Mr. Speaker, natural resources are a source of immense wealth for Canada. In this sector, as in many others, foreign investment is an important lever in the Canadian economy. It creates jobs and encourages the exchange of knowledge and technology.
In the oil and gas sector, foreign companies' assets are worth nearly $181 billion, according to Statistics Canada. In comparison, Canadian companies' assets are worth $337 billion.
The purchase of Canada's 12th largest oil and gas company, Nexen Inc., by China National Offshore Oil Corporation, or CNOOC, for $15.1 billion clearly illustrates a growing trend. It reminds us that with the tremendous wealth that we have in this country comes great responsibility. We must develop our resources responsibly and in such a way that our wealth benefits all Canadians.
Foreign investments are increasing in the natural resource sector, especially from state-owned enterprises like CNOOC. Chinese investments rose from $113 million in 2004 to $14.1 billion in less than a decade. A strong trend along the same lines has also been noted in the case of companies from the United Arab Emirates, Russia, Singapore and France.
In fact, investments from state-owned enterprises are targeting the natural resources sector more and more. In 2009, foreign assets in the oil and gas sector accounted for 35%. The proportion of foreign assets involved in the oil sands development, for instance, is becoming particularly high.
Surprisingly, it is the CEOs of Canadian oil companies who are beginning to worry about the limits on foreign acquisitions.
Top oil industry executives are asking Ottawa for rules to protect Canadian ownership of major oil sands companies from a flood of foreign investment expected in the sector.
Canada’s oil sands contain the third-largest crude oil reserves in the world and are a strategically critical resource for the country.... [They note that] the deal signals growing foreign interest in the oil sands and insist [that] Ottawa needs to ensure a substantial level of domestic ownership as more deals loom.
It is more important and timely than ever to review the Investment Canada Act and, in particular, the murky net benefit to Canada provisions that the Minister of Industry must determine if he is to approve a foreign takeover, such as CNOOC's purchase of Nexen. At this juncture important weight must given to strategic considerations about the ownership of our natural resources far beyond the time horizon of the deal whose merits Canadians are debating.
As Murray Edwards, the CEO of Canadian Natural Resources Limited, one of Canada’s biggest energy companies and a major oil sands player, put it:
I think it is important to get some ground rules in place before the next one.
The NDP could not have been clearer. We are calling on this government to launch public hearings so that Canadians from all backgrounds and experts can have their say regarding CNOOC's plans to purchase Nexen.
For three years now, the NDP has been calling for a review of the Investment Canada Act. According to Industry Canada, nearly 15,000 Canadian companies have been purchased since that legislation was passed in 1985. Only two attempts have been blocked. We have a review process that is a complete farce, whereby the transactions are either approved or blocked depending on how the decision will affect the government's popularity.
“Net benefit to Canada” is not clearly defined in the legislation, which causes uncertainty for both the investors and the communities that are likely to be affected. Ultimately, the Minister of Industry is the only person who has the authority to decide whether the transaction provides a net benefit to Canada.
Again, the NDP's position on what constitutes a net benefit could not be clearer. The purpose of the Investment Canada Act:
...is to encourage foreign investment that brings new capital, creates new jobs, transfers new technology to this country, increases Canadian-based research and development, contributes to sustainable economic development and improves the lives of Canadian workers and their communities, and not foreign investment motivated simply by a desire to gain control of a strategic Canadian resource...
This definition of net benefit to Canada is taken from the NDP motion that the government unanimously supported in 2010. It expresses a clear and unequivocal desire by the House to amend the Investment Canada Act.
By voting in favour of the motion, the Conservative government supports the NDP's key demands. The government accepted the requirement of mandatory public hearings involving the communities affected by a transaction under review, and the public disclosure of all the conditions attached to the approval of an acquisition.
The NDP motion also asked that the legislation provide sanctions in the event of a breach of the conditions attached to a transaction. The Conservatives did not honour that promise, unfortunately. Experts from the firm Blakes, Cassels & Graydon also underscored the importance of broader consultations among the stakeholders, in order to provide opportunities to discuss the concerns of the industrial sectors, the unions, environmental groups and the affected communities.
Concerns over our country's national security should take greater priority in the debate over ownership of our natural resources. The Canadian Security and Intelligence Service has also issued warnings regarding foreign acquisitions in key sectors of the economy. Such is the case when it comes to intellectual property and technology transfers.
It is no surprise that the criteria in the Investment Canada Act that affect issues of national security are just as vague as those governing net benefit.
It is solely up to the minister to determine whether a foreign investment poses a risk to national security. That is purely arbitrary. In the United States, the law specifies that a committee must examine foreign investments and immediately consider that national security may be at risk when foreign investments touch on crucial sectors, such as infrastructure, mining, transportation, energy and key industrial capabilities.
In short, where American law is clear, Canadian law is vague.
We are at a crossroads. The concerns of Canadians, Conservative ministers and backbenchers are unequivocal. Private sector executives are asking for clearer rules for foreign takeovers. And so is the NDP.
It is time for the government to make good on its promises and review the Investment Canada Act. It is time to consult Canadians about one of the most significant transactions in the history of this country, a transaction that will create an important precedent for our foreign investment policy.
The NDP is calling for public hearings to be held to allow the various stakeholders to have their say. We are asking the government to finally go ahead with a complete review of the Investment Canada Act. We are asking that the act's objective be to promote foreign investment while fostering the development and prosperity of Canadian communities and the creation of high-quality jobs. We are asking for investments be made in accordance with the laws and governance best practices, in an environmentally responsible way and with the utmost transparency.
We owe it to Canadians to exercise exemplary diligence.
