Bill C-40

Strengthening Canada's Defence Sector Act

An Act respecting production, procurement and investment in relation to national defence and national security

This enactment contains measures relating to production, procurement and investment in respect of national defence and national security.
Part 1 enacts the Canadian Corporation for Defence Investment Act . That Act establishes the Canadian Corporation for Defence Investment, a corporation whose mandate is to, among other things, carry out activities related to production, procurement and investment in respect of national defence for the benefit of the Canadian Forces or the Department of National Defence or for associated governments. Part 1 also makes related and consequential amendments to other Acts.
Part 2 amends the Defence Production Act to, among other things,
(a) extend the application of that Act to supplies and projects related to national security and to services related to national defence and national security;
(b) provide that the Minister of Public Works and Government Services has the authority to acquire supplies and services related to national defence and national security that are required for the purposes of a department, board or agency of the Government of Canada, subject to certain exceptions;
(c) extend the purposes for which that Minister may engage in stockpiling to include national defence and national security, including economic security, and the defence and security of an associated government or other state;
(d) provide that Minister with new financial authorities, including the authority to enter into financial transactions for the purpose of investment in national defence and national security sectors; and
(e) establish procurement rules in relation to national defence and national security.
Part 2 also makes consequential amendments to the Access to Information Act and terminology changes to certain legislative texts.
Part 3 provides for a review of the operation of the Canadian Corporation for Defence Investment Act and the amendments to the Defence Production Act .

Strengthening Canada's Defence Sector Act

[Stephen Fuhr, Liberal, Kelowna, BC]

moved that Bill C-40, An Act respecting production, procurement and investment in relation to national defence and national security, be read the second time and referred to a committee.

Madam Speaker, it is my pleasure to rise today to speak to Bill C-40, the strengthening Canada's defence sector act, and the future of the Defence Investment Agency.

I think we can all agree that the world has changed. The security environment is more dangerous, less predictable and moving faster than the institutions we built to respond to it. Canada must defend its sovereignty, meet its commitments to its allies and equip the men and women of the Canadian Forces with the equipment they need to do their jobs. We are making generational investments in our national defence, but investment alone is not enough. We also need to change how we deliver. Bill C-40 would establish the Defence Investment Agency as a permanent organization with the mandate, authorities and flexibility to deliver military capabilities sooner, strengthen Canadian industry and remain accountable for the results.

Defence and economic security are mutually reinforcing. A strong defence industrial base helps protect our sovereignty, while defence investment creates jobs, drives innovation and strengthens our economy. Every dollar invested in defence is an opportunity to strengthen Canada's economic security and build sovereign capabilities for decades to come.

Our defence industrial strategy sets out a build, partner, buy approach: build in Canada where we can, partner with trusted allies where it makes sense, and buy abroad when necessary. The objective is to meet the military's needs while strengthening Canada's defence industrial base and maximizing economic benefits here at home. That requires more than just different purchasing policies. It requires an organization that brings procurement, production and investment together; engages industry earlier; and makes decisions at the speed our security environment demands.

The Defence Investment Agency was established in October 2025, a little more than a year ago, as a special operating agency within Public Services and Procurement Canada. It was explicitly a temporary structure, allowing us to improve delivery immediately while developing its permanent structure. We have accomplished a lot in this last year, and I want to give my colleagues in the House some examples of what we have achieved specifically.

We have awarded Colt Canada a contract for the Canadian modular assault rifle, moving forward with next-generation rifles for our army and accelerating the original procurement timeline by two years. We have contracted with Bombardier for six Global 6500 aircraft to renew our multirole airlift capability, moving from project definition to contract award in about four months. We have ordered a contract to Telesat to deliver next-generation military satellite communications through its Lightspeed constellation, strengthening Canada's Arctic sovereignty and supporting our domestic space industry. We have concluded a government-to-government agreement with Australia for Arctic over-the-horizon radar, with production contracts signed between Australia and BAE Systems Australia to deliver critical capability.

We have selected ThyssenKrupp Marine Systems as the preferred supplier for discussions on Canada's next generation of submarines under the Canadian patrol submarine project. That was a competitive process, and we undertook that in about eight months, which is unheard of for such a large procurement. We have selected Saab's GlobalEye platform as a preferred supplier for discussions on airborne early warning and control capability. We have advanced work on future fighter lead-in training, including the selection of Leonardo's M-346 aircraft as a preferred solution. We have selected the Pilatus PC-21 to replace the aging Snowbird CT-114 fleet, and I will have some very good news for the House very shortly on that procurement.

