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Bonjour mesdames et messieurs, and thank you for being with us here this morning.
And thank you as well to Isabelle for such a kind introduction. Isabelle is a tremendous asset to our Panel, and a tireless worker on behalf of this city and this province. It is nice to be on her terrain today, and I thank her and her staff at the Board of Trade of Metropolitan Montreal for their excellent work in pulling together this morning’s event.
As some of you may know, I had the pleasure of living and working here in Montreal for a number of years, and the city remains one of the most dynamic centres for business and culture in this country. I know the city well, and my son makes his home here.
As Chairman of CAE, I remain active in the business community here. Many of Canada’s leading companies are based here in Montreal. This region has so much to offer, both to firms, and to the people who work for them.
Today I want to talk to you about Canadian competitiveness, and the work that the Competition Policy Review Panel is undertaking.
The mandate of our Panel is about building a dynamic and competitive Canada.
Creating the conditions for our economy and our companies to thrive.
Improving our productivity. Seeking out and seizing hold of opportunities – here in Canada, and around the world.
As Isabelle mentioned, the Competition Policy Review Panel was announced this past July, based on a commitment made in the last federal budget.
The Government recognized – as have many in the private sector, and many in this room – that the global economy is changing rapidly and fundamentally.
No country, not even one as sound as ours, can afford to stand still. The globalization of trade and investment has brought new realities to Canadians. We must adapt to these realities.
And that is what this Panel has been asked to do: to provide recommendations on how we adapt and best move forward in this new competitive environment.
Productivity and competitiveness are the watchwords.
We have been mandated to review Canadian policies bearing on competition and investment. To ensure that they are modern and effective. That they are relevant to the new global competitive environment. And most importantly, that they represent the interests of Canadians in a robust economy that underpins our quality of life.
As Isabelle said, we are joined in this effort by three outstanding Canadians – Murray Edwards, Tom Jenkins and Brian Levitt. These are people with diverse experience and a fundamental commitment to Canada. It is a pleasure to be working with them.
And we are supported by an excellent Secretariat, headed by Andrew Treusch, an experienced senior public servant, with a highly successful policy track record.
Today we are releasing our consultation paper – Sharpening Canada’s Competitive Edge.
In it, we lay out what we believe are many of the key issues that Canada must deal with as we compete in the rapidly changing global economy.
The title serves as our guiding principle. We have come a long way as a nation. Throughout our history, Canadians have been world traders and investors, and many world leading firms are Canadian-based. Our talents and sound fundamentals have provided Canada with a competitive edge.
But we need to sharpen that competitive edge – and how we best do that is what this Panel is all about.
Canada’s competition and investment policies have not been subject to a review of this breadth in more than 20 years.
The Panel’s mandate is broad and demanding. There are many areas of public policy which impact productivity and competitiveness. We hope, with your input, to explore many of these.
In our paper we refer to two broad issues or themes.
The first is how best to encourage international investment by Canadians.
We will be examining the conditions that enable our ambitious firms to take advantage of global opportunities, and compete and succeed in markets around the world.
Our second theme is how to best position Canada to be a world-leading location for talent, capital and innovation.
Premised on the belief that we want Canada to be home to the most talented people and innovative firms, what can we do to encourage investors – Canadian and international – to succeed here?
With those two overriding themes in mind, the Panel’s mandate is to focus on two general policy areas: investment and competition.
The importance of foreign investment to Canada is well documented. We are a growing country, and foreign capital has always been important to our development.
Canada continues to be one of the top 10 global destinations for foreign direct investment.
However, our share of foreign direct investment into North America has declined significantly since the 1980’s. And the OECD has highlighted Canadian restrictions on inward investment.
Since 1985, the Investment Canada Act has been the mechanism through which foreign investment in Canada is reviewed. Prospective investors in Canada are obliged to demonstrate that their investment represents a “net benefit” to Canada.
The ICA seems to have served the country well. But it has not been subject to a policy review in more than twenty years.
