The federal government is following the lead of other countries and tightening scrutiny of foreign takeovers of Canadian firms whose values have plummeted due to the COVID-19 pandemic.
The goal, according to the Saturday policy statement is to “ensure that in-bound investment does not introduce new risks to Canada’s economy or national security, including the health and safety of Canadians.”
Rules already in place to vet foreign direct investment from state-owned enterprises, or state-connected entities, will now apply to all investments, no matter their value said the weekend policy statement. The government will also pay close attention to “investments of any value, controlling or non-controlling” in businesses involved in public health or the supply of critical goods and services.
According to the statement, the broader lens Ottawa is applying to state-linked entities is because the pandemic amplifies the concern that they may be “motivated by non-commercial imperatives that could harm Canada’s economic or national security interests.”
The new policy will stay in place until the “economy recovers from the effects of the COVID-19 pandemic.”
The change follows in the footsteps of countries like Australia, Germany, Spain and France that have taken steps to limit or further scrutinize takeovers from foreign investors. A month into the pandemic, innovation and legal experts say Canada’s move comes late and that it shouldn’t just be limited to the pandemic’s time-frame as COVID-19 has laid bare the country’s vulnerabilities when it is too reliant on international players for critical goods.
Innovation, Science and Economic Development Minister Navdeep Bains was not available for an interview Saturday.
In a statement, he said the enhanced scrutiny is needed to put a buffer between economically weakened companies and “opportunistic investors.”
Mr. Bains’ office did not say whether it has already identified foreign entities trying to take advantage of the lower valuations of many companies, but the Canadian Chamber of Commerce said it was not aware of any opportunistic buying so far. Still the chamber’s senior director of international policy, Mark Agnew, said the pandemic has shown the country needs to protect key sectors.
“Naive thinking will leave us ill prepared for future pandemics,” Mr. Agnew said in a statement
He cautioned that the domestic economy still needs foreign capital and the move by Ottawa could have a “chilling effect.” The chamber also called on Ottawa to more widely publicize the changes, which were announced on a federal government website and flagged to some journalists.
The federal government should be clear about which sectors will be subject to the broader scrutiny, Mr. Agnew said.
Paul Boothe, a retired professor and former associate deputy minister at Industry Canada, said the policy statement puts companies “on notice” that the government will be taking a closer look at some transactions.
Attracting foreign investment has been a big focus of the Liberal government since is was first elected in 2015. To push its agenda Ottawa established Invest Canada in 2018. Saturday’s policy marks a departure from the federal government’s previous stance.
The new policy was panned by Jim Balsillie, chairman of the Council of Canadian Innovators, who said it’s not adequately thought through and falls short on several measures.
“It confuses foreign direct investment with foreign portfolio investment, its short term applicability ignores the sustained capacity a sovereign country requires, and its narrow scope ignores the breadth of strategic assets required to protect Canadians’ interests,” Mr. Balsillie said.
“Whoever developed this policy needs to talk to innovation policy experts who understand how strategic technologies are developed, commercialized and move across borders.”
Natalie Raffoul, an Ottawa patent lawyer with Brion Raffoul LLP, said the pandemic has revealed the vulnerability in becoming too dependent on international sources for critical goods. To prevent a repeat, she said more focus needs to be put on developing and protecting Canadian-made patents and other intellectual property so there is more domestic control over supply chains — not just for health and safety, but for the country’s overall prosperity and security.
“It’s great to see the government doing this, but I hope that it’s not just a COVID-19 specific measure and that they’re going to be now long-term looking at scrutinizing foreign direct investment,” Ms. Raffoul said. She stressed the distinction between foreign direct investment, which leads to foreign control, and foreign portfolio investment, which gives Canadian companies access to cash without forfeiting control.
Saturday’s statement comes a day after Prime Minister Justin Trudeau announced $1.2 billion in help for startups and small businesses. Given that companies, weakened by the pandemic-sparked economic crisis, are already desperate for cash, Ms. Raffoul said Ottawa is late implementing the new measures.
“We waited now a month,” she said, “so hopefully these programs can now move quickly to ensure that our innovative companies are going to be protected so we don’t lose the ground that we already have.”
The heightened scrutiny of foreign takeovers during the pandemic is also missing protections for patents, according to Jim Hinton, a Kitchener-Waterloo-based intellectual property lawyer with Own Innovation. Cash-strapped companies can boost their coffers by selling their patents or save money by letting patents lapse, which risks Canada losing even more of its domestically-made intellectual property and doing so at a discount, he said.
“The tide has gone out and we are now shown that we don’t have the innovation capacity that you need to weather both economic and health storms,” he said.
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Australia's economy shrinks in first quarter, signals first recession in 30 years – TheChronicleHerald.ca
By Swati Pandey
SYDNEY (Reuters) – Australia’s economy shrank last quarter, setting the scene for what will be the country’s first technical recession in three decades as entire business sectors were shut down to fight the coronavirus.
