Government Operations Committee on June 11th, 2026

[The Chair, Conservative, Kelly McCauley]

Good morning, everyone.

Welcome to meeting number 45 of the House of Commons Standing Committee on Government Operations and Estimates, known far and wide, of course, as the mighty OGGO.

Today we're continuing our study on buy Canada.

We have witnesses in person and also online. Colleagues, if you're directing questions, please specify whether they're for our witnesses in person or our witnesses online.

I'll also just give you a gentle reminder to keep your headphones away from your microphones. Don't touch the microphones. As well, I have a reminder—and this is for all of us, including me—to not speak super fast; this is so that proper translation can be provided.

We have several opening statements.

We'll start with the CFIB and Ms. Auger, who is here in person, for five minutes, please.

Before we start, everyone, I'll ask, because we have so many opening statements, that you keep to the five minutes. I don't want to have to cut you off, but I will.

Ms. Auger, welcome to OGGO. Please go ahead.

[Michelle Auger, Director, National Affairs, Trade and Marketplace Competitiveness, Canadian Federation of Independent Business]

Good morning. Thank you, everyone, for having the CFIB appear here today.

The CFIB is a non-partisan, not-for-profit organization representing more than 103,000 small and medium-sized enterprises across every industry and region of Canada.

My name is Michelle Auger. I'm director of trade and marketplace competitiveness at the CFIB.

Generally speaking, SMEs support the objective of strengthening domestic supply chains, especially in the context of the ongoing trade tensions and tariff pressures facing Canadian businesses. The federal government's efforts to advance a buy Canada approach are certainly a reasonable response aimed at supporting domestic industry and economic resilience.

It's important to make sure that SMEs are included. Federal procurement needs to be accessible, not just to large firms but also to the small businesses that drive jobs, innovation and local economies.

Today, SMEs are operating in a very challenging environment that is shaped by trade tensions, higher costs, labour challenges and growing regulation. Canada is also facing an entrepreneurial drought. More businesses are closing than are opening. Fewer owners are willing to invest, expand or encourage others to become entrepreneurs. In fact, CFIB data shows that 55% of small business owners would not recommend starting a business today. Procurement can be a powerful economic lever, but only if it improves access, increases competition and supports SME participation.

Only 12% of CFIB members are currently involved in selling goods or services to the federal government, with businesses in retail, wholesale and construction more likely to participate. However, significant barriers to awareness and participation remain. Based on a CFIB survey sent to our members just last week—this is preliminary data—regarding the new buy Canada policy, we found that 5% of SMEs said they were aware of new federal procurement opportunities and had actually applied, 31% were aware but had not applied, and 51% were completely unaware that these opportunities existed at all. The same survey showed that 77% of SMEs agree that federal procurement rules tend to favour large firms over small and medium-sized businesses; 66% agree that even with the buy Canada policy, the procurement process remains too complex for their business to participate; and 71% agree that lowering minimum contract sizes would make procurement opportunities more helpful for small businesses.

These results highlight a consistent message from SMEs: The effectiveness of a policy depends not just on the intent but also on whether the system is practical, accessible and easy to navigate.

A buy Canada approach can help strengthen domestic supply chains and regional development and expand opportunities for Canadian businesses. However, we are concerned that many SMEs may still be left out. The $5-million threshold coming into effect on June 15 is still very high for many SMEs, meaning that many will not be able to access or benefit from these new opportunities.

A key way to improve access for small businesses is to debundle contracts, allowing SMEs to compete for smaller, more manageable opportunities.

SMEs continue to face administrative burdens—for example, obtaining a security clearance or preparing policies that go beyond the occupational health and safety mandatory requirements, such as supplier codes of conduct, ethics policies, etc. These requirements can discourage participation in federal procurement. This points to the need for simpler tools, standardized templates and scaled requirements for smaller firms.

Another key concern with the buy Canada approach is the risk of focusing too narrowly on the raw materials while overlooking Canadian SMEs and the broader economic value they generate. As a result, small firms that create Canadian jobs and economic activity could be excluded from buy Canada procurement opportunities. To reflect the operational realities of SMEs, eligibility should instead focus on ensuring that Canadian-owned and operated businesses, regardless of where their inputs are sourced, have access to the buy Canada policy.

Finally, we're also concerned that conditions such as project labour agreements, union-exclusive community benefits agreements and prevailing wage requirements tied to specific collective bargaining structures would reduce competition and make it harder for many small businesses to participate.

In conclusion, SMEs support the intent behind the buy Canada policy, but it must work for businesses of all sizes, not just the large ones. To achieve that, the government needs to improve awareness and the accessibility of procurement opportunities, reduce any structural or administrative barriers, and ensure fair, competitive access for SMEs across the country.

