dettwiler and Associates and Canadian space and satellite technology. We were able to prevent some of that takeover, and some of that is Canadian innovation.
I want to touch on something that is often forgotten. When we look at some of the tax on research and development, and incentives such as SR&ED credits and a whole series of others, we have to remember that as we are building up some of these companies, and providing subsidies for them to do research and development, we should have an obligation to stay Canadian and so should they. That is one of the things that we have to recognize. When we are giving incentives, whether they are direct or indirect subsidies, there is an obligation and an investment by the Canadian public. Therefore, if we were going to have a so-called free-market economy, where we get government out of the way, we would not be doing tax credits or subsidies for a whole series of things. We choose them as a democracy and as an innovative society to make advancements. If we do not actually get the fruits of those investments, they do not make any sense at the end of the day.
We have talked a bit about thresholds, but we are not seeing the action that we need to. We have much more work to do on this, and so much awareness is necessary. It is a very complicated file, but there is no doubt that it is sometimes captured in some of the iconic companies in the bigger acquisitions that take place. Let us not forget the small and medium-sized businesses that fly under the radar and under the requirements for review, that we just get notifications that we are losing. That is a poor choice for a country, especially if we are trying to build up our small and medium-sized businesses. We need to protect those assets and develop them better.
I will conclude my speech by again thanking the staff and the analysts for all the work that went behind this report. I know that some have diminished the importance of this debate for different reasons in the House of Commons, but I appreciate it because it has been important. At least we have it on the record, and I know that the House of Commons worked really hard to present issues in front of the government and the minister, as food for thought and also for making a difference.
