Debates of Feb. 17th, 2023

Questions Passed as Orders for Returns

[The Deputy Speaker, Conservative, Chris d'Entremont]

Is that agreed?

[Some hon. members]

Agreed.

The House resumed consideration of the motion that Bill C-34, An Act to amend the Investment Canada Act, be read the second time and referred to a committee.

National Security Review of Investments Modernization Act

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Mr. Speaker, I am pleased to rise in the House today to speak to Bill C‑34, the national security review of investments modernization act, which was introduced by the Minister of Innovation, Science and Industry.

As the minister, my colleague from Saint‑Maurice—Champlain, mentioned, this bill is an attempt to update and strengthen the Investment Canada Act through seven amendments.

I will not list them all, but I will say that the government is seeking to streamline the minister's ability to investigate national security reviews of investments, strengthen penalties, create a list of industries in which acquisitions would automatically be subject to national security reviews, give the minister the power to impose interim conditions, remove the Governor in Council from the process for making an order for further national security reviews and substitute the minister, and improve coordination with international partners.

The act was last modernized in 2009. It is true that an update is needed. As my colleague from South Shore—St. Margarets and shadow minister for industry mentioned, I can confirm from the outset that we will be voting in favour of this bill at second reading. We will, however, work to make improvements to it.

If there is one phrase that sums up how we feel about this bill, it is “too little, too late”. After eight years of this Liberal government approving countless acquisitions of Canadian companies by state-owned firms, we are skeptical that protecting our national security interests is important to this government.

There is no shortage of examples of breaches. There have been numerous cases over the past few years where this government failed to take the real threats posed by foreign investments seriously.

I am proud to be a member of the Standing Committee on Industry and Technology. Over the past two years, we have examined several cases of government failures during transactions and contracting processes that had the potential to compromise national security.

I will share a few examples, some of which are very disturbing.

In January 2022, the Minister of Industry failed to follow his own guidelines when he fast-tracked the takeover of the Canadian company Neo Lithium by Chinese state-owned Zijin Mining without a national security review.

It seems to me that when a company controlled by the Chinese Communist regime wants to buy a Canadian company, that should raise a red flag. Unfortunately, that did not happen in this case. We are talking about rare materials that are important in dealing with climate change, for making more batteries and such. Lithium is an extremely important element in the production of batteries. A review should have been done.

As I just mentioned, this is a Canadian company specializing in critical minerals, like lithium. Unfortunately, this government did not sound the alarm or issue warnings. We should already be doing everything we can to protect our companies in such a key sector, but, when the buyer has ties to the Chinese Communist regime, that is stating the obvious. A serious and rigorous review should have automatically been considered.

The Standing Committee on Industry and Technology undertook an urgent study on this subject to investigate this questionable transaction. Following this study, we made three recommendations.

The first recommendation reads as follows: “That the government create a formalized and transparent process...by which government departments provide advice to the Minister...regarding decisions made under the Investment Canada Act”.

The second recommendation reads as follows, “That the Minister issue a notice...for all investments by firms from authoritarian regimes considered to be state-owned enterprises under the Investment Canada Act”.

It is worth noting that in China, the government often controls many companies, either partially or fully, through various means, so we need to have a closer look at that.

The third recommendation reads, “That the Minister release in a timely manner a full and comprehensive Critical Minerals Strategy”.

A year has passed, but it is clear that nothing has been done in that regard, unfortunately.

I will give a second example of a dubious contract. In December 2022, the RCMP awarded a contract for sensitive communications equipment to Sinclair Technologies, which is a subsidiary of Norsat.

It is important to note that Norsat, which was founded and based in Richmond, British Columbia, had itself been acquired by Hytera Communications. Who owns Hytera?

It is headquartered in China and is therefore partly owned by the Communist regime of the People's Republic of China. The company is even a major supplier to China's national security department. The $500,000 contract was awarded without any thorough investigation or verification, even though it is known within the federal public service that China and the companies it controls have attempted to interfere in Canadian affairs.