Thank you.

[The Chair, Conservative, Kelly McCauley]

Thank you very much.

Ms. Cobden, are you going to do two and a half minutes and then share?

[Catherine Cobden, President and Chief Executive Officer, Canadian Steel Producers Association]

Yes, I will share with Janco. Thank you.

[The Chair, Conservative, Kelly McCauley]

Wonderful. Please go ahead.

[Catherine Cobden]

Good morning, everyone.

Thank you very much, Mr. Chair and members of the committee, for having John and me here today. I'm Catherine Cobden, the CEO of the Canadian Steel Producers Association. John and I are very pleased to join you to discuss the importance of the buy Canadian policy to the Canadian steel industry.

First, let me say that the Canadian Steel Producers Association represents 100% of Canada's domestic steel production, from Alberta through Quebec, as well as significant steel users in our downstream market. One of them, Janco Steel, joins us today and will be sharing our five minutes.

Canada's domestic steel industry generates $15 billion in economic activity and supports 123,000 direct and indirect jobs across the country. As I sit here today, you will be aware that we are facing the most consequential trade action by the United States, with 50% section 232 tariffs on all Canadian steel exports. These tariffs have now been in place for over a year. In 2024, the U.S. was the destination market for over six million tonnes of steel. Today, our shipments to the U.S. have plummeted. We're now down 60%, and over 1,000 workers have lost their jobs.

In the face of this threat, the domestic industry's core strategy has been to pivot to the domestic market by addressing unfair steel trade in Canada and increasing market opportunities for Canadian producers. This is where the buy Canadian policy fits in. Mandating domestic steel in federal procurement for construction and defence projects gives us a much-needed market opportunity when we really require it. The government adopted appropriate thresholds and requirements in the policy—including proving that steel was melted and poured in Canada—that will ensure that it meets the intent.

We urge comprehensive implementation of the policy across all federal departments and relevant federal transfers, grants and contributions. We look forward to assisting the government to make sure exemptions are granted in limited circumstances that cannot be met by the domestic industry. We hope all levels of government in Canada will follow the federal lead and introduce mandated requirements that steel be melted and poured in the country.

In closing, I would like to say that the domestic industry does not believe this policy will create supply chain shocks or uncompetitive price escalations. We can produce what the country needs. We have the scale. We have the capacity.

Thank you for your attention.

[The Chair, Conservative, Kelly McCauley]

Thank you.

We'll go to Mr. Young for two minutes.

Go ahead, please.

[Stephen Young, Director, Strategy and Innovation, Janco Steel Ltd.]

I would like to thank the chair and the House standing committee for the invitation to speak here today on behalf of Janco Steel.

I've worked in the steel industry for 38 years in a commercial capacity and in my role right now, as a member of the trade subcommittee of the CSPA.

Janco is a steel service centre with production and manufacturing capacity, located in Stoney Creek, Ontario. We employ 325 Canadian workers, have over 600,000 square feet of plant space and serve the North American market. Ninety-nine per cent of the coil and plate we purchase is from the four Canadian steel mills, always. We truly value their partnership.

Traditionally, 30% to 35% of our business was sold into the United States, so you can imagine how challenging the past year has been for us, navigating the landscape of punitive steel tariffs. This buy Canadian policy is welcomed by Janco. In fact, we've already seen some benefits from this policy: an increase in inquiries requiring melted and poured Canadian steel and a general feeling in the market that investment in manufacturing is being supported by the government and industry.

From our perspective, we are navigating an evolving global trade landscape, and the buy Canadian policy can immediately stabilize domestic markets. Canadian manufacturers will now have the opportunity to participate in federal projects where bids will consider the value of using Canadian materials produced by Canadian companies benefiting Canadian workers—a goal we feel is aligned with the country's spirit of standing together, supporting our neighbours and building relationships that will drive demand for Canadian materials and goods.

Canada has the steel production capacity to support this policy, from mill to manufacturer. Where products are not domestically produced, we encourage creative dialogue within the Canadian manufacturing base. Engineered sections and beams made out of domestic coil and plate are a notable example.

Our steel industry is under attack. We need support, and this policy is a strong step forward. Buy Canadian is a logical and necessary policy. Without a strong, healthy steel industry, our country's sovereignty is threatened.

Thank you.

[The Chair, Conservative, Kelly McCauley]

Thank you.

We'll go to Mr. Prévost, please, for five minutes.

[Francis Prévost, Director, Public and Government Affairs, Canadian Manufacturers & Exporters - Quebec]

Thank you, Mr. Chair and members of the committee.

