July 4, 1972

?

Some hon. Members:

Agreed.

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

Prosper Boulanger (Assistant Deputy Chair of Committees of the Whole)

Liberal

The Acting Speaker (Mr. Boulanger):

Then we can move on to the next group of amendments, motions Nos. 5 to 9 inclusive.

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

Marcel Joseph Aimé Lambert

Progressive Conservative

Mr. Lambert (Edmonton West):

On a point of order, Mr. Speaker, may I respectfully suggest to Your Honour, in view of the fact that motion No. 5 moved by the hon. member for Oshawa-Whitby (Mr. Broadbent) has a thrust in one direction whereas motions nos 6 to 9 have a thrust in another direction, though they do have some superficial resemblance to each other to group them together for debate, that we debate motion No. 5 separate and apart from motions Nos. 6 to 9 inclusive, and that they be voted on accordingly. I did not raise this point when Mr. Speaker made his suggestions the other day with regard to

Foreign Takeovers Review Act

grouping, but I do make that respectful submission to Your Honour at this time.

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

Stanley Howard Knowles (N.D.P. House Leader; Whip of the N.D.P.)

New Democratic Party

Mr. Knowles (Winnipeg North Centre):

With respect to the same point of order, Mr. Speaker, I should like to support what has been requested by the hon. member for Edmonton West. It seems to me it is a bit unfair, particularly to our friends in the official opposition, that their motions Nos. 6 to 9, should be more or less attached to our motion. Although we think they are wrong, surely they have the right to press their point of view on a level equal to the level given to us. I therefore think it a good idea that No. 5 should stand by itself for the purpose of both debating and voting and that Nos. 6, 7, 8 and 9 should stand together for both debating and voting.

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

John Edward Broadbent

New Democratic Party

Mr. Broadbent:

Mr. Speaker, I should only like to add a few words to what has been said. It is not in respect of my friends literally and liberally to my right that a distinction should be made, but also in respect of my colleagues in this party who would not want any confusion to occur as a result of the suggestion that in substance our motions are essentially related.

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

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

Liberal

Mr. Pepin:

Mr. Speaker, knowing full well that my bill can pass only if the opposition agrees with it I will let them debate the matter. If we take them separately, that is motion No. 5 and then motions Nos. 6, 7, 8 and 9, the only thing I am losing is an argument.

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

Prosper Boulanger (Assistant Deputy Chair of Committees of the Whole)

Liberal

The Acting Speaker (Mr. Boulanger):

I will have to ask for the unanimous consent of the House to debate motion No. 5 separately.

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

Some hon. Members:

Agreed.

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

John Edward Broadbent

New Democratic Party

Mr. Edward Broadbent (Oshawa-Whitby) moved:

That Bill C-201, An Act to provide for the review and assessment of acquisitions of control of Canadian business enterprises by certain persons, be amended by deleting therefrom in paragraph (1) of subsection (2) of Clause 3 the figure "25 per cent" and substituting therefor the figure "5 per cent" and that paragraph (ii) of subsection (2) of Clause 3 be amended by deleting therefrom the figure "40 per cent" and substituting the figure "20 per cent".

He said: Mr. Speaker, I will be relatively brief in my remarks on this motion because the change was dealt with at some length in the committee. I am looking forward to the minister's explanation as to why he felt it necessary to change the bill from the form in which it was originally before being sent to the committee.

The thrust of my amendment would be in agreement with the essential recommendations of the government on this point. In other words, the percentages I proposed in this amendment are exactly those percentages which the government believed to be essential prior to all the advice it got from the business community in Canada. My point is that I believe, as do the members of my party, that a prima facie case for low level foreign ownership should be seen as the basis for concluding there is foreign control. We, therefore, do not subscribe to the view that we should support the change the government brought back to the House which would raise the level of foreign ownership substantially in percentage terms before the operative clauses of this bill are brought into effect. I will leave

July 4, 1972

Foreign Takeover Review Act

the matter in that way until I hear what the minister says in justification of the changes he has made in the bill.

Hon. )ean-Luc Pepin (Minister of Industry, Trade and Commerce): I will try to answer that point.

Mr. Speaker, all the hon. members know we are talking about control and presumptions. I am unaware that anyone until now objected to this procedure.

The question asked by my good friend the hon. member for Oshawa-Whitby (Mr. Broadbent) is this: Why this increase from 5 to 25 per cent in the presumption which exists in the case of the purchaser's eligibility in connection with public corporations, the shares of which are publicly traded, whereas the 5 per cent proportion is not increased for those same corporations when their shares belong to only one individual, government or corporation? It is only in the first instance that the presumption was increased from 5 to 25 per cent.