Wednesday’s data from the Australian Bureau of Statistics (ABS) showed the A$2 trillion ($1.39 trillion) economy contracted 0.3% in the quarter ended March, the first decline in nine years.
That took the annual growth to 1.4%, the slowest since the 2009 global financial crisis, as the economy was hit by the worst bushfire season in living memory, a prolonged drought and a pandemic that shut down businesses and left many without jobs.
Following the data release, the Australian dollar eased from a five-month high of $0.6982 and the benchmark share index .AXJO> slipped to 5,835.1 points from 5,902.2.
Australia’s gross domestic product is expected to fall even more sharply in the current quarter. Two consecutive quarters of contraction would mean Australia would suffer its first technical recession since the early 1990s, ending one of the world’s longest growth streaks.
Household consumption was the biggest drag on growth last quarter with massive falls in spending on clothing, cars, transport, recreation, hotels, cafe and restaurant.
Net exports and government spending supported the economy in the quarter.
The economic fallout deepened in Australia as the number of local coronavirus cases surged from less than 100 in early March to more than 7,000 now, forcing the government to shut borders and restrict large gatherings.
The central bank stepped in by cutting the cash rate to a record low 0.25% and launching an unlimited bond buying programme. The government, meanwhile, unleashed a large fiscal stimulus plan, including a A$60 billion wage subsidy scheme.
The Reserve Bank of Australia (RBA) has recently sounded less gloomy about the economy even though the country is in the midst of its worst downturn since the Great Depression as better health outcomes have led to an earlier-than-expected re-opening of businesses.
“Although the immediate outlook is better than anticipated a couple of months ago, the economy still faces challenges,” said Sarah Hunter, Chief Economist for BIS Oxford Economics.
“The size and speed of the decline are unprecedented,” Hunter added.
“The outlook for investment is also highly uncertain, with the construction sector pipeline and capital goods imports data suggesting that spending will slow markedly in the second half of the year.”
($1 = 1.4391 Australian dollars)
(Reporting by Swati Pandey; Editing by Himani Sarkar and Sam Holmes)
Enbridge to boost tolls on key pipeline based on 2019 economy – BNNBloomberg.ca
A year ago, the economy looked rosy and crude prices were riding high. Enbridge Inc. now will be getting a bit of a boost from that due to a nearly decade-old contract provision that will increase what the company charges to transport oil on Canada’s largest pipeline network.
The increase comes as the Canadian oil industry has been ravaged by the COVID-19 pandemic and pipelines out of Canada are running partly empty after oil sands producers slashed about 25 per cent of output with demand for their product waning.
Enbridge’s Mainline system, which runs from Hardisty, Alberta, to the Chicago area, ships about 75 per cent of Western Canada’s oil output. The toll on the 2.9 million barrel-a-day system from Alberta to the Chicago area will rise 18 cents a barrel, or 3.9 per cent, starting July 1, Enbridge said. The increase is based on an index of Canada’s economic growth from the prior year, a formula approved by regulators in 2011.
The Canadian economy grew 1.7 per cent last year but has contracted so far this year due to the pandemic. Still, Enbridge says the contract provision has kept prices from rising even higher.
In the past, shippers would have been forced to pay more when oil demand and volumes on the pipeline were lower. The provision “shields shippers from throughput risk which, in current circumstances with decreased oil demand and declining volumes on the Mainline, would have otherwise resulted in a significant toll increase under the previous negotiated settlement,” Jesse Semko, a company spokesman, said in an email.
Enbridge discussed the toll changes with companies that ship on the lines in the middle of May before submitting them to the Canadian Energy Regulator, Semko said.
Lower demand for oil from U.S. refineries has made exporting Canadian crude less economic. The price difference between Canadian heavy oil in Alberta versus the U.S. oil hub of Cushing, Oklahoma, is about US$4 a barrel, according to NE2 Group pricing.
That’s too narrow a difference to cover the cost of most oil shipments on Enbridge’s pipeline system at current tolls.
Too Many Pipelines
For years, Canadian oil producers struggled with a shortage of export pipelines. Since the coronavirus pandemic and the drastic decline in output, Canada has gone from having too few pipelines to too many. Mainline volumes are expected to be down by 300,000 barrels a day this year, according to Enbridge.
The Mainline includes several pipelines that carry light, medium and heavy oil from Alberta to Superior, Wisconsin, where they link to pipelines running into eastern Canada and South to pipelines connected to the U.S. Gulf Coast.
Enbridge’s toll increases weren’t matched by other pipeline operators. The Federal government-owned Trans Mountain Pipeline running from Alberta to the Vancouver area cut rates for shipping light crude from Edmonton to Sumas, British Columbia, by 32% on May 1. TC Energy Corp. plans to keep rates to Texas unchanged for uncommitted shipers starting July 1 on its Keystone pipeline after lowering them April 1.