We have also worked with General Dynamics Land Systems to move forward with 190 armoured combat support vehicles for the Canadian Army. Through our industrial and technological benefits policy, we have also supported the award of a contract for Davie shipyards for six new Canadian Coast Guard icebreakers. We have established the defence drone initiative marketplace through a supply arrangement that creates a pathway for Canadian industry, developing uncrewed and autonomous systems.

These are all different kinds of milestones. Some are signed contracts; others are preferred supply arrangements, decisions, negotiations or supply arrangements. We should not confuse them. Together, they show the agency is moving important capabilities forward while the permanent structure is being developed.

The need for reform is not new, and it is not partisan. In 2024, the House of Commons Standing Committee on National Defence published a report called “A Time for Change: Reforming Defence Procurement in Canada”. It identified fragmented responsibilities, duplicative process delays and the need for a stronger relationship between procurement and Canadian industry. Several recommendations are directly relevant to the reforms we have made in advancing this legislation, and I will point out a few.

Recommendation 1 from this report called for reviewing the defence procurement process across departments and agencies to simplify Treasury Board guidelines and eliminate duplication. Recommendation 15 called for delegating appropriate decision-making responsibilities to reduce the number of approvals needed and accelerate procurement decisions. Recommendation 17 called for a risk-based approach to procurement and contract approvals to reduce unnecessary process. Recommendation 24 called for creating a defence industrial strategy to maintain and strengthen Canada's defence industrial base. Although that is not the topic of today's discussion, we have also achieved that, and it is working very well.

The Conservative members of the national defence committee went further in their supplemental opinion. They specifically recommended that the Prime Minister designate one minister to be ultimately accountable for all defence procurement. Members of different parties have recognized that our procurement system needs clearer accountability and fewer unnecessary obstacles. Bill C-40 responds to that challenge. It does not mean that every decision becomes easy overnight. It means establishing an organization with a clear mandate and the ability to act on it.

I thank the members of the Standing Committee on National Defence for their important work. Their recommendations helped inform Bill C-40 and contributed to a stronger approach to defence procurement reform.

I want to be clear about the evolution of the DIA. The special operating agency was never intended to be the final destination. It allowed us to get started quickly, learn from operational experience and develop a permanent structure suited to Canada's investment opportunities. Bill C-40 builds on the progress achieved by the agency and establishes the DIA as a Crown corporation within the national defence portfolio.

This is about more than just buying equipment. We need to realize production, investment and opportunities that traditional procurement structures were not designed to pursue. We need to build industrial capacity here in Canada, strengthen critical supply chains and invest strategically in technologies and capabilities that will matter in the future. A permanent organization with commercial expertise and appropriate financial tools will be better positioned to do all of this. Procurement, production and investment should reinforce one another rather than operate as disconnected activities. Our military will continue to find the capability it needs. The DIA will work with its partners and industry to deliver them effectively.

As I mentioned earlier, even the Conservative members of the Standing Committee on National Defence recognized the need for a single point of accountability for defence procurement. Under the previous, decentralized system, responsibility was spread across multiple departments. Many organizations had a role, but no single minister was ultimately accountable for delivering results. That fragmentation created multiple approval gates. Major projects could require new Treasury Board submissions, even when the previous phase had been completed on time, on budget and within scope.

These controls served a legitimate purpose. Government must oversee public spending. Major changes in cost, risk or scope may warrant further approval. However, there is a difference between meaningful oversight and unnecessary duplication. Unnecessary repeated approvals add no value, but every repeated approval costs time. A more centralized model can reduce unnecessary duplication while preserving the authorities and safeguards that matter. Policy, project, financial, spending and contracting authorities all remain important. The Treasury Board will continue to play a critical role in overseeing government spending.

We have already streamlined approval processes under the DIA's temporary structure and achieved many things, as I mentioned earlier in my remarks. Bill C-40 builds on that progress and establishes a dedicated ministerial leadership within the Department of National Defence portfolio with a clear line of accountability for the agency's work. Greater operational independence does not mean less accountability. The agency will still operate under a legislative mandate and governance framework with financial reporting and audit requirements.

