May 29, 1972

PC

Robert Gordon Lee Fairweather

Progressive Conservative

Mr. Fairweather:

That is the Pepin two step.

Topic:   GOVERNMENT ORDERS
Subtopic:   FOREIGN TAKEOVERS REVIEW ACT
Sub-subtopic:   MEASURE TO PROVIDE FOR CONTROL OF FOREIGN OWNERSHIP OF CANADIAN COMPANIES
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LIB

Jean-Luc Pepin (Minister of Industry, Trade and Commerce)

Liberal

Mr. Pepin:

Another basic aim of the bill is to deal with control rather than ownership. As everybody knows, these are not necessarily the same thing. For example, a widely held corporation can be controlled by a very few people. Consequently, throughout the bill reference is made to control. Now, control is more difficult to establish than ownership and this is why a system of presumption is to be found in the bill. This is a bit complicated, I will admit. There are two categories of presumptions in the bill. One is to help determine who must go through the review process before acquiring a Canadian company, and the other is to help determine when a takeover has taken place.

These presumptions are designed to simplify the administration of the law, both for the government and for business. They permit the responsible minister to look at the proportions of share ownership in the hands of foreigners and draw certain tentative conclusions. These tentative conclusions can be rebutted by the corporation. The reason for these presumptions is that while it would be relatively easy for the minister to determine the number and proportion of shares held in a corporation by various persons, only the individuals themselves know whether or not they have control. So, the procedure is that the minister will presume control in certain important cases and permit the individuals to rebut that presumption.

Cabinet looked at this problem at length, for at first glance it appears that the law would assume that a party was guilty until he proved himself innocent. But any alternatives we looked at could create greater difficulties. Since the individuals are the only persons who know who controls a company, the only alternative would be for the government to set up a rather elaborate investigative apparatus to snoop-to use a favourite word of the hon. member for Prince Albert (Mr. Diefenbaker)-into company records. This would be inimical to the Canadian way of life. It was decided to put the onus of proof on the acquirer of the enterprise being taken over. It should be relatively easy for the purchaser to satisfy the minister as to who really has the control of his company. There are several ways to do this. Filing shareholders lists is one way, the records of annual meetings is another and the presentation of affidavit evidence of the location of control of the company is still another way. The bill provides authority to the government to give advance opinion on such matters. Any decision by the minister about control should be challenged before the courts.

Speaking of these presumptions, I know that a number of Canadian controlled companies have been concerned

Foreign Takeovers Review Act

about the provision that where 5 per cent of the voting rights are held by foreigners, a company is presumed to be foreign controlled unless the contrary can be established. Some Canadian controlled companies have read this to mean that they cannot take over another Canadian controlled company without first consulting the minister. I am informed that this will not be the case. As long as the company knows that if challenged it could readily show that control lies in Canada, it does not need to consult or inform the minister.

Mr. Speaker, to conclude my comments, the government hopes that Parliament will be able to adopt this legislation before the summer recess and once it is promulgated, the screening process will obviously become operative. We know that there will be some disagreements on certain aspects of the bill. However, I think we will unanimously, or almost, recognize that it is, as a whole, useful and should be implemented as soon as possible.

My friend the hon. Minister of National Revenue begins today his consultations with provincial authorities. He will explain the bill's provisions to the provincial premiers and request their opinion on the matter. Their views, together with those of hon. members and other outside parties will be taken into consideration when the bill is referred for study to the committee.

Topic:   GOVERNMENT ORDERS
Subtopic:   FOREIGN TAKEOVERS REVIEW ACT
Sub-subtopic:   MEASURE TO PROVIDE FOR CONTROL OF FOREIGN OWNERSHIP OF CANADIAN COMPANIES
Permalink
?

Mr. R. Gordon L. Fairweather@Fundy-Royal

Mr. Speaker, it is significant that the Minister of Industry, Trade and Commerce (Mr. Pepin) is introducing this bill and not the Minister of National Revenue (Mr. Gray). If we wanted to search for the rationalization of the government's approach to the whole matter, perhaps the fact of the minister's imprimatur on the bill would provide the answer.

