July 4, 1972

?

Some hon. Members:

Nay.

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):

In my opinion the nays have it.

And more than five members having risen:

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):

Pursuant to Standing Order 75(11), the recorded division on the proposed motion stands deferred. The House will now consider motions Nos. 6, 7, 8 and 9.

Mr. Lambert (Edmonton West), seconded by Mr. MacLean, moves:

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 striking out the figure "5" where the same appears in line 14 on page 5, line 10 on page 6, and line 34 on page 7, and substituting therefore in each and every instance the figure "10".

The next motion is No. 7: Mr. Hees, for Mr. Horner, seconded by Mr. Alexander moves:

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 the figure of 5 per cent in line 10 on page 6 and substituting the figure 10 per cent.

Motion No. 8: Mr. Hees, for Mr. Horner, seconded by Mr. Alexander, moves:

Foreign Takeovers Review Act

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 the figure 20 per cent in line 16 on page 6 and substituting the figure of 40 per cent.

Finally, motion No. 9: Mr. Hees, for Mr. Horner, seconded by Mr. Alexander, moves:

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 as follows: in subparagraph 3(3)(c) by substituting the figure 10 per cent for the figure 5 per cent in line 34; and

in line 39 by substituting the figure 40 per cent for the figure 20 per cent.

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, if I speak to motion No. 6, this question was debated at great length at second reading. I think I crossed swords with the minister at least half a dozen times or more on this point in committee. The witnesses who appeared before the committee and considered this point were unanimous in condemning this provision as it stands in the bill. When I raised this matter the minister said, "Wait until the members from the Canadian Bar Association come, and we will see what points they raise." They raised two points. First, they were not satisfied as to the constitutional power of the government of Canada to deal with the problem as proposed in this bill. Second-and this is their other point-they were in agreement with what I contended, namely, that there are at least half a dozen major acts on the statute books dealing with the ownership of particular types of Canadian business institutions, mostly in the financial field.

There are stringent requirements governing foreign ownership and many of these statutes have been amended in recent years in this field. There is the Canada Corporations Act which says that 10 per cent ownership shall be the limit in connection with insider-trading.

I point to the testimony given before the finance committee, as it then was, now the Committee on Finance, Trade and Economic Affairs. The then minister of finance, now Secretary of State for External Affairs (Mr. Sharp) said that with a holding of less than 10 per cent no one company could gain control of a Canadian bank. Life insurance companies, trust companies, have also been dealt with. Sales finance companies, newspapers, broadcasting, have all been dealt with. The figures are 10 and 25. Now, for some unknown reason, the figures have become 5 per cent cumulative. There is no such thing as 10 per cent or 5 per cent in the hands of any particular individual.

Therefore, all I can say is this: let us introduce a degree of uniformity. If all the expert witnesses say it is impossible to acquire control of a Canadian company with a holding of less than 10 per cent, why on earth have people in the minister's department, people with little or no experience of business, come up with the figure of 5 per cent? If a non-eligible person, within the meaning of the act, acquires a 5 per cent holding in a publicly-traded Canadian company, or 20 per cent of a privately-held company, or if there is an acquisition of 5 per cent in a non-eligible company or an acquisition of the assets of a company, the transaction is subject to screening, subject

July 4, 1972

Foreign Takeovers Review Act

to the determination that it is of significant benefit to Canada.

There has been a good deal of discussion as to the correct interpretation of the phrase "significant benefit to Canada". As it is, apart from some pious and hopeful words on the part of the minister, there is nothing which defines what may be of significant benefit to Canada. It is true there are certain criteria mentioned in clause 2(2), but these are meaningless as applied to many of the transactions which will arise. This is an area the minister has failed to clarify. There has never been an indication as to the way in which it would be handled.

As an example, I mention a transaction involving the acquisition or exchange of portfolio investments. This brings again to mind the amendment I mentioned this afternoon, the one which was discussed in committee, to the effect that the government should be able to show that a transaction is detrimental to the interests of Canada rather than that the parties to the transaction should show that it is of significant benefit. There is a vast difference, particularly when one is dealing with portfolio transactions. I suggest to the minister and his advisers that they have no conception whatsoever of the volume of these holdings or of the totality of these transactions in the course of a year.

