Ottawa Obfuscates on Foreign Investment

Finally we got some clarity today regarding foreign investment in Canada, yet in the process we also got more uncertainty.
The Harper government has approved (PM's statement here) the takeover of Calgary-based Nexen by China's CNOOC. Additionally, Ottawa gave the greenlight to the takeover of Progress Energy Resources by Malaysia's Petronas.
Both decisions were correct. These were decisions made by the shareholders of two Canadian companies and there was no need for the government to interfere.
If these foreign entities want to pour in billions in new foreign investment, then Ottawa should be getting out of the way.
However, Ottawa has indicated that it may indeed get in the way of future transactions. The government announced that future takeover deals in the oilsands involving state-owned companies will only be allowed in "exceptional circumstances". The Prime Minister says while Canada is open for business to foreign investors, it's not for sale.
But our government does not own these private companies. We might own the resources and we might set the laws, but none of that is up for sale.
If the government is so worried about the detrimental impact of state-owned enterprises, perhaps then we could start eliminating the crown corporations that still exist in our country. But in the meantime, the basis for the government's new policy is unclear. As Andrew Coyne points out:

Yes, it is true that they “play by different rules,” that they “have different incentives,” or have access to “different resources” than private firms. Yes, yes, yes. So what?
What precise harm they could do to us with these “different resources” is never explained. There’s no doubt that they can overpay us for things, as CNOOC may well have done for Nexen. If so, we should shut up and take their money before they have time to reconsider. They might even sell us stuff for less than they should. Again, why would we want to stop them?
What the critics are really saying is that state-owned enterprises sometimes do dumb things, owing to their tendency to pursue political rather than commercial objectives. That is indeed why, as the Prime Minister noted, state ownership has rather fallen out of favour in this country.

The fact is, foreign investment is needed to help develop the oilsands. and moreover, foreign investment is a net benefit to Canada. As the IRPP notes (PDF):

A dispassionate analysis of the evidence shows that the benefits of foreign investment far outweigh any real or imagined drawbacks. Foreign firms operating in Canada are more innovative and productive than their Canadian counterparts, and they pay higher wages. More importantly, they import significant amounts of technology from their parent companies, and the benefits of these technologies spill over to domestic firms. In addition, though the stock of inward FDI did increase somewhat as a share of GDP in the late 1990s, it has held steady since then at just over 30 percent — the same share as in 1970.

Worries about corporate takeovers and the “hollowing out” of high-value head office functions in Canada are also misplaced. Foreign takeovers have actually increased head office activities in Canada in recent years, because foreign firms typically find it to their advantage to keep such activities geographically close to their Canadian operations.

But in this case, the dumb state-owned enterprises are somebody else’s problem. The costs of their mistakes fall on foreign taxpayers, not ours, while the benefits accrue to us. Why self avowed free marketers, amongst whom the Prime Minister once counted himself, should fail to understand this is yet another puzzle.

More specifically, as economist Stephen Gordon notes, foreign investment is crucial to oilsands development:

The first is that foreign investment is very important. Investment spending must be financed by savings, and those savings can come from Canadians or from foreigners. Canadians investors already own 65 per cent of the assets in the oil and gas sector (this share is 47 per cent in the manufacturing sector) and are unlikely to significantly increase their holdings, if only to avoid putting all of their eggs in one basket. The Conservatives’ policy of favouring the development of the oil sands while simultaneously making life difficult for foreign investors, then, seems self-defeating.

If we're really open for business, let's start acting like it.