The minister speaks about division in the country. He mentioned particularly division amongst provincial leaders, but I do not think he mentioned the most significant division of all and one which we have watched for the last two years, the division in the Cabinet of this country.

Topic:   GOVERNMENT ORDERS
Subtopic:   FOREIGN TAKEOVERS REVIEW ACT
Sub-subtopic:   MEASURE TO PROVIDE FOR CONTROL OF FOREIGN OWNERSHIP OF CANADIAN COMPANIES
Permalink
?

Some hon. Members:

Hear, hear!

Topic:   GOVERNMENT ORDERS
Subtopic:   FOREIGN TAKEOVERS REVIEW ACT
Sub-subtopic:   MEASURE TO PROVIDE FOR CONTROL OF FOREIGN OWNERSHIP OF CANADIAN COMPANIES
Permalink
PC

Robert Gordon Lee Fairweather

Progressive Conservative

Mr. Fairweather:

What underlines this division, of course, is the fact that the Minister of Industry, Trade and Commerce was successful and the Minister of National Revenue now finds himself in the position of disassociating himself in a general way, and he said publicly, with the document entitled "Foreign Direct Investment in Canada"-

Topic:   GOVERNMENT ORDERS
Subtopic:   FOREIGN TAKEOVERS REVIEW ACT
Sub-subtopic:   MEASURE TO PROVIDE FOR CONTROL OF FOREIGN OWNERSHIP OF CANADIAN COMPANIES
Permalink
LIB

Jean-Luc Pepin (Minister of Industry, Trade and Commerce)

Liberal

Mr. Pepin:

Why is it then that he has been sent to the provinces to explain the bill?

Topic:   GOVERNMENT ORDERS
Subtopic:   FOREIGN TAKEOVERS REVIEW ACT
Sub-subtopic:   MEASURE TO PROVIDE FOR CONTROL OF FOREIGN OWNERSHIP OF CANADIAN COMPANIES
Permalink
PC

Robert Gordon Lee Fairweather

Progressive Conservative

Mr. Fairweather:

I think we should discuss all the divisions, that is all. I should like the record to be clear.

The minister says that the government is looking at other measures in the foreign investment field. The problem is that when this government looks at other measures, it continues the uncertainty that is endemic with this government in the whole economic field. The minister discussed the essayist Montesquieu. I think he said some-

May 29, 1972

Foreign Takeovers Review Act

thing to the effect that "changes in realities are more important than changes in the law". I think it is a pity that Montesquieu is not here to see some of the nonsense that goes on and perhaps if he were here he would say that the reality is that there is very little change in the law and very little change in our mores.

The debate in Parliament and the country about the very large foreign presence in the Canadian economy, and the capacity of Canada to make her own decisions about Canadian economic policy, is surely in no way joined by Bill C-201, the Foreign Takeover Review Act. The bill we are considering today has been variously described in the following terms, some of which have been trotted out by the minister himself, I suppose in anticipation of what we will say in this debate. It has been described as "one big zero", as being a surprisingly modest first step, as being just plain modest, as being hesitant, as being a little nibble, of failing to come to grips, of being weak and so on. I have exhausted my energy, but I can assure you that the record is filled with adjectives about the bill. One of the most interesting appeared in the New York Times which said that "the reaction of American business is one of satisfaction". This must surely rank as one of the understatements of this year.

If I read the newspapers correctly, the Minister of National Revenue has announced, and the Minister of Industry, Trade and Commerce alluded to this a minute ago, that there will be meetings with provincial premiers. What we must know is whether the comments and views of the provincial premiers might mean that changes will be made in the legislation. The Minister of National Revenue (Mr. Gray) said that it would be more a consultation and that we could not anticipate any changes in the legislation. This is a sort of bow to the cliche of participatory democracy. Surely, if the Minister of National Revenue is to be believed, the bow is accompanied with a slap. He says, "We will meet you my dear premier, but nothing in the bill will be changed because of the meeting."