The Auditor General, the Parliamentary Budget Officer and parliamentary committees would still continue to have important oversight roles. The Canadian Armed Forces and the Department of National Defence would continue to establish military requirements. The DIA would deliver against them, with specialized organizations contributing with their expertise when it is needed. The goal is not to eliminate checks and balances. It is to preserve meaningful oversight while ensuring process does not consume time without improving outcomes.

Canada's defence industry includes major manufacturers and thousands of small businesses with specialized expertise, innovative products and technology our military needs. For many small to medium-sized businesses, limited access to capital, unpredictable demand and difficulty in participating in defence programs presented significant challenges. Our defence industrial strategy addressed many of these barriers by improving access to capital, providing greater certainty for industry and creating more opportunities for Canadian businesses to participate in defence procurement.

Bill C-40 would give the DIA greater scope to support production and investment, strengthening domestic capacity and engaging with companies earlier. The Defence Investment Agency would manage the implementation of the industrial and technical benefits policy for industry. That would mean one single point of contact, which is really important for industry. Companies would deal directly with the DIA rather than navigating multiple departments. This would bring defence procurement and industrial benefits together in a more coordinated, one-stop approach. I see my critic nodding. He is happy about that.

We have undertaken an unprecedented level of industry engagement, working directly with companies to understand their capabilities, identify opportunities and address barriers in order to deliver the equipment our military needs. Earlier engagement provides better information about suppliers, industrial capacity, costs and risks before procurement decisions are locked in. That means better contracts and better results.

The benefits extend beyond the major equipment projects managed by the DIA. The Department of National Defence has its own procurement authorities, and Canadian businesses of all sizes participate. With dedicated ministerial leadership for defence procurement within the national defence portfolio, we would be better positioned to apply our defence industrial strategy and the build, partner, buy approach consistently across defence purchasing. That means better coordination in supporting Canadian companies, strengthening domestic production and maximizing the economic benefits for defence investment.

When we build at home, we strengthen more than our economy. We strengthen our ability to supply and sustain the Canadian Armed Forces when it matters most. Canada is making necessary generational investments in our national defence to protect our sovereignty, strengthen our security and meet our commitments to our allies. We have an obligation to ensure that these investments strengthen Canada's industrial base, build resilient domestic supply chains and develop capabilities we need in order to sustain ourselves for the long term.

Our ability to defend ourselves depends not only on the equipment we acquire but also on our ability to produce, maintain and support it. That makes Canada is more self-reliant, more resilient, stronger, and a more dependable partner for our allies. Bill C-40 would give the Defence Investment Agency the permanent structure, authority and flexibility to do what it needs while maintaining clear accountability and parliamentary oversight. We have already demonstrated what can be done under the agency's temporary structure. Now it is time to build on that progress.

I encourage all members of the House to support Bill C-40 at second reading and send it to committee for further study. Fundamentally, this is about delivering faster the capabilities our Canadian Armed Forces need and ensuring that our defence investments strengthen Canada's economy. These objectives are mutually reinforcing, and both are essential for Canada's security and prosperity.

[Jeff Kibble, Conservative, Cowichan—Malahat—Langford, BC]

Madam Speaker, the member opposite mentioned numerous announcements that are only about preferred providers, not signed contracts or delivered equipment. The member stated, “remain accountable for the results.” Will the member ensure that the reasons for all sole-source contracts signed under Bill C-40 are reported to the House, and how will he ensure that is done?

[Stephen Fuhr, Liberal, Kelowna, BC]

Madam Speaker, as I said in my remarks today and last Thursday when we had an interaction in this place, we have signed a number of contracts. I will not repeat them, but perhaps the member could review the tapes. There were supply arrangements, contracts and preferred suppliers. There are a number of things, and we should not confuse those things, but, yes, we have signed a number of contracts, and we will continue to do so.

[Claude DeBellefeuille, Bloc, Vallée-du-Haut-Saint-Laurent, QC]

Madam Speaker, since the Trudeau government was elected in 2015, all sorts of independent agencies and organizations have been created to deal with all sorts of things. I often hear the Minister of Public Safety say that he cannot intervene politically because the Canada Border Services Agency is an independent agency and so is the RCMP.

When it comes to the new entity provided for under Bill C-40, how can we be sure that accountability to parliamentarians and government accountability will be upheld and not delegated to another body that does not have the same accountability requirements?

