Government Operations Committee on June 16th, 2026

[The Chair, Conservative, Kelly McCauley]

Good afternoon, everyone. We are in session.

Our friends with the media are welcome to stay, but perhaps they can turn off their cameras.

We welcome back today our Parliamentary Budget Officer.

Before we start, colleagues, very quickly, we discussed among the parties that we will adopt, by UC, the motion by Ms. Sudds from June 10 regarding M-16. Are we fine with that?

(Motion agreed to [See Minutes of Proceedings])

That's wonderful.

We'll do the two budgets now because we have a heavier crowd in the second hour. We have two budgets to approve. One is for today's study. The second one is for the extension of the CER study.

Do we have unanimous consent for them?

[Some hon. members]

Agreed.

[The Chair, Conservative, Kelly McCauley]

Thank you very much. That's wonderful.

PBO Ryan, welcome back to OGGO. We'll turn the floor over to you for five minutes. Please go ahead.

[Annette Ryan, Parliamentary Budget Officer, Office of the Parliamentary Budget Officer]

Thank you very much, Mr. Chair.

I am very pleased to be here today, and I thank the committee for the invitation to discuss my office's recent reports. One is on the supplementary estimates (A) for 2026-27, and the other one is our economic and fiscal outlook, published in June 2026.

I am joined today by Mark Mahabir; director general and general counsel for costing and budgetary analysis; and Govindadeva Bernier, director of budgetary analysis, who jointly led the work for our report on the supplementary estimates (A) for 2026‑27, published on June 9, 2026.

I am also joined by Kristina Grinshpoon, director of fiscal analysis; and Caroline Nicol, adviser-analyst, who respectively oversaw and drafted our economic and fiscal outlook published on June 4, 2026.

First, let me begin with the estimates.

The supplementary estimates (A) seek $3.6 billion for 16 measures from budget 2025. Together with the $14.7 billion sought through the main estimates, we assess that approximately 90% of budget 2025 expenditures planned for this fiscal year have now been reflected in the estimates.

The supplementary estimates (A) also include $358 million for six measures announced in the spring economic update of April 28. This amount represents 4% of new expenditures announced in the spring economic update planned for this fiscal year.

I would now like to highlight a few elements of our economic and fiscal outlook.

The economic and fiscal outlook, or EFO, was published on June 4 and was prepared using information available as of May 8, following the spring economic update on April 28—all 2026.

As committee members know, economic projections are based on information available at a given time. Our report was prepared using the information available on May 8, 2026. As a result, it did not take into account the national accounts published by Statistics Canada on May 29 of this year.

On May 29, Statistics Canada revised its annual real GDP growth for 2025 upward from 1.7% to 1.9% for the entire year. In that release, StatsCan also reported that real GDP contracted at an annualized rate of 1% in the fourth quarter of 2025 and a further 0.1% in the first quarter of 2026.

These revisions to GDP did not materially change the forecasts we presented in our economic and fiscal outlook on June 4, which already anticipated below-potential economic growth through 2026. In this way, parliamentarians should view our projections as reflecting continued below-potential growth through 2026, broadly consistent with recent assessments by the Bank of Canada.

That being said, based on the information currently available, the parliamentary budget office is not of the view that the Canadian economy is on a clear negative trajectory. The two quarters of negative growth into early 2026 have more recently been followed by strengthened monthly data in respect of GDP, employment, trade and manufacturing. It is important to keep in mind that economists monitor indicators associated with recession because they may signal the need for significant changes in economic policy.

For example, deteriorating economic conditions could lead governments to consider additional spending measures to support the economy, measures which parliamentarians might have differing views on.

As such, the parliamentary budget office will continue to monitor incoming economic data and evolving economic conditions. We will continue to update parliamentarians on our assessments.

Thank you.

We would be pleased to answer your questions.

[The Chair, Conservative, Kelly McCauley]

Thank you.

We'll start with Mr. Chambers.

Welcome back to OGGO, Mr. Chambers. The floor is yours for six minutes.

