Mulcair wants clarity on new rules for foreign investment
Published Monday, December 10, 2012 10:45AM EST
Last Updated Monday, December 10, 2012 7:04PM EST
NDP Leader Tom Mulcair is accusing the federal government of undermining future investment in Canada by not spelling out exactly why it approved the takeover of Nexen Inc. by the state-owned China National Offshore Oil Company.
On Friday, Prime Minister Stephen Harper announced his government had approved CNOOC’s $15.1-billion takeover of Calgary-based Nexen Inc., as well as the $6-billion purchase of Calgary-basedProgress Energy by the Malaysia state-owned company Petronas.
In announcing the deals, Harper made clear changes to the Investment Canada Act mean all state-owned enterprises looking to purchase Canadian companies will face greater scrutiny. Government ministers have since said that in future, investment in Canada by foreign state-owned enterprises (SOEs) will only be allowed under “exceptional circumstances.”
During question period in the House of Commons Monday, Mulcair asked what “exceptional circumstances” means, and repeated that question on CTV’s Power Play.
“What the prime minster told us on Friday is that he shouldn’t be approving the Nexen deal, but then he went ahead and approved it,” Mulcair told Power Play.
“But he said that as of Monday, he would never approve it anymore because it does not have a net benefit for Canada, but he approved it anyway on Friday. So maybe an exceptional circumstance is when it’s Friday.”
When Mulcair asked in the House how foreign companies are supposed to be clear on the rules for investing in Canada, the prime minister replied that the government has “given the kind of clarity private investors need.
“At the same time we have reserved discretion and we need discretion to make sure when we’re dealing with foreign governments that this government has the capacity to protect the best interests of this country.”
Mulcair told Power Play that the government must be clear on the meaning of “exceptional circumstances,” or risk leaving potential investors unsure of the rules for entering the Canadian market.
“Investors are not going to know what Canada’s asking, so we should at least be clear on that, and we’re not,” Mulcair said.
“And I think that the Canadian public stands to lose a lot because there will be opportunities for investment that will simply go elsewhere for the failure to have done the basic homework of setting down clear rules.”
Mulcair accused the government of making up rules “as they go along,” and said changes in foreign investment rules should be discussed in Parliament.
On Sunday, Industry Minister Christian Paradis said that the Nexen and Progress deals are where Canada draws the line on SOE investment in the oilsands, and while Canada is open for investment by foreign companies, it is not for sale to foreign governments.
Paradis said he could not divulge specific details of what is a commercial transaction, saying it is up to China to declare the so-called net benefits of the CNOOC-Nexen sale to Canadians.
Harper echoed that sentiment in the House Monday, saying the terms of such a deal “are made public when it is proper to do that and not of course in circumstances where it involves confidential commercial information.”
On Monday, Paradis told Power Play that “this Nexen transaction does not change the structure of industry, but we had to send a signal to say that we don’t want to go further down this road.”
Earlier Monday, Natural Resources Minister Joe Oliver said that while the federal government has not completely shut the door to investment by state-owned foreign enterprises, private investment in the oil industry “must be reinforced.”
Oliver made his remarks in a speech to the Canadian Association of Petroleum Producers Monday morning.
In his speech, Oliver touted the role private-sector investment can play in future oilsands development. Speaking to reporters after his speech, Oliver said: “There is a huge amount of a capital available globally,” including within Canada, and said “the oilsands have been financed overwhelmingly by the private sector.”
He also reminded reporters that Bank of Canada Governor Mark Carney has called out Canadian businesses for sitting on an abundance of cash. In August, Carney said the funds amounted to “dead money” for the economy.
In his speech, Oliver said a considerable jump in investment will be required if so-called “megaprojects” are to come to fruition, including further oilsands development, pipelines and deepwater and Far North exploration, so Canada can meet the energy needs of thirsty markets such as China, India, as well as the United States.
Oliver said that Ottawa does “welcome foreign investment in the oilsands,” noting that a number of producers in the oil patch are owned by foreign companies.
However, he said that while the government will continue to approve foreign investments “that are of net benefit” to Canada, “not all investments are equal.
“In particular, controlled purchases of Canadian assets by foreign governments or state-owned enterprises are not the same as other transactions,” he said, noting that state-owned companies may have “broader objectives” beyond that of private enterprises.
When speaking to reporters, Oliver clarified that the government is still open to investment by SOEs, including transactions where the money flows to industries beyond the oil patch.
“We’re not saying no to state-owned enterprises even in respect to the oilsands,” Oliver said. “We’re saying that if they want to participate there’s an opportunity to do so… but we’re also not saying no to them with respect to other resource sectors.”