I appear before you today as director of public and government affairs for Canadian Manuracturers and Exporters - Quebec. We are a business association dedicated to the growth of Quebec's manufacturing sector. We rely on a network of more than 1,000 manufacturers of all sizes across the province. We also work with Canadian Manufacturers and Exporters - Canada, which has been around since 1871, to advocate for Canadian manufacturing.

From a manufacturing stand point, the policy being discussed today can provide several important benefits. First, it can strengthen domestic demand for domestically manufactured goods. Second, it can secure and boost Canadian supply chains, which are particularly important in the current context of trade and geopolitical volatility. Third, it can encourage investment, innovation and industrial capacity development in Canada.

That said, a poorly designed Canadian preference policy can also miss the mark. It should be used as a useful industrial policy lever to build Canadian manufacturing capacity, improve supply chain resilience and maximize the economic value created across the country.

In a context characterized by fragile supply chains, the increase in industrial policies from many of our trading partners and the pressure on our economic sovereignty, the manufacturing sector welcomes the modernization of public procurement. Moving away from the lowest bidder approach, it's important to keep in mind the country's economic benefits, our crisis response capacity, the creation of quality jobs and the preservation of industrial expertise in Canada.

The policy can improve the government's capacity when it helps develop a more stable and reliable offer in the country. In some sectors, especially in those where security of supplies matters and is currently at risk, a Canadian player offers real advantage in terms of time, compliance and risk management.

However, it's not just about purchasing cost. We must also always keep in mind the cost of a delay in supplies, the cost of excessive dependence on foreign policy chains, the cost of losing industrial capacity in strategic sectors in Canada, and a share of public spending that comes back to the economy in the form of jobs, investment and innovation.

The procurement policy we are discussing today may have varying effects depending on the sector. In sectors where Canada and Quebec already have a strong manufacturing base, it can have a very positive effect. This policy should make it possible, in Canada's strong manufacturing sectors, to justify investments to improve productivity and production capacity, to foster local innovation, to strengthen value chains across the country and to improve the ripple effect on all small- and medium-sized businesses in Canada.

We will need an approach tailored to each of the major manufacturing sectors. Some sectors aren't as present in Canada, and investments to develop this production capacity will have to accompany the policy. These types of investments should be based on each manufacturing sectors' situation and take into account current production capacity, growth potential and, above all, the strategic importance of the sector in question.

Public procurement is not necessarily enough to build a sustainable manufacturing capacity. For this policy to truly support manufacturing companies and strategic sectors in Canada, it must be accompanied by investment programs, innovation measures, support for automation and productivity and support for Canadian SMEs. We also need to invest in workforce training to be able to keep up with the new demand.

This policy holds promise, but it must be seen as part of a broader industrial strategy, not as a stand-alone measure. We need to encourage domestic industrial development only if it comes with other tools to help manufacturing directly.

To adequately support Canadian businesses in the manufacturing sector, the policy must take into account production capacity in Canada, the added value created in Canada and criteria adapted to each sector and its own reality. However, we will have to be careful not to impose a disproportionate administrative burden on businesses, especially on SMEs looking to increase production. The idea is not to require a product that is always 100% Canadian, but to make sure that a significant and verifiable share, as well as an economically useful share, of the value remains in Canada.

In conclusion, for the Quebec and Canadian manufacturing sectors, the Buy Canada Policy is a very useful tool to strengthen the industrial base, secure our supplies and better anchor economic value in the country. However, its effectiveness and how it will be carried out will require clear, proportionate rules adapted to the realities of the manufacturing sectors and, above all, accompanied by measures to support investment, productivity and innovation. This policy can provide real benefits. If—

[The Chair, Conservative, Kelly McCauley]

I apologize. We're way past our time. Would you finish up, please?

[Francis Prévost]

That's all right. I'm done. You can go ahead.

[The Chair, Conservative, Kelly McCauley]

Wonderful. Thanks.

We'll start with Mrs. Block for six minutes.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Thank you, Chair, and thank you to our witnesses for joining us today.

My first question will be for Ms. Auger with the CFIB.

When we look at highly integrated supply chains for many of our SMEs on both sides of the border, do you foresee there being adverse effects with rigid content restrictions and the costs to small and medium-sized businesses?

[Michelle Auger]

Yes, our data does show that SME integration with the U.S. has been built for years. They've built in place business contracts that they cannot easily get out of. They have their supply chains, they have customer relationships, and despite a lot of our data showing that a lot of Canadian SMEs are diversifying—in fact 50% of SMEs have said that they are moving away from the U.S. market as much as possible in their supply chain—there still is a significant number of SMEs that just cannot lose that reliance on the U.S. market for supplies, for their inputs to their business operations.

