Mr. Speaker, today we are talking about foreign investment in Canada: What are the benefits? What are the risks?
Canada is a large nation by geography, but a relatively small nation when measured by population or by economic power. We are a small contributor, relatively speaking, to the world economy, but we are punching above our weight class, and the only way we can do that is by being a trading nation. That means we have to sell what the world wants and buy what the world has to offer, but we also have to be open to foreign investment, to allow investors to contribute to our economy but also to make a good return on that investment.
This money is very mobile. A big hypothetical pension fund, for example, with a lot of money to invest, does not come to Canada because we are nice people or, as the Prime Minister says, because the world needs more Canada. That is just naive. Investment money goes where it can earn a rate of return. It is a very competitive market.
The LNG sector in Canada is a very good example of that. LNG Canada is building a large export terminal near Kitimat, British Columbia, for shipping clean, ethical liquid natural gas to world markets, to our trading partners, so they can replace dirtier burning coal. This is a partnership among some very large international corporations, such as Shell Canada, Korea Gas Corporation and Mitsubishi Corporation, and there are a lot of foreign investment dollars involved here.
This is what the world needs more of: more Canadian, clean, ethical liquid natural gas to help our trading partners get off coal. Unfortunately, this is not according to our Prime Minister, who just recently told the German chancellor that there is no business case to be made for Canada supplying Europe with liquid natural gas so that Europe can reduce or get rid of its dependency on Russia. Investors need to hear that kind of talk only once from our Prime Minister and they head for the exits.
Happily, for the investors, there is a place for them to go. Late last year, the White House announced that it will work with the industry to ensure that U.S. liquid natural gas is available to replace Russian natural gas in the European market. Apparently there is a business case to be made, after all. The world smiles at Canada's naïveté.
That is where we are after eight years of Liberal mismanagement of our economy. The fundamental problem with the way the Liberal government has been managing, or rather mismanaging, our economy is that it does not look to the fundamental economic principles.
Take, for example, our economic productivity metrics. Canada lags, in a significant way, behind our largest trading partner, the United States. For every dollar that American workers pump into their GDP, their Canadian counterparts add 75¢ to our national economy. This does not mean that we are not working as hard as the Americans. We may be working harder than the Americans. It is just that we do not have the tools. We do not have the best tools available. We are lagging in investing in our tech sector and we are not investing aggressively in growth industries.
Also, there is too much red tape, too much useless bureaucracy, which just gets in the way of hard-working Canadians using their ingenuity to grow our economy. This is what our leader, the member for Carleton, calls “gatekeepers”, who are just standing in the way. Let us get rid of them.
Economists recognize that this productivity lag is a big, significant problem for Canada. Even our current Minister of Finance mentions this in her 2022 budget report and in her fall economic statement. She calls it “Canada's Achilles heel”. She understands the problem, but it is too bad that her boss does not seem to be paying attention to that.
The former minister of finance actually underlines that. He agrees with the current Minister of Finance. In his recent book, he says this: “productivity improvement is the most important issue on our agenda”. It is not “one of the most important” but “the most important”. However, in his words, “neither the PM nor the Prime Minister’s Office saw the need to address our anemic growth”.
That is where we are. After eight years of Liberal mismanagement, everything seems broken, including our economy. What Canada needs is a strong Conservative government that understands the basic principles of economics and how to grow the economy for the benefit of all, and that means working with foreign investors to attract investment money to Canada.
When we are talking about foreign investment, it is important, in my opinion, to reflect on where we are today in relation to where we were 50 years ago.
In 1974, when the Investment Canada Act's predecessor, the Foreign Investment Review Act, was the law, intangible assets, which are things that cannot be picked up with a forklift, ideas in our head like intellectual property, copyrights, trademarks and patents, accounted for only 17% of the S&P 500's assets by dollar value.
If we fast-forward a decade, when the old act was replaced with the current Investment Canada Act, which we are talking about today, the intangible assets ratio had doubled to 32%. After that, it just accelerated. Today, it stands at roughly 90% of the S&P 500's total assets by dollar value.
Let us move a little closer to home, to the Toronto Stock Exchange, a less technology-driven exchange. There, the comparable number is 70%. The European comparable number is 77%. This is hard data that Canada lags in developing our knowledge-based economy, and that is part of the reason why our productivity numbers are lagging.
Where are we after eight years of a Liberal government? We have low productivity numbers, a lack of investor confidence in Canada and a lack of focus on our knowledge-based economy. It really is time for a change at the top.
Today, we are talking about Bill C-34, an act to amend the Investment Canada Act. The parliamentary Committee on Industry, Science and Technology studied this a couple of years ago. It is too bad that the minister did not pick up on all the recommendations. That report highlights the need for foreign investment in the tech industry, but it also points out some of the challenges and risks.
If we are attracting money from non-friendly, non-democratic countries, they may profit more from that than we do. One example is a state-owned enterprise funding a research chair at a world-class Canadian university. At the end of the whole process, after a lot of contributions by Canadian brainpower into new intellectual property, the foreign company ends up owning it. That is a big risk. I am happy to see that the federal government has finally zeroed in on that.
One of the recommendations, recommendation 1, as my colleague mentioned already, was not picked up by the minister when he drafted Bill C-34. That recommendation would require that the valuation threshold for prospective acquisitions of control of Canadian assets or shares by state-owned or state-controlled enterprises must be reduced to zero. That being said, every proposed transaction that would transfer direct or indirect control of a Canadian corporation or assets to a foreign-owned enterprise would be scrutinized. I agree with that. It is too bad it was not picked up in the bill.
We will be supporting Bill C-34 at second reading, in principle, so that it can go to committee, where hopefully it will pick up recommendation 1. We will work diligently at committee to make sure that Bill C-34 comes back better for third reading.