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Canadian PM comments on foreign takeovers

[PoliticsWatch updated 5:15 p.m. May 9, 2007]

OTTAWA  — Prime Minister Stephen Harper and the Conservative government came under pressure from opposition parties in the House of Commons Wednesday to put the brakes on foreign takeovers of Canadian companies.

This comes on the heels of a reported takeover bid for Montreal-based Alcan this week by U.S. counterpart Alcoa and reports that BCE is also a takeover target. 

"It's not a fire sale," Harper said in question period. "If there's any kind of acquisition ... we will investigate these transactions and make sure there is a net benefit for Canada."

Pressure on the government to do something is coming from all three opposition parties, including the Liberals and the NDP. 

For a second-consecutive day, NDP Leader Jack Layton used his question period time to criticize the takeover bids.

"What the government is doing is putting a great big sign on the lawn. It simply says, 'Canada for sale,'" Layton said during question period. 

"We are losing our identity with the takeover of companies like Molson, The Bay, Van Houtte. When will the prime minister start standing up for Canada and Canadian jobs?"

The prime minister dismissed the question and accused Layton of preaching the "economic nationalism of the NDP." 

Finance Minister Jim Flaherty was not in question period on Wednesday, but he also dismissed opposition concerns about takeovers earlier this week. 

"The fact is that in the last quarter of 2006, Canadian companies continued to exhibit a strong appetite for foreign companies, acquiring 456 purchases valued at $70 billion, mainly in the United States," he noted during Tuesday's question period. 

"What we are seeing is expansion by Canadian-based companies abroad. Yes, there are some transactions within Canada. Yes, we have the rules in the Investment Canada Act which we will follow." 

After question period, Layton suggested that Parliament must strengthen the Investment Canada Act, which has not halted a single foreign takeover since it came into effect in the 1980s. 

"The law is certainly too weak, but the law is strong enough to allow for some action on the part of the government," he said. "I'm calling on the government to use those tools." 

Green Party leader Elizabeth May also weighed in on the merger mania on Wednesday and called on the government to put in place an "immediate freeze" on foreign takeovers of resource-sector companies. 

May said she wants a Royal Commission to conduct a full inquiry into the economic and political impact of "high foreign ownership" of Canada's resource sector. 

"Even before the latest takeover frenzy, well over a third of all non-financial industry corporate assets were foreign owned," May said in a statement. 

"At what point will Prime Minister Stephen Harper stand up for Canada and say that enough is enough – at 50 percent foreign ownership, at 65 percent?"

Meanwhile, Bloc Quebecois Leader Gilles Duceppe pressed the government in question period to close what he called a "scandalous loophole" in the Income Tax Act that allows Canadian companies to take advantage of tax shelters in Barbados. 

At the finance committee on Tuesday, Revenue Canada officials would not confirm or deny an Auditor General's estimate that section 59.07 of the Income Tax Act costs the federal government $4 billion in taxes each year. 

"When the prime minister was in opposition he did say clearly that this agreement with Barbados should be abolished," Duceppe said in question period. 

"Well now today he has the power to do so. What is preventing him from doing so? When will he have the courage to take action? Did he change his mind?"

Harper did not respond to Duceppe's question about his past position on the Barbados loophole. 

Tory MP Diane Ablonczy, who is Flaherty's parliamentary secretary, said the government committed in the last budget to set up a panel to study this issue. This is in addition to the Commons finance committee's work. 

"We are moving very vigorously on this front," she told Duceppe.

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