TORONTO (Reuters) - The leader of Canada’s main oil-producing province issued a rare direct rebuke of Prime Minister Stephen Harper’s foreign investment policy on Friday, saying uncertainty over the rules was taking a serious toll on investment by foreigners.
Alberta Premier Alison Redford was speaking a week after Harper said it would be “foolish” for the Canadian government to provide absolute clarity on the rules because it needed some discretion in considering takeover bids.
After a meeting of provincial premiers, which called for greater clarity on the rules, she told reporters that the rules had changed so often and so unilaterally that they were deterring foreign investors.
“It’s too easy to say there needs to be a little bit of uncertainty. There is too much uncertainty right now,” Redford said.
Harper brought in new rules in December as he allowed China’s CNOOC Ltd to buy domestic energy company Nexen Inc despite unhappiness among some legislators in the ruling Conservative Party, who did not like the idea of Chinese state-owned enterprise scooping up Canadian energy assets.
He announced that henceforth state-owned companies would be able to buy majority stakes in Canadian oil sands only in exceptional circumstances.
“This isn’t just about state-owned enterprises in China. Unfortunately many of us who are looking to equity firms in different parts of the world have heard commentary that there’s so much uncertainty right now with respect to the rules in Canada that it’s giving them pause,” Redford said.
The premier added that these were “sophisticated investors who understand that there’s always going to be a little give and take. But the rules have been changing so quickly and so unilaterally in Canada for far too long.”
Redford said there had been a “drastic drop in volume” of merger and acquisition activity from foreign investors in the last year.
Redford is from the provincial Progressive Conservative Party, part of the same family as the federal Conservative Party but widely seen as closer to the center.
Her remarks were the strongest public comments among the 10 provincial premiers, which agreed as a group on the need to reassure international investors that Canada remains open to investment.
They asked the federal government to define more clearly key procedures under the Investment Canada Act, and to publish the reasons for declining or accepting foreign investments.
Peter Julian of the left-of-center federal New Democrats, said of her remarks: “What we have is another messed up economic file from the Conservatives that does not provide clarity. It does not have foreign or Canadian investors’ confidence.”
Harper spokesman Jason MacDonald said the rules had been clarified but he stuck with the message that the government still needed latitude in deciding which investments to accept.
“Canada welcomes and encourages foreign investment and we are always prepared to talk with investors, but the government will always retain its ability to exercise discretion,” he said in an email to Reuters.
Writing by Randall Palmer; Editing by Dan Grebler and Mohammad Zargham