If the minister or his advisers have read the evidence given by the witnesses who came before us, they will have realized that this country has no monopoly of attraction for foreign capital. The picture is very competitive-and if there is any degree of uncertainty, investors will get out. If the proposed degree of uncertainty is allowed to remain, I will make a bet with the minister that in the majority of cases investment plans will be abandoned. Is this what the minister wants? This is the sort of monster he is creating.

After all, the Department of Industry, Trade and Commerce has had no experience in the investment field. Those who do have such experience warned the minister time and again of what may lie ahead. Yet the government plunged headstrong into this area. If the result, a year or two from now, is found to be underdevelopment of resources, undercapitalization, will it be a solace to any Canadian to hear hon. gentlemen opposite say, "we have made a mistake: the patient is being given a fatal injection; he is not being cured"?

I am reminded of the actions of the former minister of finance (Mr. Benson) when he told us he intended to deal with inflation. All that resulted was increased unemployment. Warnings were given then. Fortunately, some of the silly things which were proposed never came to fruition. This is another area in which the government is likely to run into serious difficulties. We have already heard that potential investors are becoming extremely skittish because of this proposal. I can tell the minister that I was asked about the prospects of this bill passing by a firm of corporation lawyers in western Canada the other day. They had a major transaction in hand and there was a clause in the agreement to the fact that if the deal was even challenged, the whole thing was off. The minister does not understand that these people are entering into a deal, one which, incidentally, is of benefit to Canada-

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

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

Liberal

Mr. Pepin:

Good, then they have nothing to fear.

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):

But the possibility of intervention by the minister or his officials will kill it. The clause is in the agreement.

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:

What are they hiding?

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):

They are not hiding anything but they do not want to expose the deal to any cockeyed ideas which may be held by the minister's officials. I am not going to repeat the arguments I have made in this regard. I simply draw attention to the fact that they have been made time and time again. The minister has not yet given one good argument for insisting upon the 5 per cent. Why not be consistent and use the figure of 10 per cent? Certainly he would lighten the administrative load in his department, which at the moment is an unknown factor but I am sure has been underestimated by his deputy minister in what he said to the committee.

I know that the minister was reasonably well disposed toward this type of amendment the other day. How can the minister say that the Bank Act is wrong? How can the minister say that the Canada Corporations Act is wrong? How can the minister say that the Life Insurance Companies Act and all the other acts referred to are wrong, but that this one, which incidentally is the only one falling under the responsibility of his department, is right?

I urge hon. members to accept the spirit of the amendments that are before the House at this time. My colleague for Crowfoot (Mr. Horner) has amendments that are similar to mine but which make further adjustments with respect to private companies. I have spoken about public companies. I am quite prepared to accept the minister's proposal in order to be consistent, but I think his argument that this bill should provide for 5 per cent is absolutely ludicrous since all the other legislation of this kind passed by the Parliament of Canada during recent years have provided 10 per cent. Has the logic and the raison d'etre of that legislation now gone by the board?

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

William George Knight

New Democratic Party

Mr. Bill Knight (Assiniboia):

Mr. Speaker, I listened with a great deal of interest to the remarks of the hon. member for Edmonton West (Mr. Lambert). His remarks were easily discarded by the hon. member for Pembina (Mr. Bigg), who said that amendments 6 through 9 were somewhat irrelevant to the whole question. It is of interest to note that a fellow member of his party finds amendments moved by the official financial critic of the party to be irrelevant. The logic presented by the hon. member for Edmonton West, who aspires to be minister of finance, I suggest is quite unacceptable.

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

Frederick Johnstone (Jack) Bigg

Progressive Conservative

Mr. Bigg:

I rise on a point of order, Mr. Speaker.

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

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

Liberal

The Acting Speaker (Mr. Boulanger):

Order. The hon. member for Pembina (Mr. Bigg) on a point of order.

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

Frederick Johnstone (Jack) Bigg

Progressive Conservative

Mr. Bigg:

I cannot let the hon. member's remarks go unchallenged. What I said was that these amendments gave no real effect to a bill that is without basis at the present time. I did not say what the hon. member just said I said.

