Mr. Hubert Badanai (Fort William):
Mr. Speaker, I am very much interested in this particular bill, which is to provide for the review and assessment of acquisitions of control of Canadian business enterprises by certain persons, because it deals with a question of great concern to areas where foreign capital is needed to establish a business or an industry, and which have little or no appeal to Canadian investors, to provide jobs and improve local conditions. After several months of study the Minister of National Revenue (Mr. Gray) made a statement of policy designed to regulate foreign investment in takeovers of Canadian based enterprises. I was rather pleased that his statement did not take the hard line of the supernationalists. Instead, he brought forth a sensible document of policy which the majority of Canadians can and will support.
I express the hope that the minister entrusted with the administration of the act will use discretion and common sense. I have great faith in the present minister. I do not believe he will jeopardize the good that many companies, with shares held by foreign investors, are doing for the communities in which they are located. But suppose another minister were to lean heavily on the ideas of the so-called Action for an Independent Canada, it would then become very difficult for companies, however successful, to expand their businesses in that their shareholders, though a minority, could be classified, at least technically, as foreigners. Of course, I would shudder to think what could happen if, by a fluke of circumstances, the NDP were to win power and form the government some time in the future. That is a very remote possibility, but nevertheless it would be a disaster.
I am therefore concerned, and very much concerned at the possibility, however distant, that virtually any acquisi-
Foreign Takeovers Review Act
tion, even by a minority interest, in any Canadian business, by a non-resident or by virtually any company, will be subject to the almost unlimited discretion of the Minister of Industry, Trade and Commerce (Mr. Pepin). This thought was very well expressed in an article on foreign ownership policy which appeared in the May 22 issue of the Financial Times. On the other hand, I am encouraged to think that after due consideration of all the angles of this very important bill, the final draft of the legislation will allow capital to start new enterprises, or expand existing ones that are foreign-owned or to develop Canadian resources, to continue to enter the country. For those of us who appreciate that this type of investment has stimulated Canada's economy in the past and contributed heavily to the nation's present state of prosperity, this is good news. It will not please those who believe that foreign capital is a threat to our independence.
In the future, Mr. Speaker, Canadians who own enterprises in this country and wish to sell them to Americans will be subject to government scrutiny, and will be permitted to do so if it can be shown to be in the national interest. The policy reflects the expressed views of the new Minister of Finance (Mr. Turner), that given a choice between extreme nationalism as expressed by some members of the Independent Canada Committee and prosperity, Canadians will choose prosperity. Of this, I have not the slightest doubt.
The opposition and the news media expressed impatience, which was not really justified, at the delay in introducing this measure. People will realize that the time spent by the government in reaching these conclusions was time well spent. It remains for Canada to continue to attract foreign investment where it can do the most good and to ensure, in every way we can, that the prime benefits accrue to Canadians in terms of prosperity and jobs. Under the new policy, Canada will continue to offer a hospitable climate for foreign investment. The difference between Canada and so many of the other developed countries is that we have, still, so much left to develop and we can use so much help in doing the job.
It should like to quote from the report of the Minister of National Revenue, which sums up the question in these words:
Important benefits have been and can continue to be obtained from foreign direct investment. The data comparing the performance of Canadian-controlled firms to foreign-controlled firms indicates that Canadian control of a business is not, in itself, a guarantee of sound performance; and is not, therefore, a satisfactory means of achieving Canada's broad national objectives.
For instance, general legislation providing for 50 or 51 per cent Canadian ownership, either in the economy as a whole or in particular industries, can be very costly to the economy.
Professor Melville Watkins of the NDP said that the remedy for foreign ownership in Canada was a system of complete state socialism. Mr. Watkins faced the issue in his "Waffle Manifesto", but that document was too hot for his own New Democratic Party to handle. What we have, in these new proposals, is a traditional Canadian solution designed to give us maximum benefits at minimum cost. Consideration has been given to the fact that the provinces attach high priority to rapid economic development
May 30, 1972
Foreign Takeovers Review Act
and are inclined to feel that Canada will continue to require a substantial volume of foreign investment to achieve this objective. I am referring, particularly, to those provinces which possess large mineral, forest, and energy resources and which have been keen for investment funds. For these provinces, foreign investment means an important source of economic development and jobs.
As an example, Mr. Bourassa, the Premier of Quebec, a strong opponent of economic nationalism, thanked the Canadian government for its prudence in limiting itself to "restrained" controls. He said that his government will not accept further controls in the future which could hamper the inflow of job-creating foreign investment. "We don't want to close the door on any foreign investment which will bring more jobs for more Quebeckers" he said; "We can't afford to refuse."
An economist, Ian MacDonald, offers this answer to the argument that Canada is trading away her independence:
As long as non-residents are behaving as good corporate citizens, there is no danger ... If they are not, the government is free to control them. American capital has not come to this country as part of an imperialist plot and Parliament remains sovereign as the appropriate guardian of the public interest should foreign-owned firms behave in a way which threatens Canadian independence or sovereignty.
Briefly, the benefits which have accrued to Canada from foreign investment have given us, first, an inflow of capital without which Canada could not have developed to the present state of economic stability; second, access to the United States managerial skills which have been considerably more developed than those in Canada; third, the benefits of the most advanced United States technological knowledge in fields which Canadians would have required long years of research to develop on their own; and fourth, direct access to the vast United States market for many of our products.
In a special study prepared for the Royal Commission on Canada's Economic Prospects in 1957, Professor Irving Beecher and Professor S. S. Reisman summarized the advantages in this way:
From the search by foreign investors for profit, Canada has received a supply of capital, enterprising skills, technological know-how, and markets which for magnitude, quality, and stimulus to economic growth, has probably never been surpassed anywhere in the world.
Canadian nationalists have been very active in recent years. Walter Gordon, Mel Watkins, Mel Hurtig, the Committee for an Independent Canada and other spokesmen have made "nationalism" the fashionable wisdom. Mr. Crump, the retiring Chairman of the Canadian Pacific Railway, during the course of an interview recently, said that he has no quarrel with foreign ownership and that money has no nationality.
Subtopic: FOREIGN TAKEOVERS REVIEW ACT