We have been hearing under different jurisdictions that some small businesses get blocked out of procurement opportunities just because their inputs or part of the inputs in their business come from the U.S. or come from elsewhere. In fact, a local business here in Ottawa recently was blocked out of a municipal opportunity because parts of their inputs in building parks for our communities were from the U.S., and I think that goes back to my message that we have to look at the economic contribution that small businesses make in our communities. This business has close to 20 employees. There are engineers. These are good-paying jobs, but the business is losing out on these economic benefits.

This is where we need to leverage those added-value components. While not every little piece a business uses might be Canadian raw material, we need to ensure that those businesses can compete fairly for those procurement opportunities. As the federal government is setting that sort of gold standard for other jurisdictions, we just want to see that being applied across the board fairly.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Thank you very much. That certainly is consistent with what I've heard from small and medium-sized businesses when it comes to the buy Canadian policy.

You mentioned this in your opening comments, but I want to give you an opportunity to elaborate on the broader restrictions in procurement, particularly the requirement for unionized labour and how this may prevent small and medium-sized businesses from participating in federal procurement.

[Michelle Auger]

Thank you for giving me that opportunity.

What we are seeing and what we saw from the last federal budget is that certain federal funding programs are preferring businesses employing unionized labour over allowing any business to apply. We know that about 96% of SMEs in Canada are not unionized, and that goes for even construction businesses. They are legitimate businesses with legitimate workforces, and they just want to be able to compete for procurement opportunities.

In the federal budget, a communities benefit funding program was announced, and it was indicated that they would favour unionized labourers for those types of agreements. We're using taxpayer money to support a very small subset of our Canadian businesses. We need to make sure that the level playing field is open to all businesses to compete on procurement, and again, the federal government is setting that standard. We're seeing examples across jurisdictions. Even in B.C., there was a bill put forward in which they would prefer unionized labour for certain construction projects, and we're really just hoping that the government realizes that there are different types of businesses, and they are legitimate and they create jobs and contribute to our economy.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Yes. At our last meeting, we heard that the government is planning on creating an office for small and medium-sized businesses when it comes to buy Canadian.

Have you been involved at all in any consultations and been able to provide some of this feedback to the governing members?

[Michelle Auger]

We have, but it wasn't until we specifically reached out to ask who was working on developing this program. We sit on the supplier advisory committee, which is an industry group of representatives that helps advise the government on procurement policy programs. Just last week, we did get a snippet of what they're looking at doing, but it does feel like it's still very much in an initiation phase, where they're not too sure what direction is going to be taken.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

I have one final question: For small and medium-sized businesses, how much of a dollar stays in Canada as opposed to for large multinationals?

[Michelle Auger]

For every dollar spent at a small business, 66 cents does stay within the local community, whereas only 11 cents would stay within the local community if it's spent at a large multinational. This is part of our messaging, because there is a lot of federal procurement or federal purchasing that does not go reported, especially those lower amounts under the $10,000 threshold.

There is an opportunity here. While it's not directly procurement-related, it's still federal government spending; it's purchasing. There's an opportunity for the federal government to maybe put in some guiding principle that all departments consider, when there are non-compete procurement opportunities or there is purchasing under that $10,000 value, that they're supporting local, supporting small businesses and can really be the champions.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Thank you.

[The Chair, Conservative, Kelly McCauley]

We'll go to Mr. Danko, and I note it's Danko, not Janco.

Go ahead, please.

[John-Paul Danko, Liberal, Hamilton West—Ancaster—Dundas, ON]

Thank you, Chair. It's a pleasure to welcome our witnesses this morning. It's probably no surprise I'm going to spend my time talking about steel and the steel industry.

I'm a representative from Hamilton, Canada's steel city, and MP Hepfner is also here as another Hamilton representative. The steel industry, as was noted, is a significant employer. In Hamilton specifically, it provides 10,000 direct jobs and 40,000 indirect jobs.

I thought it was interesting in your opening remarks that both of you referenced buy Canadian as an opportunity for steel producers and manufacturers in Canada to really expand their domestic market.

My first question, Ms. Cobden, if I could start with you, is, what is the current state of the steel industry in Canada in terms of domestic sales versus international imports, and why is that such an opportunity for steel producers?

[Catherine Cobden]

Thank you very much for the question.

For sure, the domestic industry battles every day with offshore imports for a competitive, level playing field. The most recent data is showing that we have about half of the domestic market, and offshore imports and imports from the U.S., for example, represent the other 50%. That shows us we have a significant opportunity to grow the market share for the domestic industry.

In the U.S., for example, their market share is closer to 80%. We have quite a gap, and I believe the number is quite similar in the EU as well. In the EU, their domestic industry is about, I believe, 75% to 80%. Canada, obviously, compared to those two trading partners, if you will, is not anywhere near those levels of market share.