When the media broke the story, the minister responsible took swift action and cancelled the contract. Still, it is astounding that, once again, no one in government saw this coming, no one realized how dangerous the situation was.

Hytera has been charged with 21 counts of espionage in the United States. President Biden has banned the company from doing business in the U.S., but it is free to operate here, no problem. The Prime Minister trusts everyone. Forgive me for questioning the severity of what the government wanted to do at that time.

I have one final, particularly troubling example that I would like to present here. It was identified by the Standing Committee on Government Operations and Estimates. In 2020, the Minister of Foreign Affairs awarded a contract to the Chinese company Nuctech, founded by the son of the former secretary general of the Chinese Communist Party, to supply X-ray equipment to 170 Canadian embassies and consulates. The contract was worth $6.8 million.

Although it was assured that this equipment would not be connected to embassy networks, the contracts included delivery, installation, and maintenance. Again, this is a question of national security. It is extremely important to verify these things.

During his testimony before the committee, David Mulroney, Canada's former ambassador to China, had some very harsh, but very fair, words for the government. He said that the experience gives us a troubling glimpse into this government's incompetence in dealing with China, considering that it has received clear, daily warnings that China is a strategic challenge to our country. However, there is no sign that the government is any more aware, no sign it has developed a greater sense of urgency to identify and better manage China-related issues. There is no evidence of any efforts to galvanize the government as a whole. All departments and agencies need to make an urgent effort to ensure that this does not happen.

This shows an appalling lack of leadership. Once again, history has repeated itself. We are hoping for changes to the bill. After second reading, it will go to committee, where we will be able to propose amendments.

I could say a lot more about this bill, but it is no different from everything else. Everything is broken.

[Jenny Kwan, NDP, Vancouver East, BC]

Mr. Speaker, the Harper government increased the threshold above which a foreign takeover of a Canadian firm is reviewed, from $300 million to a billion.

Does the member stand by that decision or will he support reducing the current threshold to zero, so that every prospective transaction for either state-owned or state-controlled enterprises triggers a review?

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Mr. Speaker, when we made that decision several years ago, the reality was that the value of international investments was much higher. We wanted the flexibility to conduct the reviews for contracts within those amounts.

Yes, I agree with the amounts. Given the current cost of living, the cost of building or repairing a home or buying a business has increased spectacularly because of the inflation caused by the current government. Inevitably, greater flexibility was required in conducting these reviews.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Mr. Speaker, my colleague raised some very troubling points in his speech.

There seems to be a trend. Year after year, the number of foreign investments made in Canada goes up, as does their value. According to the latest available data, there were 1,255 applications for a total of $87 billion. Only eight of those applications were reviewed.

This bill would bump the number of applications reviewed up a bit, to 24. That is barely 2%. It does not sound like that is enough.

What should the government do to improve this bill?

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Mr. Speaker, I thank my Bloc colleague for that very important question.

We will vote in favour of the bill at second reading. Together, we can make sure all the necessary elements are in place to do a review. Obviously, China is not the only country that could pose a national security risk to Canada. We want to work together to make sure the strictest standards and safeguards are in place to prevent incidents like those we have seen in recent years.

[Brenda Shanahan, Liberal, Châteauguay—Lacolle, QC]

Mr. Speaker, I am very pleased to hear that the Conservative Party will be voting in favour of this bill. It is important to make investments before things get difficult. Can he comment on the fact that it really is important to modernize the international trade regulations?

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Mr. Speaker, I completely agree with my colleague that we need to implement the necessary safeguards to prevent national security risks for Canadians, whether it be in telecommunications, business or health. In every area, we need to ensure that these safeguards are broad enough to ensure that nothing harmful gets through and avoid this type of incident.

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

Mr. Speaker, in the questions and responses, I think there has been some confusion about what this bill addresses, which is investment by foreign state-owned enterprises as opposed to foreign investment that is private and not from authoritarian state-owned enterprises. I wonder if the member could use the remaining time to ensure that we understand the difference.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Mr. Speaker, my colleague is correct. Indeed, companies run or controlled by entities such as China, which is a communist regime, pose a risk. The threat to Canada comes from that type of country. There is a fundamental difference between private companies and companies run by countries.