July 4, 1972

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

William George Knight

New Democratic Party

Mr. Knight:

Mr. Speaker, I will not change my opinion of what I thought I heard the hon. member say. I suppose I could debate that issue for the rest of the evening, thus making the platitudes used by the hon. member in his speech even more irrelevant in terms of debating this bill.

The hon. member for Edmonton West talked about the Bank Act and the percentage used in relation to the amount of foreign ownership in Canada. I sometimes listen to the Minister of Industry, Trade and Commerce (Mr. Pepin) with a great deal of mixed feeling, but I assume he is relating this percentage to foreign control, not ownership. Both control and ownership are fundamentally different questions from those posed by the Bank Act.

I find the amendments moved by the Conservative opposition quite reprehensible in the sense that if this is the sort of action that they would take on this measly, inadequate piece of legislation if they were to form the government, then we can well see how they would deal with the question of Canadian independence and Canadian nationalism. The fact of the matter is that they will not, and cannot bring themselves to find an answer to foreign ownership in Canada and to the questions posed by Canadian nationalism. These amendments moved by Her Majesty's Loyal Opposition demonstrate the weak-kneed, lack-lustre approach of that party to independence in this country and can be coupled to the lack of imagination shown by the government in the meagre answer it has put forward today to the question of foreign ownership.

The original bill made reference to levels of 5 and 10 per cent in regard to foreign control, and although the members of this party wish to maintain those levels in the present bill, we find the provisions relating to the value judgments and performance standards required quite reprehensible. As a result, the bill is going to be ineffectual. Indeed, it is mere window-dressing for the forthcoming federal election.

Let us look for a moment at the clauses of the bill to which the Conservative amendments relate. For example, amendment No. 8 moves from 20 per cent to 40 per cent the percentage of voting rights of shareholders, and thus increases the number of loopholes in the act so as to enable large corporations to avoid having to deal with a screening process even as weak and unimaginative as that presented by the bill.

The hon. member for Don Valley (Mr. Kaplan) described this legislation as exciting, but I have to disagree with him. It is a piece of legislation that fails to deal directly with foreign investment in this country. It deals with a mere 6 per cent, and does so in such a way as to cast doubt on whether this government or any future government will ever take real action to control foreign ownership. The amendments presented by the Conservative opposition merely serve to underline the other defects in the bill.

I am sure hon. members are well aware that government members are bemoaning the fact that opposition members are continually putting forward negative proposals without offering alternatives. I think the government should recognize that there is one political party in the House that has offered clear and consistent alternatives to the policies of the government, namely, the New

Foreign Takeovers Review Act

Democratic Party. The amendments put forward by my friends in the Conservative party do nothing to strengthen the one small tooth that there is in the jaws of the bill. The government party is always unhappy about any kind of criticism in respect of its legislation, yet we sit here and witness this kind of legislation in respect of foreign control and ownership.

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

Some hon. Members:

Oh, oh!

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

John Edward Broadbent

New Democratic Party

Mr. Broadbent:

Mr. Speaker, I rise on a point of order. I wonder whether you might say something to those Liberal backbenchers who obviously require a lot of information. A very able speech is being made, and if they listen they might learn something.

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

Some hon. Members:

Oh, oh!

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

Russell Clayton Honey (Deputy Speaker and Chair of Committees of the Whole of the House of Commons)

Liberal

Mr. Deputy Speaker:

Order, please. The Chair would like to say, with respect, to the suggestion of the hon. member that while I do not make any assessment as to the source of the undertone, I should like to hear the hon. member for Assiniboia (Mr. Knight). I know hon. members will co-operate.

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

George Harris Hees

Progressive Conservative

Mr. Hees:

Mr. Speaker, the only thing we object to is the fact that the hon. member has not named the party about which he is speaking-and we should like him to tell us about the Waffles.

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

Some hon. Members:

Oh, oh!

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

Russell Clayton Honey (Deputy Speaker and Chair of Committees of the Whole of the House of Commons)

Liberal

Mr. Deputy Speaker:

Order, please.

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

July 4, 1972