[Stephen Fuhr, Liberal, Kelowna, BC]

Madam Speaker, just by way of history, I will say that the previous Liberal government actually doubled defence spending over the 10 years that Trudeau was prime minister, but we did not see a noticeable change. The reason was that there was a financial commitment but we did not have a process that was able to dispatch the funding in a good way. It certainly did not work then, and it now needs to be amplified, given the situation we all find ourselves in with the global security environment.

With regard to the member's concerns, I will say that clause 9 in the bill is clear and unambiguous that the minister would have the ability to direct the corporation and that the direction is deemed to be in the best interests of the corporation. There would be an unambiguous tie to the government, to quell her concern.

[Gord Johns, NDP, Courtenay—Alberni, BC]

Madam Speaker, I have a ton of respect for my colleague, and New Democrats want our military to have the right equipment and in a timely fashion, but Bill C-40 must ensure that public dollars support Canadian workers and veterans.

Canadians were horrified yesterday to learn that the Canadian Corps of Commissionaires lost a nearly $12-million CRA security contract to a foreign-owned company, Allied Universal, for roughly over $80,000, less than 1% of the bid. Its subsidiary reportedly holds contracts with ICE, the agency carrying out Trump's mass deportations. Canadians want to know how awarding this contract to a foreign-owned corporation with those ties, instead of to a Canadian-owned institution supporting veterans, squares with the Liberals' Canadian promises. Will the Liberals, seeking broader powers through Bill C-40, support binding safeguards on Canadian ownership and supporting veterans' employment, labour, human rights and parliamentary oversight?

[Stephen Fuhr, Liberal, Kelowna, BC]

Madam Speaker, I covered this last week. With respect to all the major investment we are going to be undertaking, we have undertaken and will continue to undertake, it is a massive amount of taxpayer dollars, and obviously we have to be responsible for that.

I want to untie Canadian economic benefit and Canadian companies, because oftentimes we confuse those. Economic benefit to Canada can mean a number of things. Foreign direct investment in Canada is at a 23-year high. It is very important. There are big companies from other countries that do direct work in Canada. I could name a whole bunch of them. Bell Textron is one, and there is Airbus, Boeing and Lockheed Martin. They employ thousands of people. They engineer here, retain IP here and have headquarters here. These companies matter to Canada as well. As long as they continue to invest in Canada, we will continue to support them where it makes sense.

There are a lot of things that go into the bucket when we have to consider what we are going to buy. Military requirements are very important, but there is also cost, risk, timeline and defence industrial strategy. There are also a whole bunch of subcomponents. These are all things the government needs to consider to make the best option choice.

[James Bezan, Conservative, Selkirk—Interlake—Eastman, MB]

Madam Speaker, as we know, we were here just months ago talking about Bill C-31, division 16, which was going to create the Defence Investment Agency under an omnibus budget bill. The secretary of state got up and made a big speech. He was actually hoping to be, fingers crossed, the minister of defence procurement, a full minister. Of course, in Bill C-40, that has been downgraded to associate minister of national defence for procurement.

What has changed? We originally set up the Defence Investment Agency as part of PSPC, and we brought it around to where it is today. We went through Bill C-31. We are now on Bill C-40. There are rumours that Doug Guzman, the Prime Minister's BFF, his Goldman Sachs investment banker buddy, has threatened to quit. Is that the reason why we now have to set up an authoritarian corporation with powers that we have not seen before in any Crown corporation: that a minister can direct the agency, that it must do what the minister wants and that he can also pass those powers down to and share them with the CEO? Is that the very reason we are doing this? I hear that Chairman Mao is actually blushing on this one.

[Stephen Fuhr, Liberal, Kelowna, BC]

Madam Speaker, so says the critic and an older parliamentary secretary to the minister of national defence. I accept his comments.

I did not speak to Bill C-31. As the member pointed out, it was an omnibus bill. I did not speak to it in the House. He was very upset that it was an omnibus bill and that the committee was not going to get to see it. Not talking about Bill C-31 or Bill C-40, the bill before us is a bill going through on its own. The member will have ample time to hopefully support it where he thinks he can and criticize it where he thinks he must. That will quell some of his concerns.