[Adam Chambers, Conservative, Simcoe North, ON]

Thank you very much, Mr. Chair. It's a pleasure to be at the mighty OGGO.

Ms. Ryan, thank you for being here. I would like to congratulate you on your appointment. It's the first time we've seen each other at committee. Thank you for your service to Canadians.

I appreciate the work that your office has put forward. You've come here with your officials, who I know do a tremendous amount of work. I appreciate some of the recent work you've released.

If I may, I'd just like to spend—

[The Chair, Conservative, Kelly McCauley]

We'll reimburse you for your time, Mr. Chambers.

[Adam Chambers, Conservative, Simcoe North, ON]

Thank you very much.

I appreciate the opportunity to ask some questions today. I'll focus on your recent economic outlook, if that's okay.

One thing I've been starting to pay a bit more attention to is debt service costs. We've seen even in the baseline projection provided in the fall economic update that just within a few years, debt service costs will approach about $80 billion. Another fact that I understand could impact the potential for the fiscal outlook is that about 40% to 50% of federal government debt is purchased by hedge funds. This is outlined by the Bank of Canada. It's been outlined as a rising vulnerability.

If there is an economic event outside of Canada and a large proportion of our expenditures go to servicing the debt.... We also fund our debt with short-term instruments of mostly two and three years. The average maturity is about 6.6 years for the Canadian federal government, as I understand it. This year we have to borrow $510 billion in the market. Next year we have to borrow almost $600 billion. The year following that, two years from now, it will be another $550 billion, which means we're basically rolling over the debt frequently.

My questions are more around the sensitivity now to the fiscal framework based on borrowing costs. We've seen the five- and 10-year rates go up. Borrowing costs are going up and are not coming down, but the entire fiscal projection the government makes is actually on borrowing costs going down.

I'm wondering if this is an issue you're exploring. I know that you do some sensitivity analysis. I just wanted to get your feedback on keeping an eye on the debt service cost number.

[Annette Ryan]

It is very much an issue that we are concerned about within the parliamentary budget office. In our report, we've tried to start bringing more focus to the question of debt service charges, first by portraying the track that you described from different perspectives. We highlight, for example, that we see debt service charges, as a share of every available dollar, rising over a five-year period from essentially 10.6¢ on the dollar up to 13.1¢ by 2030-31. That's one way to draw attention to this. It is starting to rise under current tracks with current expected interest rates and so on. From a per capita basis, that rises from roughly $1,300 to almost $1,900. Under a status quo track, it very much is showing the type of profile that you're talking about.

I think the Bank of Canada has been increasingly pointed in drawing attention to the dynamics that you speak about, including the ownership of amounts of debt by hedge fund owners, as well as the potential for essentially coincident risks happening in the global environment in stock markets and so on. From a number of perspectives, that draws our attention to risks within that debt service profile.

While not defining the question here, I'd certainly be open to speaking with you and other OGGO members about what type of sensitivity analysis we might put in play that would help in understanding these measures and where the risks are, for sure.

[Adam Chambers, Conservative, Simcoe North, ON]

Debt service costs are now basically the second-largest line item in the budget. OAS costs are higher. They're more than we spend now on health care, and that gap is going to grow in the next couple of years. Understanding the sensitivity about what would happen if interest rates don't drop, as the government predicts, what is that going to do to the fiscal framework? I think it will prevent some money being available for more productive uses, whether it's tax cuts or social programs.

I'll ask about the impact on the fiscal anchor, because I know that was also part of the work you did. Did I read your work correctly that, based on some of your assumptions, the government has about a 1% chance of keeping its new fiscal anchor?

[Annette Ryan]

That was very much part of our analysis in the fiscal outlook. To your earlier points about sensitivity, I agree, and we'll follow up on that.

In terms of the analysis of the chance the government will meet its fiscal anchor for a declining share of deficit to GDP, briefly what we did is looked back at the different types of shocks that have happened in the past and at year-over-year shocks. The result that the government, absent policy changes, would have roughly a 1% chance of meeting its deficit as a GDP target rests on the reality that both deficits—the numerator and GDP itself—are quite sensitive on a year-to-year basis.