On May 2, the Minister of National Revenue made his momentous announcement about how the government intended to deal with the phenomenon of foreign ownership of the Canadian economy. The minister tabled a document entitled, "Foreign Direct Investment in Canada." I find it curious that the document and bill should have come forward at the same time. The bill, presumably, arose as a result of this document, but really has nothing to do with the warnings which are received if one analyses carefully the document. The document thoroughly confuses the public, and one wonders why legislation dealing with a small aspect of the problem came so late, is so weak and will accomplish really very little. The foreign takeover legislation is well and good, provided it is carefully drafted, contains adequate appeal provisions and has, as an essential component, provision for strong provincial inputs on decisions as to whether a specific takeover is of significant benefit to Canada.

May I say this: the man who works in the pulp mill at Bathurst, New Brunswick, if he is lucky enough to hold the job, is not as interested in the debate on the Canadian life style as he is in his bread and butter. It really does not matter to the man working in that mill in Bathurst wheth-

er the capital behind the Bathurst mill is based in Montreal or in New York. We should remember this when discussing the whole question of investment; also, provincial assistance, direction and advice is necessary in order that there may be, pursuant to clause 2(2) of this bill, assessment in determining that any acquisition or control of a Canadian business enterprise is or is likely to be of significant benefit to Canada. Unless the provinces take a great part in the evaluation and formation of policy considerations that the minister enunciated both in that clause and in his speech today, the whole matter will fall flat.

It is small wonder that the Minister of National Revenue, I suggest with great respect to him, is anxious to dissociate his name from the report. Presumably, as a loyal member of cabinet, he supports the policy itself, because that is the only way he can continue in cabinet. He spent two years developing the policy in this area and has since seen most of his work shelved, as most hon. members would admit, or nicely wrapped in red and white.

Topic:   GOVERNMENT ORDERS
Subtopic:   FOREIGN TAKEOVERS REVIEW ACT
Sub-subtopic:   MEASURE TO PROVIDE FOR CONTROL OF FOREIGN OWNERSHIP OF CANADIAN COMPANIES
Permalink
LIB

Colin David Gibson

Liberal

Mr. Gibson:

Step by step, merely.

Topic:   GOVERNMENT ORDERS
Subtopic:   FOREIGN TAKEOVERS REVIEW ACT
Sub-subtopic:   MEASURE TO PROVIDE FOR CONTROL OF FOREIGN OWNERSHIP OF CANADIAN COMPANIES
Permalink
PC

Robert Gordon Lee Fairweather

Progressive Conservative

Mr. Fairweather:

Step by step? Step by faltering step.

Topic:   GOVERNMENT ORDERS
Subtopic:   FOREIGN TAKEOVERS REVIEW ACT
Sub-subtopic:   MEASURE TO PROVIDE FOR CONTROL OF FOREIGN OWNERSHIP OF CANADIAN COMPANIES
Permalink
LIB

Colin David Gibson

Liberal

Mr. Gibson:

No, step by careful step.

Topic:   GOVERNMENT ORDERS
Subtopic:   FOREIGN TAKEOVERS REVIEW ACT
Sub-subtopic:   MEASURE TO PROVIDE FOR CONTROL OF FOREIGN OWNERSHIP OF CANADIAN COMPANIES
Permalink
PC

Robert Gordon Lee Fairweather

Progressive Conservative

Mr. Fairweather:

By two steps? Which step?

Topic:   GOVERNMENT ORDERS
Subtopic:   FOREIGN TAKEOVERS REVIEW ACT
Sub-subtopic:   MEASURE TO PROVIDE FOR CONTROL OF FOREIGN OWNERSHIP OF CANADIAN COMPANIES
Permalink
LIB

Colin David Gibson

Liberal

Mr. Gibson:

No, no.