With regard to the Crown corporation, it is very important for the current government or any future government to have control over military spending. We would have a Crown corporation to reap the benefits of the upside, to act as a more commercial entity to capitalize on procurement, production and investment, while still having it tied back to the Government of Canada. Clause 9 lays out how that would be the case. If we had not put clause 9 in, the member would be talking and arguing about this from the opposite side of just allocating all this to a Crown corporation and not being involved.

I hear those comments. I hope the member supports the bill. He will get ample opportunity to criticize it or support it as we move forward. I will probably see him in committee, and I look forward to that.

[Lori Idlout, Liberal, Nunavut, NU]

Uqaqtittiji, I really appreciate our government's focus on Arctic sovereignty and Arctic security. I think that we all know that doing business in the north is a lot more challenging.

I wonder if the member could respond to the question of how the bill would be impactful for the establishment of NOSH sites or NORAD sites and the importance of the bill to keeping Arctic sovereignty and Arctic security.

[Stephen Fuhr, Liberal, Kelowna, BC]

Madam Speaker, as many people know, the NATO commitment is 5% by 2035. That is broken up into 3.5% in hard military spend and 1.5% in infrastructure and dual use. We did an announcement in Yellowknife, five months ago, I want to say. We are investing $35 billion into the north for roads, bridges, ports, northern supply hubs, and infrastructure for NORAD bases such as Inuvik. There is lots of investment going into the north. This is great, because a lot of these things that we are building will not only serve the military. Obviously, roads and infrastructure will help improve the quality of life for people who live in the north. I am also proud to say that we met in 2025-26 the government's obligation to obtain 5% indigenous procurement under national defence procurement.

[James Bezan, Conservative, Selkirk—Interlake—Eastman, MB]

Madam Speaker, this being a solemn day, as we think about the tragedy and disaster that happened at CFB Wainwright, I just want to extend my heartfelt and sincere condolences to families and Canadian Armed Forces members, especially those who were on site. They are in our thoughts and prayers during this very difficult time. I would like to acknowledge Private Aidan Goulding, Private Shaun Farrell and Private Hayden Lykkemark, all part of the 3rd Battalion Princess Patricia's Canadian Light Infantry, as well as Sergeant Morgan Wong, a reservist with the Loyal Edmonton Regiment. After their passing during this tragedy, we want to rally behind their families and their comrades at this time.

We also want the 39 injured members of the Canadian Armed Force to know that we will be there. We will work across party lines. All of us are going to stand with them 100% to ensure that they get the supports they need to heal and recover, and ensure that if they are unable to return to work, supports are there through Veterans Affairs Canada.

I have been to CFB Wainwright on a number of occasions, to be out there, to witness training and to participate in some of the training exercises, including with the PPCLI. I see why the young men and women who put on the uniform are the best of the best that Canada has to offer. They are so excited to be serving our great nation. We realize that they have to do things like live-fire training so they are always ready to defend us. Again, we send out all our support, our prayers and our love to the entire Canadian Armed Forces military family.

Conservatives always support our armed forces, and we have a record of getting equipment bought and delivered in a very timely and quick manner. After the Liberal decade of darkness under Chrétien and Paul Martin, the Canadian Armed Forces was in dire need of reinvestment. We witnessed that its members were sent into Afghanistan wearing things like green uniforms. They did not have proper boots. They did not have kevlar body armour and tactical vests. We quickly went out there and bought for them the stuff they needed to work in theatre.

During our time in government, we bought 650 brand new LAVs so they had light armoured vehicles to do the work they did, and 500 tactical armoured patrol vehicles. We bought 100 Leopard tanks. The Liberals, during the Chrétien era, were decommissioning all of our Leopard tanks, and what we needed in Afghanistan were Leopard tanks, so we bought 100 Leopard 2 main battle tanks. We bought 82 armoured heavy support vehicle systems and 50 Nyala armoured vehicles so they could move around more carefully, and we bought IED vehicles to clear away all of the mines and IEDs that were causing harm. Many of the fatalities and casualties experienced in Afghanistan were caused by them. We bought 16 of those vehicles and bought 37 M777 howitzers. We made sure that our army had what it needed when it went into theatre.