Concern has been raised about the transparency of the procedures. Some investors claim to be uncertain about how the Act – and in particular the net benefit test – will be applied. They want to know what the obligations are likely to be and what the government is going to be asking of them.
Another concern centres on the effectiveness of the net benefit test. Approval of a foreign investment is typically granted based on certain undertakings. There is currently little reporting on these undertakings.
The Panel will examine these and related issues.
Those of you following our progress will be aware that we have been relieved of the need to review issues concerning national security and the treatment of investment in Canada by foreign state-owned enterprises.
In a speech delivered earlier this month, the Minister of Industry signalled the government’s intention to give its more immediate attention to these issues.
In the paper we are releasing today, we are asking you to comment on the impact that Canada’s investment review regime has had on our competitiveness as a nation.
We are seeking advice on changes or amendments to the Investment Canada Act – changes that would make our treatment of foreign direct investment more effective, and Canada more competitive.
Many of you will have followed in the media the discussion of the ‘hollowing out’ of Canada’s economy. This is an issue of considerable interest to Canadians.
In recent years some of Canada’s most successful, historic firms have been acquired by international investors, and the loss of these firms as Canadian icons has occasioned much debate.
Certainly it is true that in recent years foreign mergers and acquisitions in Canada have increased noticeably. The value of foreign acquisitions of Canadian firms tends to be higher than the value of foreign firms that Canadians themselves are acquiring. A few recent large transactions have increased the gap.
However, Canadians are also acquiring significant numbers of foreign firms. Indeed, in terms of the number of companies being acquired, in the last five years Canadians appear to be currently acquiring more foreign firms than foreigners are acquiring in Canada.
What does this increasing international M&A activity mean for Canada’s competitiveness, and for our future?
We have also been asked to review Canada’s sector-specific restrictions. These relate to the telecommunications and broadcasting industries, our cultural sector, transportation services, uranium production, and the financial services sector.
As I have said, the Panel intends to look at each issue in our mandate through the lens of our productivity and competitiveness as a nation.
The second general area which we have been asked to review is the Competition Act and related policies.
In the global economy competition extends beyond any one country’s borders. International economic activity is driven by firms with global reach pursuing opportunities in all corners of the world. These firms look beyond their own domestic market and local competition. They compete in many national markets.
The challenge for competition authorities, here in Canada and around the world, is to evolve and adapt to the context within which they work – in order to reflect the globalization of business.
With the release of our paper today, the Panel hopes to spark a vigorous debate in Canada. We hope that you will read and consider the issues that are presented. And we very much want to hear from you.
While the focus of the Panel’s work is on public policy, as we point out in the paper, Canadian success will depend on the commitment and abilities of Canada’s private sector. The primary role must be played by the entrepreneurs, the leaders, the management and boards of Canada’s private sector companies.
This Panel is comprised of business people – we have all had direct experience in the growth and international development of Canadian businesses.
But let me hasten to add that we are not pursuing a narrow business agenda, nor are we trying to protect entrenched interests.
Our agenda is competitiveness – because competition drives productivity, the generator of wealth.
Competitiveness demands continuous improvement, constant innovation, and a focus on the future.
It requires an offensive mind set.
And, of course, competition means more choices and better products and services for Canadians, at lower prices.
And so today begins what I believe is the Panel’s most interesting phase. With this paper, you have heard from us. Now we want to hear from you.
Our timelines are tight. We are targeting a final report this coming June.
But we will be meeting key stakeholders and interested parties, and participating in a series of consultation meetings in cities across the country in early 2008.
Written submissions as well as oral discussions, along with panel-sponsored research, will be crucial in informing the Panel’s eventual recommendations, and I urge you to consider our paper, and submit your views to us.
Let me remind you – we are looking for ways to encourage Canadian firms and investors to be even more active in global markets than we are today. And for ways to make Canada the destination of choice for investors and innovative people from around the world.
That is why the government has asked for the Panel’s recommendations. And that is why we are asking Canadians to consider the issues and questions in this paper.
We very much hope to hear from you.