OTTAWA – Prime Minister Justin Trudeau’s sales pitch Friday to attract more foreign investment to Canada comes as the government struggles to get a handle on exactly what foreigners own in the country’s crucial oil and gas sector.
Documents obtained by The Canadian Press show the Finance Department only had a “rough estimate” last year on foreign ownership in the energy sector — a key destination for investment from abroad.
The February 2015 briefing note, addressed to deputy finance minister Paul Rochon, estimated 40 to 50 per cent of the sector is owned by foreign investors.
“A significant amount of foreign capital was brought into Canada to expand oil and gas production,” said the document, obtained by The Canadian Press under the Access to Information Act.
“Unfortunately, there are no precise data on the foreign-owned share of the oil and gas sector.”
Statistics Canada says foreign holdings in the country have increased in recent years in general, including a gain of 5.8 per cent from 2013 to 2014. The total foreign holdings hit $361 billion last year, which the agency said accounts for almost half of all direct investment in Canada.
When asked about the lack of precise information for the oil patch, a spokesman for the Finance Department referred to data collected by Statistics Canada under the Corporations Returns Act. The latest available data is for 2012, showing foreign control over 36.7 per cent of the oil and gas sector.
Foreign investment has at times been a contentious issue in Canada and the former Conservative government wrestled for years to find a policy mix that would make everyone happy.
The Tories, however, ended up sending mixed signals by blocking the takeover of Potash Corp., and changing the rules for state-owned enterprises after allowing a Chinese-owned company to buy Nexen Energy.
On Friday, Trudeau used the global stage at the World Economic Forum in Davos, Switzerland to try and reel in more foreign money to help Canada’s limping economy, which has suffered a big punch from falling commodity and oil prices.
“Our government understands that global trade and foreign investment are key drivers of economic growth and important sources of new jobs,” Trudeau said Friday.
“This will be a key priority for us.”
Craig Alexander of the C.D. Howe Institute think-tank said attracting foreign investment is critical for a smaller economy like Canada, where an adequate amount of capital can’t be generated within its borders.
Business investment, he added, is expected to slide in the coming year due to low commodity prices. That’s why he believes it’s “highly appropriate” that a prime minister try to draw the attention of international audiences to opportunities in Canada.
Alexander said because of the low commodity prices it’s also important for Canada to attract investment to non-resource sectors, which are expected to help lead the economic turnaround.
He said the weak Canadian dollar, pulled down alongside slumping oil prices, should help lure foreign investors — especially those from the United States.
However, it could still prove tricky in a tough global economy.
“On the one hand the currency is going to make it a lot more attractive. But the economic backdrop is not one that you would expect to see booming foreign direct investment take place,” said Alexander, C.D. Howe’s vice president of economic analysis.
Pedro Antunes, executive director and deputy chief economist for The Conference Board of Canada, said there are many reasons why boosting investment is a good thing — whether it be local or foreign.
Investment is what drives a country’s future capacity to produce, he added.
“A source of funding isn’t really important,” Antunes said. “What’s important is, are we adding to the productive capital of the country?”