In terms of our air force, we were at a point when we took over as government that we were begging the Americans to help us move our troops into Afghanistan. We were hitching rides with the Russians, of all people, having to get them to come with their heavy-lift Antonovs to move us. We invested in buying five brand new C-17 tactical Globemasters. We bought 21 Chinook helicopters to move our troops around in Afghanistan safely and get them away from IEDs. We bought 17 new Hercules CC-130J models, and we bought a number of UAVs. During that time, we also upgraded our CF-18s and extended the life of our Auroras, which are now past their end of life. This is going back to over 15 years ago when we made those investments. We also made the decision to buy the F-35 as our future fighter jet.

On the navy side, we made sure that we stood up the national shipbuilding program. We ordered the very first six AOPSs, the Harry DeWolf-class Arctic offshore patrol ships. We ordered two joint supply ships, the protecteur class. We not only ordered but delivered on time the Asterix auxiliary offshore replenishment vessel to support our navy until the JSS's were delivered. We also did a mid-life extension to our Halifax-class frigates. We stood up and bought what we needed.

We know that sometimes we have to sole-source, so we used national security exemptions and the urgent operational requirements required by the CAF to sole-source where we had to. Some things we have to buy off the shelf to get them into play quickly, ensuring they are interoperable with our allies. We proved that we were able to get stuff done because of political leadership. We made sure that this started right at the top, with the the prime minister at that time, Stephen Harper, directing the PCO and cabinet to set up a secretariat of ministers and deputy ministers to provide leadership back down to the bureaucracies to get things done and buy the kit and equipment we needed to support the Canadian Armed Forces, especially during a time of war.

Here we are, 11 years in with the Liberal government, and I can say that our fighter jets and most of the aircraft we have within the military right now are worn out. We know the army has been hollowed out and the navy is rusting out right before our eyes.

To prove the point, all we have to do is look at the serviceability, readiness and operational demands of the vehicle fleets we have within the Canadian Armed Forces. This is right out of the performance reports from National Defence. In 2023-24, only 49% of land vehicles for the army were serviceable and deployable. That increased slightly to 51% in 2024-25, the last year for which we have this data. It is so bad that the guys deployed right now to Latvia are not able to train properly alongside our allies because a number of their vehicles are broken down. There is not enough in the budget to maintain and repair them and put them back into service. Often, a couple hundred of our guys who are deployed do not get certified for working as a brigade alongside our allies.

In 2023, only 48.9% of our air fleet was available for operational deployments. That dropped down to 42.3% last year under the Liberals. In 2023-24, only 45% of the maritime fleet was deployable. That increased in 2024-25 to 59.6%, almost 60%. How did the Liberals make that gain? They were able to do that because they retired an entire class of patrol vessels, our Kingston-class coastal patrol vessels. They mothballed them. They are sitting in furlough now and being scrapped instead of being out there protecting our sovereignty and patrolling our maritime coastline.

After 11 years, all we have gotten from the Liberals is talk and no action. The proof is in the numbers, and the sorry state of the Canadian Armed Forces today is due to 11 years of neglect by the Liberals.

We are looking at a system where the Canadian Armed Forces know what they need but the Liberals are not going to give it to them. As a case in point, since the minister is talking about all the things they bought, one thing they are supposed to buy is new assault and sniper rifles, the C25s and C26s. However, we are waiting for them because the Liberals failed to sign a contract to get them delivered before all the orders were booked with the manufacturer. The Denmark and United Kingdom militaries are getting these assault rifles before we do. Our guys have to wait in the queue because we allowed other countries to jump ahead of us and buy up these new assault rifles.

With respect to the SkyGuardian, the Liberals announced three years ago that we were going to have a new drone patrol aircraft or reconnaissance vessel that could fly all over Canada and up into the Arctic, but the first one has still not been delivered. Where is it? We are still looking for it.

The government bought the Kingfishers, the CC-295s. This is a procurement that continues to lag behind, as it is not fit for operations. We know that the air force is struggling to use this jet to do fixed-wing search and rescue and contour flying in the Canadian Rockies. The plane has not been able to pass operational requirements, as set out by the Royal Canadian Air Force, and is still not certified, and not all the planes have been delivered at this point in time.