The reason for this is quite simple: it was done at the request of several witnesses. I remember Mr. Gordon, in particular, who said that presumption was so low that "it was a plain nonsense". Therefore, it is at the request of several witnesses and also certain committee members that we have taken this decision. There are two main reasons for it: the first one is of psychological nature. The corporations themselves which are Canadian-controlled and which involve a significant foreign capital participation, took exception to the fact that the presumption was 5 per cent only, while 10,15, 20 per cent of their capital were in the hands of non eligible persons. These corporations' officials suggested that this was a reflection on their "Canadianity," if there is such a word. To accommodate this psychological reaction, we have decided, I repeat, to raise the presumption from 5 to 25 per cent.

I shall answer to these people, to these shareholders: If you are so proud of your Canadian identity, why do you not show it more often by refuting presumption? This argument does not seem to have convinced representatives from concerned enterprises.

The second reason for the change or the second impediment for Canadian controlled enterprises was the difficulty of proving their Canadian identity, wherever their shares were broadly distributed. Then, in order to please them, we have raised the presumption from 5 to 25 per cent. The only practical difference involved is that from now on, instead of having the burden of proof lying with the enterprise itself, whenever the presumption is between 5 and 25 per cent, the government will bear the burden of the proof.

That is why we have raised the presumption from 5 to 25 per cent in the case I referred to.

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

Robert Jardine McCleave

Progressive Conservative

Mr. Robert McCleave (Halifax-East Hants):

Mr. Speaker, one of the more slaphappy aspects of the original bill submitted to the committee was precisely this point which has been corrected now. The mover of the motion wishes, however, to turn back the clock and adopt what was originally presented to us. There was strong objection to the government formula at that time, and those who took the objection managed to persuade the minister to see the

light. It would be a shame if we went back to something which really would cause a great deal of commercial confusion and would not assist the measure. Very shortly, we are rejecting the suggestion now being presented to us.

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

John Stratford Burton

New Democratic Party

Mr. John Burton (Regina East):

Mr. Speaker, I find the remarks of the minister this afternoon in respect of the motion moved by the hon. member for Oshawa-Whitby (Mr. Broadbent) very interesting. The minister can really engage in some pretty piteous reasoning in trying to justify his case. He defies all attempts at understanding. He does an excellent job of losing himself in the woods. He gets so concerned with the trees he completely loses sight of the forest. I must confess it is somewhat difficult at times to follow him when he is dealing with some of these technical points. He seems to take delight in spinning a very complex web in attempting to develop what I am sure, on many occasions, he does not himself understand.

This motion, of course, involves some technical considerations but also some very fundamental considerations. I should like to ask the minister, first of all, why he chose 5 per cent as the threshold level of shares in relation to the assumption of control, as provided in the original bill. This, of course, applies to shares of companies which are publicly traded on the stock exchange. Does the minister suggest the department did not have a rationale for that 5 per cent figure and just pulled it out of a hat. Does he suggest that there was no basis for this figure and that it was just an arbitrary figure? Does the same thing apply in respect of the 20 per cent figure relating to public and private corporations where the shares are publicly traded? Was this simply an arbitrary figure which the minister or his officials found some place and one which was not arrived at after a decision? I say I really cannot accept such a view.

During another debate, the minister commented that he has very competent officials in his department. I do not doubt that for a second, but what is lacking is some sort of current policy to provide an adequate framework in which the officials can do the job I am sure they would like to be doing. Surely, the minister must have had some rationale for the figures of 5 per cent and 20 per cent when he inserted them in the original bill. He seems to have thrown these figures totally out the window at the present time. In doing so, he has come up with a much higher level of figures, 25 per cent and 40 per cent. This would seem to be a rather high level when dealing with this area of presumption as it is involved in this rather complex concept in this particular clause. When this level was torn down as a result of some of the representations made-and I want to say quite frankly that there were some legitimate concerns and problems raised in respect of these figures when this particular clause was under study by the committee-the minister simply shifted totally from the 5 per cent and 20 per cent figures up to the 25 per cent and 40 per cent figures.

The minister was attempting to assuage the feelings of the business community. After all, the minister has been in plenty of difficulty with this community in Canada. I am sure the fact that the business community apparently has been quite unhappy with this government, whether

July 4, 1972

justifiably or not, is a matter of great concern to the minister and the government. The minister indicated that one reason for making the change was that he simply wanted to satisfy the minds of those in the business community that they should not be worried about this legislation or any possible effect it might have on their dealings and transactions. I suggest that the minister has not come forward with a rationale for the change made in the bill at the committee stage. What he really has indicated is that he has submitted to political pressure from the Canadian Chamber of Commerce, the manufacturers association and the business interests in this country. That is the sole reason for making this particular change, because I suggest if the minister were to respond to some of the problems raised when the bill was under study in the committee he would have come forward with a much different type of amendment to the bill than that which has been brought forward.