Given that this measure is defined as a decreasing track every year, that's what drives the mathematical baseline that it's going to be a very hard target to hit, but not impossible, especially if the government wants to manage it very carefully. That is essentially the message we want to put forward with that analysis.

[Adam Chambers, Conservative, Simcoe North, ON]

I understand that if they break it, that would be the third fiscal anchor not kept in the last three or four years.

[Annette Ryan]

I haven't counted, but—

[Adam Chambers, Conservative, Simcoe North, ON]

Does that sound about right?

[Annette Ryan]

It sounds about right, yes.

[Adam Chambers, Conservative, Simcoe North, ON]

Thank you very much, Mr. Chair.

[The Chair, Conservative, Kelly McCauley]

Thanks.

Mr. Gasparro, please go ahead.

[Vince Gasparro, Liberal, Eglinton—Lawrence, ON]

Thank you for being here again. It's great to see you.

In your PBO report, you touch on real GDP. As you know well, when you're looking at a country's fiscal position, reviewing it relative to its peers' is incredibly important, because it gives the appropriate context for the macro global economic environment.

For 2026, you rightly point out that real GDP is projected to rise by 1.1%, followed by 1.6% in 2027. The IMF expects Canada to have the second-strongest economy this year among G7 countries, after the United States. In addition, external forecasts from the OECD suggest that Canada is expected to grow at the second-fastest pace in the G7 this year and next.

Does the PBO analysis show a similar pattern of relative strength?

[Annette Ryan]

We did not do an analysis of international comparables of growth rates. That type of analysis checks with my casual understanding of international growth rates, so I would say that this sounds about right.

[Vince Gasparro, Liberal, Eglinton—Lawrence, ON]

You also touched on the main estimates and the supplementary estimates.

In budget 2025, we're making strategic capital investments to raise long-term growth rates and to try to build a strong economy off of infrastructure and housing. Some of our largest expenditures obviously flow into investments in housing and infrastructure, and the totals are significant, whether it's $2.3 billion going into the build communities strong fund or additional funding for Build Canada Homes and the Canada Infrastructure Bank.

Can you touch on how important that is relative to our credit rating? Canada continues to hold a AAA credit rating, giving us a strategic advantage relative to other major economies. Can you tell us why it's important for Canada to continue to maintain a AAA credit rating and how that helps with market confidence and borrowing costs, as well as supports our plan to build and finance infrastructure and housing?

[Annette Ryan]

It's a very rich question.

I'll start with the aspect of credit ratings, which are integral to our borrowing costs, as raised by your colleague.

It has certainly been a strength of both the Canadian economy and Canadian public finances that we've been able to maintain the AAA rating. It has tangible benefits for us year over year in terms of borrowing costs. This reflects a number of factors that relate to the overall management of the Canadian economy and its many strengths, as you spoke to.

[Vince Gasparro, Liberal, Eglinton—Lawrence, ON]

How much time do I have, Chair?

[The Chair, Conservative, Kelly McCauley]

You're at four minutes, so you have two minutes to go.

[Vince Gasparro, Liberal, Eglinton—Lawrence, ON]

Thank you.

I'd like to drill down a bit on the IMF for a moment.

Going back to real GDP growth, the IMF projects a 1.5% increase in 2026. They recently noted, “Canada’s strong fundamentals...and reliable access to external financing...provide important buffers [for the Canadian economy].”

From your perspective, what factors are supporting Canada's ability to continue growing despite external economic headwinds?

[Annette Ryan]

There are a number of factors that play to Canada's advantage: our natural resources base; our strong, vibrant and educated population; our business environment; and our business culture. There are many underpinnings for continued strength in the Canadian economy, despite the headwinds we face, which are real and undeniable.

I will say that on balance, we generally agree with the forward track that was put out by the Department of Finance in the spring economic update in terms of the Canadian economy. This, in turn, was based on private sector forecasts of how the Canadian economy will develop over the short and medium terms.