I will note one of the greatest examples of the failure of the Liberal government. Since the war in Ukraine started, which we are four and a half years into now, we have seen how important artillery shells are in the war. Ukraine goes through between 5,000 and 6,000 shells a day. Russia has used over 30,000 shells against Ukrainians on Ukrainian territory. Putin's war machine is getting shells from his allies: North Korea and Iran, which are not our friends. Meanwhile, we should be supplying Ukraine. We could produce, when this war started, about 3,000 shells a month. That would not last a day in Ukraine. We have been able to up it slowly, but there is no contract signed. It is up to 5,000 shells per month. The artillery shell factories and manufacturers in Canada have more than doubled their production, but the United States Army signed contracts and is getting them built there faster than we are building for ourselves. That is a failure of the government to get things done.

The government likes to hang its hat on the new GlobalEye that it announced at CANSEC back in May. It is an asset that we need desperately in the Royal Canadian Air Force, especially with what is happening today, but sadly, the Defence Investment Agency and the Secretary of State for Defence Procurement failed to consult with the Royal Canadian Air Force. The media reported that the RCAF was as surprised as anyone else, since it had not even drafted the final version of the statement of requirement. The argument is used that the platforms out there did not have all the standards that we require. However, one, how do they know this when they did not talk to the air force about what it needs? Two, there were at least three competitors out there, two of them using the Bombardier Global 6500 as their basis, and for whatever reason, the government announced that it was partnering with Saab and that it was going to be a preferred supplier on this procurement, without talking to Boeing, without talking to Saab, without talking to Bombardier and without talking to L3Harris, which employs over 1,000 people in Montreal alone.

If we want to talk about a symbiotic relationship, Bombardier-L3Harris is an interesting one. Boeing has the proven E-7, and instead we are going with an aircraft that has some operational shortfalls and cannot even do 360 radar, never mind having the proper connectivity. As such, there are major concerns with that procurement.

If we are going to give unprecedented powers under Bill C-40 to the minister, would that not open it up so they could do more sole-sourcing based upon who they know and give Liberal insiders, friends and well-connected manufacturers the contracts, rather than talking to the user to ensure we are buying the kit and equipment we need to protect Canada in the best way possible?

The replacement of the CF-18s has also been a disaster. The secretary of state is a former fighter pilot, and I respect his service to Canada, but he knows that the CF-18s are well past their due date, despite the life extension that we did as Conservatives. He was the chair of the defence committee back in the day when the government invented the capability gap nonsense and said that we had to increase the number of fighter jets we had. Of course, right away, the government announced it was going to go with a super Hornet, a brand new F-18, to make up the capability gap that we required. That, of course, would open the door to buying all F-18s.

However, Boeing and Bombardier got into a mess, and the decision was made by Trudeau to do no more business with Boeing, so there were no more super Hornets. What did the government do? It went out and bought a bunch of used, vintage F-18s from Australia that were as old and worn out as our own fleet of F-18s. It cost us millions and millions of dollars to buy them and refurbish them, and we have nothing to show for it at the end of the day, other than using them as parts for the current fleet we have.

The government continues with its F-35 review. That review has been sitting on the Prime Minister's desk for over a year now. The Department of National Defence has reported back. It is well known what plane the Canadian Armed Forces wants, which is the F-35. Because of political games and grandstanding, the Prime Minister will not announce that we need the F-35, which, I must say, has been said before.

Trudeau said that he would never buy the F-35. He put it out to competition, did a complete review and guess what. It was won fair and square and hands down as the best fighter jet, on all four major measurements, as what we need in Canada. We are already in the process of purchasing the first 16 jets and there will be another 14 after that. Our F-18s are old and worn out. We cannot wait for the Prime Minister to keep playing his political games and grandstanding with the United States on this when we need a fighter jet in service today so we can train up the next generation of pilots and air crew to support that fleet.

It has been so bad here that we are already hearing rumours that members of the Canadian Armed Forces are being asked to turn in their rucksacks and sleeping bags. The Liberals bought a bunch of sleeping bags that do not even work at below -20°C. There are no sleeping bags. There is a shortage of tactical vests. Everybody has been asked to hand them back in. Guys are going through basic training saying that there are not enough uniforms. They are all getting worn out and we have not bought any new ones, so they have to turn their uniforms back in through basic training. It is so sad to hear that our guys who are deployed are begging, borrowing and stealing from our allies to get proper kits when they are serving in places like Latvia and on Operation Reassurance across Europe.