Rather than simply making the total shift from 5 per cent and 20 per cent to 25 per cent and 40 per cent, the minister would have come up with a meaningful change to take into account some of the real problems which may exist, such as the problems in respect of affidavits and burden of proof. He would have come up with some other solution than the one he has in respect of this bill. It seems to me the minister is destroying any chance this legislation might have or might have had of having any impact on the Canadian economy. I believe the change that has been made in the bill should be rejected. If the minister cannot come up with any better solution than he has up to the present time, we should return to the old figures of 5 per cent and 20 per cent. If he can come up with some change which takes into account some of the problems which may exist or if he can demonstrate some thought has been given to the problems which might be involved, this might be acceptable. However, I suggest the explanation provided by the minister for the change which has been made as a concession to big industry, and which was adopted by the majority of the committee, is unacceptable. It demonstrates that the government is not prepared to come to grips with the problem of foreign ownership or foreign take-overs. It simply indicates a bankruptcy of government policy and the failure of the government to come forward with any sort of meaningful policy.

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

David Lewis

New Democratic Party

Mr. David Lewis (York South):

Mr. Speaker, as you know and as the minister well knows, I do not think this bill is worth the paper it is written on so far as protecting Canada's interest in the economy and so far as regaining Canadian control of the economy is concerned. I am certain, if this bill becomes law, the minister will have some interesting discussions with some takeover enterprises and may arrive at some arrangements which he will think are advantageous, but which in the end will be a sell-out of some other part of Canada's economy. It is, therefore, with some reluctance that one rises to speak on any proposal for changing so innocuous and useless a piece of legislation as the minister is attempting to push through this House. However, I think it ought to be said that the explanation the minister gave for the changes in the proportions in this clause of the bill really raises the question of whether he is serious, because the problems he is trying to solve are not soluble at the level of 25 per cent and 40

Foreign Takeovers Review Act

per cent any more than they are at the level of 5 per cent and 20 per cent respectively. The problems will still arise at no matter what level. We find the proof of the situation in the fact that we still have the words, "the corporation is, unless the contrary is established a non-eligible person" which were used in respect of the 5 per cent and 20 per cent.

Under the original clause it would have been possible for certain trustees, or whatever, of some shares of a company to be able to come to the minister and say that such and such is the case and therefore the contrary is established, that they are not foreign controlled. That was as available in respect of the 5 per cent and 20 per cent originally set out as it is in respect of the 25 per cent and 40 per cent level because it was there in the original bill. In view of the fact that a solution is not visible at any level-and at whatever level there will always be some gray area-in view of the original objections made by the people concerned and in view of the possibility of establishing that the contrary is the case at whatever level one is talking about, it really is impossible to escape the conclusion that the only concession the minister was willing to make was the concession demanded by the Canadian Manufacturers Association, the Canadian Chamber of Commerce and the Bankers Association of Canada.

He was not prepared to make any concession in the bill that would strengthen the ability to do something about foreign ownership in this country. Oh, no, he would not go for that, no matter how reasonable the proposition might be, and add some factors that would give him some power. He did not want that because, as I have said on more than one occasion at various stages of the bill, this minister and the government do not intend to stop takeovers. That is not the purpose of the bill. The purpose of the bill is not to limit takeovers, it is to give the government the fagade of having done something about foreign ownership when in fact it has done nothing. It is not an honest purpose because the minister is far too intelligent-and I say this because I have great regard for him as a person-and far too knowledgeable about the Canadian economy. He is far too aware of the facts of the situation to have even needed the Gray report to have made him aware of it, but with the assistance of the Gray report he cannot but know that the area with which this bill deals is a minor one in the problem of the Canadian ownership of the economy.

I want to put on the record that it seems to me significant that the minister did not need any amendment for the purpose of solving the problems with which he dealt in his reply a few minutes ago. The original bill had the loophole, but because the enterprises wanted a higher place so that more of them would get under that line, the minister gives in to them. I respectfully submit that that is merely another item in the proof, if another item is needed, that neither the minister nor the government are serious about protecting Canada's place in its economy. The sham which this bill is, is again underlined by the way in which the minister bowed graciously and smilingly to the demands of those forces in this country that have sold out Canada before and will, with his assistance, sell out Canada again.

