Third reading of Bill C-34, An Act to amend the Investment Canada Act

By: The Hon. Diane Bellemare

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Hon. Diane Bellemare: I don’t have a written speech, but I’m prepared to share some thoughts based on everything I have heard and some of the evidence given at the Standing Senate Committee on Banking, Commerce and the Economy.

I would like to thank my colleague Senator Gignac for his kind words and his hard work. I would also like to thank Senator Carignan, the critic for this bill.

Let me put this bill in context. What does foreign investment in Canada amount to? Does it matter? My analysis of this bill is more in keeping with the context in which it is set.

To give you some idea, in 2021, the value of foreign direct investment in Canada was 3.3% of GDP. This represents an upward trend. As Senator Gignac pointed out, Canada is currently one of the world’s top recipients of foreign investment.

On average, between 2012 and 2021, foreign direct investment represented 2.1% of GDP. In contrast, investment by Canadians abroad — because Canadians do invest directly overseas — represented 4.9% of GDP in 2021. On average, over 10 years, investments by Canadians represented 3.3% of GDP.

We are therefore receiving and making foreign investments, and the investments that we are making exceed the investments that we are receiving. That is rather worrisome, but I looked at what is happening in the OECD. On average, foreign direct investments in OECD countries represent 1.1% of their GDP, and the investments that these countries make abroad represent 2.1% of their GDP.

In general, the countries invest more abroad than they receive. That reassured me a little about what is happening in Canada. However, our country’s numbers are high compared to the OECD average. How does Canada rank when it comes to global investments? The investments made in Canada represented 19.7% of the GDP in 2021. This means that, whether it be a good year or a bad year, we are talking about an average of 20% of the GDP when it comes to investments made in Canada. Investments made in Canada have dropped in recent years. Foreign direct investments represent about 10% of our total investments.

That is important. We have to pay attention to that, because our prosperity depends on it, particularly since, in general, the absolute value of Canada’s productivity is dropping. As a result, there is a legitimate threat to our prosperity.

Investments are important and foreign investments are a major part of that. We also need to understand that Bill C-34 amends the Investment Canada Act from a national security perspective. This bill does not include the notion of prosperity. We can come back to that.

Witnesses told us about their concerns, which can be divided into three categories. We heard testimony from witnesses who were concerned that, in the current geopolitical context of the Cold War, there needs to be a certain level of mistrust of certain foreign investments. Senator Carignan went over that.

On the other hand, we have received written criticism from others across the country who say that overly heavy bureaucratic regulations could drive foreign investment out of Canada and harm our prosperity. A balance must be struck between these two aspects. Another group of witnesses told us — and this criticism came up often in the Standing Senate Committee on Banking, Commerce and the Economy — that we must be increasingly aware of capital investments that are intangible, related to data and related to intellectual property.

Senator Deacon has experience with this approach and this aspect of investment. He has told the Standing Senate Committee on Banking, Commerce and the Economy many times that we need to be concerned about these intangible investments.

That dimension is absent from Bill C-34. In addition, prosperity has taken a back seat to security in this bill. That’s why the committee appended various observations to its report.

First, Senator Deacon suggested adding comments about putting greater emphasis on investments in intangibles. For greater clarity about that, I would like to quote from a brief that the committee received from Jim Balsillie of BlackBerry fame, who appeared before the committee previously. The brief stated the following:

Today’s economy is knowledge-based, data-driven, and increasingly underpinned by the machine learning capital. In such an economy, FDI is extractive —

 — “extractive” is the key word that’s important to understand —

 — where technology, knowledge and data assets, senior executive personnel, tax base and wealth effects can easily flow out of countries that receive foreign investments. Prosperity and security risks do not scale with size and type of buyer but with the nature of economic and security spillovers.

He said that we need to be careful and made the following suggestion:

It is critical that Canada builds capacity inside the Federal Government for governance of today’s economy.

That’s why Mr. Balsillie, Dan Ciuriak and others propose the following:

Canada needs to create a standalone agency that has the ability and expertise to examine all aspects of a transaction and provide a unified view of the costs and benefits to Ministers. Our major allies—the US, the UK and Australia—all have a single body responsible for reviewing foreign investment (CFIUS in the US, the Investment Security Unit in the UK, and the Foreign Investment Review Board in Australia), and Canada should adopt the same approach.

That being said, that is not the scope of the bill we are studying; this is a bill to improve security with respect to the current geopolitical context. That is why we have appended some observations to indicate that it would be important for Canada that we, parliamentarians, revise the Investment Canada Act more thoroughly.

For now, let’s move Bill C-34 forward. However, in our observations, we are asking the minister to come back and report in three years’ time on how well the objectives have been reached, with a view to broadening the scope of the Investment Canada Act to include not only security, but also prosperity. Given the Canadian context and our investment trends, these issues deserve particular attention.

Our observations are appended to the committee’s report and they are brief. With regard to intellectual property and data processing, the observations state the following:

Your committee believes it is important to ensure that government-funded intellectual property and treatment of personal data be considered as economic net benefit factors and that forthcoming regulations reflect that.

There is also a series of minor technical comments, particularly asking that the Minister of Innovation, Science and Industry report to parliamentarians within three years on the extent to which this bill is achieving its objectives.

With that, I thank you and invite you to vote in favour of the bill.

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