QUESTION PERIOD — Industry
Foreign Investment in Canadian Businesses
May 26, 2021
Honourable senators, my question is for the Government Representative in the Senate. Senator Gold, earlier this year, we learned that new guidelines were issued under section 38 of the Investment Canada Act that would give greater consideration to national security concerns when foreign investors want to purchase a Canadian company. That is welcome news. Thank you.
However, I think the government could do more. What is the government doing to further protect our burgeoning high-tech sector and homegrown intellectual property? Is the government considering reviewing the Investment Canada Act to further reduce the purchase price of foreign transactions that would trigger a review and ministerial sign-off? Although these amounts were reviewed in February, they are still considerably high in the current context of this pandemic. I think this would be a fair next step because there is a troubling trend in Canada where promising high-tech start-ups are being taken over by foreign capital. There is ample evidence that big tech companies with billions of dollars in capital are eager to swoop in and purchase Canadian companies with new technology, many of which may be in dire need right now due to the pandemic. Especially with the health care sector and health care investments we are making, I think it’s very important to keep reviewing this act and, like I usually say, it’s never static but dynamic. Thank you for your response.
Thank you for raising this issue. Foreign investment, as we all know, helps Canada’s cutting-edge intellectual property firms to scale up and reach customers around the world. But at the same time, the government remains committed to ensuring that such foreign investment doesn’t raise national security concerns and also gives a fair opportunity for Canadian investors to participate in this sector.
Thank you, senator, for giving me advance notice of your question; it allowed me to make some inquiries with the government. To the best of my knowledge, I have not seen any indication that the Investment Canada Act is being reviewed at this stage, but I can say that the government is well aware that a robust copyright and intellectual property regime are vital to Canada’s creative, social and economic well-being. That’s why, in 2018, the government introduced Canada’s first ever Intellectual Property Strategy and investments of over $85 million over five years to help small- and medium-sized enterprises better leverage their intellectual property and to help Canadian law schools establish legal clinics in intellectual property to provide free or low-cost IP legal services to such businesses and entrepreneurs.
Thank you for that answer. As you might know, I’ve publicly called for a review of the Investment Canada Act because I think we need to do more to protect our high-tech sector and our intellectual capital. It’s no secret that many start-ups benefit from generous government grants and tax incentives. I think we need to find the right balance between enhanced scrutiny to protect our investments and free markets. But with the likelihood of more foreign transactions initiating reviews, can you tell us if Innovation, Science and Economic Development Canada have adequate resources to handle a larger caseload? I didn’t see any funds being allocated specifically for this purpose in last month’s budget.
Thank you for your question, senator. Again, I had the opportunity to make some inquiries. I was not made aware of any additional funding or resources that are needed, at least to this point. But rest assured that if capacity becomes an issue, the government will seriously examine how to better support officials as they conduct the enhanced scrutiny that is being applied to investments.