July 4, 1972

Foreign Takeovers Review Act

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

Marcel Joseph Aimé Lambert

Progressive Conservative

Hon. Marcel Lambert (Edmonton West):

Mr. Speaker, in this particular field I have always wondered where the blind spot exists. I know that in the economic field the Prime Minister (Mr. Trudeau) has made some very dubious statements, and the litany of those is long. But I must say, after listening to the short intervention of the hon. member for York South (Mr. Lewis), that I can accord him the palm of economic confusion.

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

David Lewis

New Democratic Party

Mr. Lewis:

That proves that I am right. I need no further proof.

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

Marcel Joseph Aimé Lambert

Progressive Conservative

Mr. Lambert (Edmonton West):

I can assure the hon. gentleman that what he has been advocating in the last two or three minutes clearly indicates that the badge of honour should go to the New Democratic Party because their philosophy merely entails more bureaucracy and more red tape not only with regard to the problem of takeovers but in the whole field of foreign ownership. I agree that this only touches a corner of foreign ownership, but that is not the problem at the present time under this bill. In so far as takeovers are concerned, let me point out to him, as if he did not know, that every time business, whether it is sole ownership, partnership or a corporation, has to make a move it costs money. Going to government, making returns to government, waiting for government to make a decision and sending representatives to Ottawa, costs money, and where does that cost go? It is on to the backs of the hon. member and the rest of the people who support him since they are Canadians.

I have never heard of another party in the last two years that in its programs has piled more cost upon cost upon any economic activity in this country, and yet it expects us to be competitive with the world where we sell 75 per cent of our production in the export market. Not only would we tie one another's hands behind our backs but we would put hobbles on our feet, if we listened to them. At every turn there is additional cost, and it has to be met, not only by those abroad but by the Canadian public. What is this for? It is to keep those people employed who would be put out of work if we became non-competitive. That is why I accord to the Leader of the NDP the badge of honour for economic misunderstanding in so far as Canada's position is concerned. Every suggestion that he makes is counter productive to the advancement of the Canadian economy and also a guarantee of employment to those people who he thinks support him.

I ask him and his supporters, would they get support from those people who could not work, who could not produce because the products could not be sold and because of the high cost with which those commodities would be saddled? I was pleased to see the minister make this change because, in so many instances, it is impossible for a corporation to know whether or not it is 5 per cent foreign owned. Shares are held by nominees, and a 5 per cent ownership in a company is a relatively small amount which can fluctuate back and forth. There is no way of knowing, but the act as originally designed imposed a mandatory duty upon a company by creating a presumption of foreign control with a 5 per cent ownership, when all the evidence before the committee and all the evidence the minister has ever received by letter or otherwise was that 5 per cent could not control a company, even if the shareholdings were concentrated in one hand. I do not

want to anticipate the debate on my own motion which would increase the other percentage from 5 per cent to 10 per cent, but I fully agree with the minister that in using the figure of 25 per cent he has gone as far as the Bank Act, as far as the Life Insurance Companies Act-

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

Prosper Boulanger (Assistant Deputy Chair of Committees of the Whole)

Liberal

The Acting Speaker (Mr. Boulanger):

Before I call it five o'clock, I must remind the House that motion No. 5 will be deferred because, as I understand it, at eight o'clock we will come back to motions No. 4 and 18 as previously agreed to.

Topic:   GOVERNMENT ORDERS
Subtopic:   FOREIGN TAKEOVERS REVIEW ACT
Sub-subtopic:   MEASURE TO CONTROL FOREIGN TAKEOVERS OF CANADIAN COMPANIES
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PROCEEDINGS ON ADJOURNMENT MOTION


SUBJECT MATTER OF QUESTIONS TO BE DEBATED [Translation]


LIB

Prosper Boulanger (Assistant Deputy Chair of Committees of the Whole)

Liberal

The Acting Speaker (Mr. Boulanger):

Order. It is my duty, pursuant to Standing Order 40, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for Selkirk (Mr. Rowland)-Pollution-Date of publication of regulations under Northern Inland Waters Act; the hon. member for Central Nova (Mr. MacKay)-Pensions-Canada pension plan-Contributions by self-employed-Possibility of relieving provision; the hon. member for Saskatoon-Big-gar (Mr. Gleave)-Grains-Possibility of increase in initial prices.

It being five o'clock p.m., the House will now proceed to the consideration of private members business as listed on today's order paper, namely, public bills, private bills, notices of motions.

Topic:   PROCEEDINGS ON ADJOURNMENT MOTION
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PUBLIC BILLS

July 4, 1972