[Tracy Gray, Conservative, Kelowna—Lake Country, BC]

Mr. Speaker, it is always a pleasure to rise on behalf of my constituents from Kelowna—Lake Country.

I am here today to speak on Bill C-34. Since Confederation, people from all over the world have believed in Canada as a place worth investing in, but an open-door policy for investment will only improve the public good if we keep our eyes wide open to see who comes through our door.

In this, the Liberals have proven far too lax and have been asleep for eight years. It is a different time than it was generations ago and different than even eight years ago. A business that leaves its door open and unattended would swiftly go broke. So, too, would a country that does not recognize the difference between an investing free market ally and untrustworthy regimes.

I am glad, in the name of improving our economic and national security, that this legislation has been put forward in this bill before us today to strengthen the Investment Canada Act, but I cannot hide my disappointment that the Liberals have dragged their feet for eight years to do so and still provide legislation that, if I am being honest, is really only half-finished.

What we have before us is a bill that asks Parliament to protect the security of foreign investment by granting more power to the very ministers who ignored foreign investment threats. Traditionally, when the security guard falls asleep, he does not get a promotion the next day. The laundry list of these instances runs quite long in the eight years of the Liberals in power, so I will only provide a few examples of the government's negligence in the name of time today.

In 2017, the Minister of Industry failed to request a full national security review of the acquisition of B.C.-based telecommunications company Norsat International and its subsidiary, Sinclair Technologies by the China-based Hytera Communications.

In 2019, that minister failed again to request a full national security review when the Chinese Sinomine Resources purchased the Manitoba-based Tantalum Mining Corporation, one of Canada's largest lithium producers.

In 2020, the Minister of Foreign Affairs approved another China-based company in Nuctech to supply security equipment to 170 Canadian embassies and consulates.

In 2022, that same foreign affairs minister then became the Minister of Industry and approved the takeover of Canada's Neo Lithium Corp. by a Chinese state-owned enterprise with no national security review.

To talk about this one for a moment, this undermined Canada's supply chain opportunities. Lithium is classified as a critical mineral in Canada, which Ottawa says are critical to Canada's economy and imperative to battery storage, in particular for the electric vehicle industry. The regime of China is establishing global dominance on securing critical mineral assets and intellectual property, which are imperative to high-tech manufacturing, including electric vehicles. This is a prime example of when the subjective authority is given to one person, a minister, as opposed to having solid laws and policies.

Just last month it was discovered that the Minister of Public Safety allowed the RCMP and the Canada Border Services Agency to sign equipment deals with Hytera Communications despite the United States having banned them from doing business after charging them with 21 counts of espionage. Communications technologies, security equipment and lithium mining are integral parts of Canadian national security and the security of our allies.

Lithium mining and the export of other critical minerals are vital to breaking western reliance on Chinese-made electronics. We are blessed in Canada with some of the continent's greatest quantities of minable minerals. Still, as I have outlined today, the Liberal government has been more receptive to providing access to our natural resources to our foes than to our friends. State-owned enterprises are not operating separately from the interests of their centralized autocratic governments.

Sadly, it has taken until year eight of the Liberal government to realize that. It has also taken it eight years to develop a critical minerals strategy, leaving us behind in supplying ourselves and our allies. I will mention that the Liberal strategy on critical minerals really is not a comprehensive strategy.

The International Energy Agency forecasts that by 2030, the production of electric vehicles could reach 43 million units per year, with production valued at more than $567 billion U.S.

Robin Goad, president and chief executive officer of Fortune Minerals Limited, said that his company has been speaking with the federal government about critical minerals for more than five years but has yet to see substantive action. Their proposed mine would supply Canada with minerals like cobalt, gold and copper, and provide much-needed employment to Canadians in the Northwest Territories. Mr. Goad put it best when he said of the government, on critical minerals, that “it's all smoke and mirrors right now” and “It's time we stop talking about this and actually [start] doing something.”