Topic:   GOVERNMENT ORDERS
Subtopic:   FOREIGN TAKEOVERS REVIEW ACT
Sub-subtopic:   MEASURE TO PROVIDE FOR CONTROL OF FOREIGN OWNERSHIP OF CANADIAN COMPANIES
Permalink
PC

Robert Gordon Lee Fairweather

Progressive Conservative

Mr. Fairweather:

What step?

Topic:   GOVERNMENT ORDERS
Subtopic:   FOREIGN TAKEOVERS REVIEW ACT
Sub-subtopic:   MEASURE TO PROVIDE FOR CONTROL OF FOREIGN OWNERSHIP OF CANADIAN COMPANIES
Permalink
NDP

David Lewis

New Democratic Party

Mr. Lewis:

Half step.

Topic:   GOVERNMENT ORDERS
Subtopic:   FOREIGN TAKEOVERS REVIEW ACT
Sub-subtopic:   MEASURE TO PROVIDE FOR CONTROL OF FOREIGN OWNERSHIP OF CANADIAN COMPANIES
Permalink
PC

Robert Gordon Lee Fairweather

Progressive Conservative

Mr. Fairweather:

By half step; that is no step.

Topic:   GOVERNMENT ORDERS
Subtopic:   FOREIGN TAKEOVERS REVIEW ACT
Sub-subtopic:   MEASURE TO PROVIDE FOR CONTROL OF FOREIGN OWNERSHIP OF CANADIAN COMPANIES
Permalink
PC

Robert Lorne Stanfield (Leader of the Official Opposition)

Progressive Conservative

Mr. Stanfield:

By a hop step, or a Russian steppe.

Topic:   GOVERNMENT ORDERS
Subtopic:   FOREIGN TAKEOVERS REVIEW ACT
Sub-subtopic:   MEASURE TO PROVIDE FOR CONTROL OF FOREIGN OWNERSHIP OF CANADIAN COMPANIES
Permalink
PC

Robert Gordon Lee Fairweather

Progressive Conservative

Mr. Fairweather:

I hesitate to take the advice of the hon. member, whose usual routine, to say the least, is to take a double step or two-step. I have something to say, if the hon. member can refrain from talking about steps, because this is a half step or, putting it in another way, not really a conclusive step. I hope the Hansard reporter is enjoying this, because our interchange is not adding anything constructive to this lamentably inadequate provision. I suppose, as parliamentarians, we should stand in some awe of the government's agility to sidestep the real decisions which ought to have been made as a result of the two-year study.

Topic:   GOVERNMENT ORDERS
Subtopic:   FOREIGN TAKEOVERS REVIEW ACT
Sub-subtopic:   MEASURE TO PROVIDE FOR CONTROL OF FOREIGN OWNERSHIP OF CANADIAN COMPANIES
Permalink
LIB

Colin David Gibson

Liberal

Mr. Gibson:

It is the opposition that does the real sidestepping.

Topic:   GOVERNMENT ORDERS
Subtopic:   FOREIGN TAKEOVERS REVIEW ACT
Sub-subtopic:   MEASURE TO PROVIDE FOR CONTROL OF FOREIGN OWNERSHIP OF CANADIAN COMPANIES
Permalink
PC

Robert Gordon Lee Fairweather

Progressive Conservative

Mr. Fairweather:

I hope that the hon. member will be able to make a speech-

Topic:   GOVERNMENT ORDERS
Subtopic:   FOREIGN TAKEOVERS REVIEW ACT
Sub-subtopic:   MEASURE TO PROVIDE FOR CONTROL OF FOREIGN OWNERSHIP OF CANADIAN COMPANIES
Permalink
IND

Lucien Lamoureux (Speaker of the House of Commons)

Independent

Mr. Speaker:

Order, please. The hon. member for Fundy-Royal (Mr. Fairweather) has the floor and should be permitted to make his speech.

Topic:   GOVERNMENT ORDERS
Subtopic:   FOREIGN TAKEOVERS REVIEW ACT
Sub-subtopic:   MEASURE TO PROVIDE FOR CONTROL OF FOREIGN OWNERSHIP OF CANADIAN COMPANIES
Permalink

May 29, 1972