There are things that we need to buy right away, but we are not hearing from the government. We need new tanks. Where are they? We need ground-based air defence systems after witnessing what is happening. There have been no requests for information of any of the companies out there. We have heard over and over again that we are short on military housing in this country. We are 6,700 residential housing units short in supplying the current demand, and that is not happening at any speed. To make up 6,700, even over 10 years, we would have to build over 600 a year, and we are not doing this. Three years ago, I think 32 homes were built for the armed forces. This is not of high importance to the Liberals.

The Liberals have done some things. They bought the Global 6500 as an executive jet to fly ministers of the Crown around, so everybody flies around in comfort. The Prime Minister did not like the Polaris aircraft we had as the executive jet for international travel, so the Liberals had to go out and buy some new Airbus CC-330 Husky aircraft just so he could be in a luxurious aircraft.

The Liberals are good at making announcements and reannouncements about preferred suppliers. They have done some of these things two times, three times and four times now, but as I just pointed out, they are bad at signing contracts. A case in point is the 155 artillery shells.

The Liberals are great at creative accounting. That is how they got up over 2%. It was not actual investment in the Canadian Armed Forces. They gave pay raises, low-hanging fruit and well overdue, but they turned around and started clawing them back, and increasing rent hikes and changing the living differential for those who are posted off base. We are witnessing right now another cut coming to our armed forces. They are looking for 10% savings right now.

We already went through this under Trudeau, where the Liberals cut $2.7 billion over three years. This year alone, the cut to the main estimates would amount to $2.9 billion in one year in the Prime Minister's efforts to find savings.

There is a lot more I could say on this, but I will just say that we are going to take time at committee to study this. This is the third iteration of it, but Bill C-40 would increase the opportunity for political interference and decrease accountability, transparency and protection to our taxpayers. We also know that the Liberal government has a history of corruption. By giving it this type of unvetted access to $1 billion at a time, we are worried this would turn into a major scandal.

[Stephen Fuhr, Liberal, Secretary of State (Defence Procurement)]

Madam Speaker, as my colleague was building an alternate universe, I ran out of paper, so let me just try to respond. It was very high level. For years, the Conservatives have crowed about supporting the military and spending and all this stuff. They did buy a few things, there is no question about it. There is the list of things the member pointed out, and I think there was even a compliment in there somewhere for me, so I thank him for that. I appreciate it. At the end of the day, they spent less than 1% on defence spending. If we add up everything he said, when it got the keys to the car, the government was spending 1.13%. When it was done, it was under 1%. If we add all the pluses and minuses, we end up with a pretty big deficit.

I had mentioned in my comments earlier that the previous Liberal government doubled defence spending and got it from under 1% to about 1.43%, but we did not get to 2%. Part of the reason we did not get to 2%, although we doubled the defence spending, is that we did not have a process that could dispatch the funds and a machine that could do it in a way it needs to be done, hence we are standing here talking about a new way of doing business that will meet the moment.

I will say that we did get to 2% in about eight months from 1.5%. I know my critic over there is shaking his head because he found some conspiracy theory place that disagrees, but does he know who audits those numbers and actually says whether we make the number or we do not? It is NATO. NATO has decreed that Canada has met the bar. Everybody else can have an opinion, but the one that matters is NATO. It has confirmed that Canada did indeed meet the target.

Can I have another minute? He had about 10 minutes. I am just getting warmed up.

[James Bezan, Conservative, Selkirk—Interlake—Eastman, MB]

Madam Speaker, he took two minutes, so I hope I get two minutes to reply.

First of all, let us talk about how the Liberals got to 2% through creative accounting. They changed the formula in 2017 when they started adding other departmental spending into national defence. Today we have the Canadian Coast Guard, which has been entirely absorbed by the Canadian Armed Forces budget, not operations. It is not a security organization. It does not have any lethality. They told us at committee, when we had the Coast Guard before them, that if there is any conflict breakout, the Coast Guard's job is to leave the scene of the assault. It would not be in the fight. It does fisheries monitoring, navigation and ice-breaking operations to ensure the St. Lawrence Seaway stays open. This is what it actually does and it does a great job. We love the Coast Guard.

If we want to compare apples to apples, as we did when we were government, compared to the numbers these guys like to throw around at us, where we just look at actual national defence spending based upon the public accounts that are filed right here in the House of Commons, in 2023-24, under the last year of Justin Trudeau, who the Secretary of State loves so much, their actual spending in that year, not using creative accounting, but actually comparing apples to apples, was 1.05%.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

That is not true.