Basically that is true (with some exceptions, I think for diplomats and soldiers or so). There are a number of cases where children of Canadian parents have been born stateless (like a baby born in Brussels to a Canadian father and a Syrian (IIRC) mother - no Syrian citizenship because that country had not approved the marriage beforehand and no Belgian citizenship either). Or where they ended up with some weird citizenship neither of their parents had (I remember a child born in Hongkong to a Canadian father and a Chinese mother who ended up with an Irish citizenship because one of the grandparents was Irish - the Chinese wouldn't give Chinese citizenship because the father was a foreigner, and the Canadians wouldn't give citizenship because the father had been born outside Canada). The CBC Radio highlighted some of these cases last year.
This new law creates a lot of problems.
Sponsoring your own child to immigrate to your home country is silly. It is difficult and there is no guarantee that it will be accepted. Plus, until then the Canadian government doesn't provide any services as this person is not Canadian. Sucks.