Mined-in-Canada cobalt, graphite, lithium and nickel could become made-in-Canada batteries supplying our allies' electric needs while improving our environment. Instead, the Liberals chose to drag their feet on clean, green prosperity for Canadians. A Conservative government will do something. We will recognize that our natural resources are Canadians' opportunities for prosperity, not bureaucracy.

I previously sat on the industry committee and some of this work has been done on previous studies, including the critical minerals study and the study on the acquisition of Neo Lithium. The witness testimony during the Neo Lithium study brought out how the discretionary nature of the current legislation has left Canada vulnerable. The informal decision-making process has had little transparency and accountability. As well, testimony stated how having a government department lead a national security review process, instead of those who are security experts, was concerning on how this could protect Canada's assets.

Similarly, Conservatives at the industry committee are prepared to do the hard work in amending this legislation to enforce the precautions the Liberal ministers consistently forgot to take.

To summarize, on these changes to the Investment Canada Act, it is a very difficult world right now, with unstable regimes in the world. The Liberals have been asleep for eight years, and this has left us vulnerable. This has been partially studied already at the industry committee, of which I was formerly a member.

Under the Prime Minister, Canada has failed to conduct full security reviews on acquisitions within Canada by Chinese regime state-owned enterprises. This is at the same time when the Prime Minister cannot find a business case for LNG while Germany and Japan are begging for it.

Conservatives will work hard to create jobs, bolster our allies and protect Canada's intellectual and resource assets. Conservatives want to ensure that this long-overdue update of the Investment Canada Act legislation features an automatic review system, as well as a net benefit analysis of any investment by a state-owned enterprise. This is just plain common sense. We would not wish to allow the entry of foreign state competitors into critical areas of Canada's security and economy.

Similarly, Conservatives will seek to allow the government to list and completely prohibit state-owned enterprises from countries with which Canada should not be doing business at this time. I am sure no constituent of mine would wish to see a Putin-backed enterprise buying into any Canadian company.

Let us ensure that this bill can draw that red line. We cannot have the uncertainty that would be created by selling off our critical mineral assets when we need these minerals for our modern world, including for electric batteries.

After eight years of blindfolds from the government on foreign acquisition of Canadian companies, intellectual property, intangible assets and the data of Canadians, Conservatives at the industry committee will do what we can to ensure that this bill fully protects our economic and national security interests from nations that do not wish us well. We need to encourage investment, while at the same time protecting Canadian interests.

[Mark Gerretsen, Liberal, Parliamentary Secretary to the Leader of the Government in the House of Commons (Senate)]

Mr. Speaker, the necessity for this legislation, given the changes that have been happening, is extremely important. The member in her speech talked about the fact that things are different than they were 20 years ago or even just a few years ago. The reality is that, as we look to attract new investment and continue to open our country to investment from the world, we need to have secure legislation in place to ensure that the integrity of our economic system and our political system is kept in place.

I am wondering if the member can comment on how we can properly balance that and bring that investment into our country, investment like that in my neighbouring riding of Hastings—Lennox and Addington, which is represented by a Conservative member, with the largest battery-manufacturing plant in North America. How do we ensure that we can have that proper balance in our country while also bringing in economic activity?

[Tracy Gray, Conservative, Kelowna—Lake Country, BC]

Mr. Speaker, absolutely, this is part of why this legislation is very important. We also need to add in a few other things that Conservatives will be asking for when and if this moves forward, so that we can protect Canadian interests.

It really comes down to looking at the regimes with regard to state-owned enterprises. There were a number of recommendations that were made at the industry committee. Not all of those recommendations went into this act. That is one of the things we will be looking at. There was a lot of testimony that went into that.

Conservatives will be bringing forth other recommendations to actually make this even stronger.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Mr. Speaker, I thank my colleague for his speech. I think we both agree that this bill needs to be improved. However, in my opinion, given the overly limited interpretation by law clerks in committee, any amendments that can be made are too often limited.

