Mr. Gordon Ritchie (Dauphin):
Mr. Speaker, in speaking in this debate on foreign ownership I should like to put forward some ideas of my own on the problems involved in this issue. It seems to me that one of the most important facets of foreign ownership and control of the Canadian economy is to have some clear idea of what the different types of foreign investment are and their effect on the Canadian economy. Government statistics indicate that Canada's liabilities to foreigners as at the end of 1970 amounted to a little over $49 billion. However, only half of that sum was foreign investment in companies controlled by non-residents, including overseas owners as well as those in the United States. The rest consisted of financial investments by non-residents in stocks of Canadian companies, bond issues of Canadian governments and corporations, and short-term investments. Certainly this part of foreign investment in Canada does not represent ownership and control in any sense.
I should like to look at some aspects of this particular half or portion of foreign investment. The present NDP government of Manitoba has been a large borrower in the United States market since it came to power. Its premier, Mr. Schreyer, had only been in office a couple of weeks
[Mr. Deputy Speaker.)
when he found it necessary to go to New York to arrange a loan. Just this week German financial interests made a loan to the government of Manitoba, which presumably was just a roll-over. This is an indication that the province of Manitoba needs foreign money to carry on its business affairs.
This morning the Montreal Gazette reported that the New York market had raised a loan of $150 million for the government of Quebec. This loan was defended by the premier of that province as being necessary and useful to the province. The James Bay project, with which the province of Quebec would like to continue, demands a $6 billion investment, probably even more, and it is considered there is no way that this money can be financed, given the present state of the Canadian economy, within Canada. Without these borrowings by various provincial governments, the provinces would not have been able to proceed with the building of these schools, hospitals and highways at anything like the volume we currently enjoy. I do not think there is anyone in this House who would be willing to say the provinces should have been curtailed in their borrowing rights if that had meant a reduction in any of the social services our people enjoy. Indeed, it is well recognized that the federal government has been most adamant in forcing on the provinces a high level of social services.
Recently, there has been an inflow of capital into Canada for mortgage loans for residential buildings. Certainly, in this case ownership and control remains in Canada. When it is considered also that Canada has abroad $21 billion worth of investment, this helps in turn to off set the flow of capital into Canada and bring us into balance. If you subtract the $21 billion from $49 billion, you get to the stage where we have a net imbalance of $28 billion. It is perhaps not so bad, when you consider that our gross national product is approaching $100 billion a year, to have a net deficit of $30 billion. That is not so great considering the immature state of development of our economy.
For instance, the recent tax legislation goes further in the way of limiting foreign securites that Canadian pension funds can buy, presumably on the philosophy that savings which are available for investment in stocks should be bottled up in the Canadian market. Canada wants to keep this money at home, but at the same time wishes to obtain free access to the United States capital market. We have indicated this in many ways, particularly in respect of borrowings for Canadian provinces. In some ways it seems to me we are kind of wanting to have it both ways. We want free access to the New York market but we propose to limit the access of Canadian capital to the U.S. market. All this makes for a certain amount of trouble.
It seems to me, whether we like it or not, United States investment is one of the principal vehicles of technological progress we have available to us. The hon. member for Waterloo (Mr. Saltsman), who spoke just before me, mentioned that his study showed Canadian manufacturing was superior to manufacturing by foreign-owned companies. If that is so, it seems unusual that we have one of the highest tariffs in the world to protect our manufacturing industry.
June 5, 1972
In the last two years we have seen the government move in the textile industry so that foreign textiles have been kept out and have largely disappeared from our shelves. United States investment, with its large technological know-how, seems to be needed by us for at least the foreseeable future. If this U.S. technological know-how is unavailable or closed to us, as well as other technological know-how from western Europe and Japan, surely we in the long run will be poorer for this. It is doubtful whether our citizens would put up with a lower standard of living than our neighbours enjoy, particularly to the south of us. Technological know-how from other jurisdictions surely increases rationalization and modernization in our own economy. It forces our manufacturers to more productivity and presumably increases the standard of living of all our citizens.
In the recent tax changes made by the Minister of Finance (Mr. Turner) when he presented his budget greater stress was placed on tax incentives for the manufacturing industry. How will we obtain this high level of technology in manufacturing, particularly when it is recognized that our high priced manufacturers must sell largely in the United States market, unless we are willing to procure technological know-how from other countries?
In respect of Canadian banking institutions, it is pointed out they are doing business with other countries. Apparently, as Canadians, we are happy to have them do this, yet we have designated banking as one of those segments in which we do not wish any foreign investment. So, it seems in this area we have considerable differences of opinion and a collision of ideas.
Official statistics suggest there is a high percentage of foreign ownership and control in certain of our industries such as petroleum, chemical, rubber, machinery and manufacturing. It has been found that when a corporation changes from being foreign-owned to Canadian-owned it does not necessarily change its way of doing business or does a better job so far as the Canadian public is concerned. For instance, the CPR has been majority Canadian-owned just in the last decade, yet have there been any discernible changes in the policies of the CPR? I have yet to see them. It is just as actively engaged in discouraging travel by passengers as it has been in the past. I met one citizen who made the journey from Lethbridge to Winnipeg without ever having to turn in his ticket.
In the case of petroleum and natural gas, the recent decision of the National Energy Board, which was strictly political, to not export natural gas is an indication that this industry can be effectively controlled without foreign ownership. Without foreign investment there would at the present time be no western petroleum industry. This has all been developed with United States capital and a little western Canadian capital. Eastern money was not available or eastern investors were not interested in investing in the western oil industry at least to the present time.
It is often said that foreign investment is capital intensive and, therefore, we should not encourage it because it does not employ a lot of labour. The province of Alberta, with its rapidly growing cities of Edmonton and Calgary, demonstrates that oil and gas create a climate for the employment of a large number of people. It is estimated that over one million people are dependent in western
Regional Economic Expansion
Canada on the oil and gas industry. This represents 20 per cent of the total population of western Canada.
Subtopic: FOREIGN TAKEOVERS REVIEW ACT
Sub-subtopic: MEASURE TO PROVIDE FOR CONTROL OF FOREIGN OWNERSHIP OF CANADIAN COMPANIES