TELUS Health: Accelerating virtual health care innovation to help restart the economy – GlobeNewswire
MONTREAL, June 02, 2020 (GLOBE NEWSWIRE) — François Gratton, Group President of TELUS and Chair of TELUS Health and TELUS Québec, will address members of the Chamber of Commerce via virtual chat to discuss three current themes: what we’ve learned so far about the COVID-19 pandemic, contributing to economic recovery by accelerating health care virtualization, and the role of business in employee safety and wellness.
“Overnight, the COVID-19 crisis triggered major changes in our lives and, in particular, greater awareness of health and wellness in our society. Today more than ever, access to health care is everyone’s business. I firmly believe that we have some fantastic opportunities to take advantage of as we write new pages in our history,” stressed Mr. Gratton.
Virtual health care represents an opportunity for businesses as their employees’ health and safety is more than ever a key concern. It is also an opportunity to reduce absenteeism, stimulate productivity, and increase retention of talents who want the flexibility to balance work and family. Following the introduction of our various health solutions, tens of millions of Canadians now have access to virtual health services.
TELUS Health is one of Canada’s largest providers of healthcare technology services, with a wide array of products and services covering the entire healthcare ecosystem. Restarting the economy also means virtualizing tools for health professionals, from medical consultations to home follow-up. This allows them to see patients safely while respecting social distancing.
“Today, all employers are being called upon, through the decisions they make about the benefits they offer employees, to consider the offering of virtual care solutions such as those provided by TELUS Health’s Akira and Babylon applications, connecting Canadians and their families to health professionals over their phones, and giving them the opportunity to get an opinion anytime, anywhere,” added Mr. Gratton.
Over the last 10 years, TELUS has invested over $3 billion in transforming Canada’s health care sector. As soon as the COVID-19 started, TELUS Health has made a clear commitment: to do everything we can to facilitate access to health care, and to help protect and support organizations in the pursuit of their activities.
Over 3,000 members of the TELUS Health team, based primarily here in Montreal, are working to develop virtual solutions to streamline access to health care for all citizens. Moreover, TELUS will make major investments of more than $850 million in the Greater Montreal area over the next four years to speed up the rollout of our leading-edge solutions.
TELUS investments will prioritize the following:
- Network robustness, speed and reliability as the virtualization of activities at our companies, hospitals and clinics accelerates exponentially Ongoing development of our virtual solutions
- Sustaining our community efforts, as shown by the partnership with the CHUM Foundation to expand Montreal’s screening capacity and the emergency fund our TELUS Community Board has set up to meet the essential needs of a dozen charitable organizations such as the Fondation du CHU Ste-Justine, Tel-Jeunes and La tablée des chefs
- TELUS has committed $150 million to support Canadians through the COVID-19 crisis.
To stay informed of the measures being taken by TELUS during the COVID-19 pandemic, visit telus.com/covid19.
This news release contains statements that are forward-looking, including regarding the anticipated amount of our investments and our investment priorities. By their nature, forward-looking statements require TELUS to make assumptions and predictions and are subject to inherent risks and uncertainties. There is significant risk that the forward-looking statements will not prove to be accurate. Readers are cautioned not to place undue reliance on forward-looking statements as a number of factors could cause actual expenditures to differ materially from the forward-looking statements in this release. Accordingly, the statements in this news release are subject to the disclaimer and qualified by the assumptions, qualifications and risk factors referred to in our 2019 annual management’s discussion and analysis and our Q1 2020 management’s discussion and analysis, and in other TELUS public disclosure documents and filings with securities commissions in Canada (on SEDAR at sedar.com) and in the United States (on the Electronic Data Gathering, Analysis, and Retrieval System, administered by the US Securities and Exchange Commission at sec.gov). The forward-looking statements contained in this news release describe our expectations at the date of this news release and, accordingly, are subject to change after such date. Except as required by law, TELUS disclaims any intention or obligation to update or revise forward-looking statements.
TELUS (TSX: T, NYSE: TU) is a dynamic, world-leading communications and information technology company with $14.8 billion in annual revenue and 15.3 million customer connections spanning wireless, data, IP, voice, television, entertainment, video and security. We leverage our global-leading technology to enable remarkable human outcomes. Our long-standing commitment to putting customers first fuels every aspect of our business, making us a distinct leader in customer service excellence and loyalty. TELUS Health is Canada’s largest health care IT provider, and TELUS International delivers the most innovative business process solutions to some of the world’s most established brands.
Driven by our passionate social purpose to connect all Canadians for good, our deeply meaningful and enduring philosophy to give where we live has inspired our team members and retirees to contribute more than $700 million and 1.3 million days of service since 2000. This unprecedented generosity and unparalleled volunteerism have made TELUS the most giving company in the world.
For more information about TELUS, please visit telus.com, follow us on Twitter (@TELUSNews) and Instagram (@Darren_Entwistle).
For media inquiries, please contact:
TELUS Public Relations
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