The Bloc Québécois believes that the government should introduce another bill to better control foreign investments in general, particularly with regard to retaining our corporate head offices, our economic levers and control of our resources.

What does my hon. colleague think about that?

[Tracy Gray, Conservative, Kelowna—Lake Country, BC]

Mr. Speaker, there are some parts of this bill that are very vague. As an example, the legislation does not make changes to the act's definition of a state-owned enterprise, and just that one piece, in itself, could be considered very vague.

I think we need to look at what recommendations for amendments are being brought forth by all parties. That work will, if this bill moves forward, happen at the committee stage, where all members can dig in the weeds, look at what recommendations everyone is bringing forth, assess them and go from there.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Mr. Speaker, I appreciate the work that the member for Kelowna—Lake Country did on the industry committee's study on this issue, in terms of this act, in the last Parliament, which made nine recommendations. This bill addresses only two of those nine recommendations. Recommendation 1 from that report, which I think would address a lot of the concerns of members, was that the threshold for investments made by state-owned enterprises in Canada, for the review on national security or net benefit, be reduced from $415 million to zero.

I would like to know whether the member has any views on that aspect.

[Tracy Gray, Conservative, Kelowna—Lake Country, BC]

Mr. Speaker, that is something absolutely worth considering and it should really be considered in this.

As I said in my speech, we know that it is a very different time than it was 10 or 15 years ago. We need to be amending our laws and our legislation to better reflect what the current environment is, the current economic environment and safety precautions, the current situation in the world. Based on the current environment that we are seeing with some of these regimes that are in the world, which have made very public what some of their plans are, we need to take that into consideration when developing legislation.

[Marc Dalton, Conservative, Pitt Meadows—Maple Ridge, BC]

Mr. Speaker, what should the number one job of a federal government be? I have always told my constituents that it is national security, our safety and security.

Last night, as I was preparing my remarks, I asked Dr. Google what the top priority should be for a national government. Lo and behold, up pops a website for Canada's federal government, which states, under “National Security”, “The first priority of the Government of Canada is to protect the safety and security of Canadians both at home and abroad.” That made me feel pretty good at first. I thought to myself that I was on the right track, and I was glad that the Liberal government places safety and security as its top priority. That made me happy. Unfortunately, I then felt disturbed when I started to think about it, because, as we have seen so much with the Liberal government, rhetoric and words are one thing, and doing is another.

Members might ask why. It is because I feel that so much of what the Liberal government and the Prime Minister do actually undermines the safety, security and protection of Canadians at home, within our borders.

The Liberals are weakening our justice system by removing mandatory minimums. There was a report recently in Vancouver that 40 or so criminals have done 6,000 crimes. That is the Liberal method, to catch and release. That is okay, I suppose, for fishing stocks, to catch a fish and let it go, but it is not good when it comes to criminals, when we have increased problems on transit with random attacks on people, and when a killer who is out on bail murders a police officer. This is not right. Canadians are not feeling protected at home by their justice system. It is a shame and a disgrace. It is not fulfilling the government's priority with respect to our security.

With respect to our national security, we have let our hair grow. Maybe that was okay back in the 1960s, but we have just let it go. We are thousands of troops short. We have obsolete equipment. The Liberal government said that it was not going to buy the F-35 fighter jets and instead decided to buy older planes, the F-18s, from the Australian air force. It has now decided that this is not working out so well and it had better get some new equipment. The Minister of National Defence has let things go with respect to our military.

I was also watching reports on Twitter and, big deal, Canada sent one tank to Ukraine. That was brought up in the House and the response was that it was actually four tanks, because three more are on the way. Meanwhile, the Ukrainians are losing hundreds of tanks over there, but Canada does not have much to send because our cupboards are bare.

This is personal for me, because I was raised in a Royal Canadian Air Force family. I was born in Germany and lived in bases all throughout Canada. Even from a young age, my mind was on the military and our national defence. I also served in the military after finishing high school.

Our national defence is not a priority. I will say that categorically.

Bill C-34 is an attempt to address an important national security risk, namely identifying and responding to economic security threats from foreign investments. I think this is good. The Conservatives will be supporting its moving to second reading because it needs a lot more teeth.

Much of what we have seen, and what I have seen since being elected in 2019, is just rhetoric. It is smoke and mirrors to make it look like the Liberals are doing something when they are not.

November 9, 1989, is a day that I remember well, along with the months and years that followed. What happened? The Berlin Wall that separated East and West Germany began to be dismantled. Numerous countries had been under communist regimes. Many are now part of NATO. There have been great changes. It was quite amazing. People were set free from communism without shots being fired in Europe. There was euphoria. It seemed miraculous, and maybe it was.

I found, as I have gone in my communities and talked to people, that those who are most concerned about what is happening in Canada in terms of freedom and security are those from eastern Europe who used to be under communist regimes. They are very concerned about what they see. They can see through the bluster of the Liberal government.

The United States became the only undisputed superpower. Western countries, including Canada, let our militaries go to pot. However, the world has changed in the past 30 years. Russia has armed itself to the teeth, and we have seen an invasion. We are coming to the first anniversary of the Russian invasion of Ukraine, and Conservatives support the efforts to oppose it, as do the other parties.

There is even more of a danger happening, and this has emerged in Communist China. China is an economic and military superpower that wants to extend its economic, military and political power and influence. It is threatening its neighbours. It is expanding control.

I have been to China, and it is a beautiful country, but its autocratic communist government is suppressing its own population. There is a lot of concern worldwide and among our military partners, whether it be Five Eyes, the United States, the U.K. or other countries, about what we are doing in Canada.

China has a larger navy than the United States. Our military partners are wondering why we are giving a country, a military and economic superpower like China, full access to secrets, our people and surveillance. It is a problem. My other colleagues have mentioned some of the problems we have had, such as Huawei, which actually used technology from Nortel, a Canadian company.

It is a big concern. This just came out a few hours ago in The Globe and Mail. It said, “China employed a sophisticated strategy to disrupt Canada's democracy in the 2021 federal election campaign as Chinese diplomats and their proxies backed the re-election of Justin Trudeau's Liberals...and worked to defeat Conservative politicians”.

[The Deputy Speaker, Conservative, Chris d'Entremont]

The member cannot use the name of a member even in a quote.

The hon. member for Pitt Meadows—Maple Ridge.

[Marc Dalton, Conservative, Pitt Meadows—Maple Ridge, BC]

Mr. Speaker, I should have edited that quote.

Some of the technology has gotten into Canada Border Services, other security and RCMP. We need to change this. We need to protect Canadians and pass some of the amendments the Conservatives have brought forward.

[Ken Hardie, Liberal, Fleetwood—Port Kells, BC]

Mr. Speaker, it should be remembered that the former Conservative government signed a foreign investment protection act with China that protected its investments in the event that Canada wanted to change legislation or do things in the interests of security.

Can the hon. member reflect on what the future of FIPA might be now that China and other countries have shown their true colours?

[Marc Dalton, Conservative, Pitt Meadows—Maple Ridge, BC]

Mr. Speaker, in 2017 there was a Chinese company called Hytera that purchased a B.C. company, Norsat. The Liberal minister of the day said that what was happening was no big deal. However, Hytera was brought up on 21 charges of espionage in the United States and banned from doing service; we invited them to do this.

We need to take care of business here and take our national security much more seriously.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Mr. Speaker, I thank my colleague for his speech. We know foreign investment is important in a globalized economy.

In 2001, which was before China became a member of the World Trade Organization, Jacques Parizeau wrote, “We do not condemn the rising tide; we build levees to protect ourselves.”

Unfortunately, weakening the Investment Canada Act has caused those levees to break. We agree that Bill C‑34 offers better protection, but it is not good enough.

I would like my colleague to comment on that.