I think that track, for both ourselves and the spring economic update, was a bit more constrained than the figures you're citing from the IMF. It essentially reflects the fact that these headwinds—trade, the circumstances in the Middle East and the continuing uncertainty about the global environment generally—have been dampers on the overall business environment, for sure.

[Vince Gasparro, Liberal, Eglinton—Lawrence, ON]

Thank you.

[The Chair, Conservative, Kelly McCauley]

Madame Gaudreau.

[Marie-Hélène Gaudreau, Bloc, Laurentides—Labelle, QC]

Thank you, Mr. Chair.

Ms. Ryan, thank you again. It's always very important to get an accurate picture of the situation. I'm aware that the new government has made changes to the anchor. Even the International Monetary Fund, the IMF, said Canada should restore its anchor, namely the debt-to-GDP ratio. For a long time, that ratio was the main benchmark for assessing the country's finances. Today, that anchor has disappeared.

What's Canada's fiscal anchor now?

[Annette Ryan]

You raise important points. In fact, the current government has two anchors. One is the deficit-to-GDP ratio, and the other is a commitment from the government to balance operating spending with revenues. The government is clarifying its commitment to spend less and invest more, in a context where it is seeking to increase overall GDP. It's a matter of increasing the denominator so a certain level of prosperity allows the government to spend more in the future.

[Marie-Hélène Gaudreau, Bloc, Laurentides—Labelle, QC]

How does the government respond to the IMF's call for the anchor to be restored?

[Annette Ryan]

I think it's important to remember that no one figure is the be-all and end-all for managing something as complex as the Canadian government or economy.

These are a series of important metrics, but it's also important for a government to keep its commitments. If that's not possible, it must be transparent with Canadians and, above all, with parliamentarians about what it will or will not do.

[Marie-Hélène Gaudreau, Bloc, Laurentides—Labelle, QC]

Let's look at public spending.

There's a lot of talk about cost, but less about quality, even though quality ultimately offers profitability and prosperity.

Does Canada have enough tools to accurately measure public spending?

[Annette Ryan]

To put it simply, no.

We have a range of annual measures that allow us to track government spending. However, departmental annual reports are structured by the government to highlight its perspective on the quality of the spending.

I don't want to put words in your mouth, but I think we agree that we would all benefit from a more informative range of metrics with respect to the quality of spending.

[Marie-Hélène Gaudreau, Bloc, Laurentides—Labelle, QC]

It would therefore be relevant for the Office of the Parliamentary Budget Officer to conduct an evaluation and measure the quality of spending.

[Annette Ryan]

I think that's an important goal. We have actually begun discussions on how to do it.

[Marie-Hélène Gaudreau, Bloc, Laurentides—Labelle, QC]

Okay.

I only have two minutes of speaking time left, but I still have several questions to ask you.

Earlier, we talked about the cost of public investment. Besides the quality of the investment, do you assess the cost of inaction? I'm referring, for instance, to the housing shortage, aging infrastructure and underinvestment.

[Annette Ryan]

In the past, we've conducted studies related to this objective. For example, we conducted a major housing study in August 2025. Ms. Nicol was one of the main authors of the study. We plan to do more.

[Marie-Hélène Gaudreau, Bloc, Laurentides—Labelle, QC]

Is there a risk that savings today could lead to higher costs tomorrow?

[Annette Ryan]

Certainly.

[Marie-Hélène Gaudreau, Bloc, Laurentides—Labelle, QC]

I wanted to hear you say it.

Since I only have a few seconds left, I'll talk more about major projects during my next turn.

It's about the relatively low growth of real GDP, which is between one and two per cent. In a context of low growth and stagnant productivity, what role should major infrastructure projects play in a growth strategy?

[Annette Ryan]

In my opinion, it's important to consider how the government's plan might work. Government spending is often proposed or recommended when there isn't a lot of economic activity. In addition, that infrastructure is seen as the foundation for private sector economic activity in the future. That's the government's philosophy.

As you said, there's the issue of implementing a well‑thought‑out planning framework to be completed on time and on budget. These are also important elements.

[Marie-Hélène Gaudreau, Bloc, Laurentides—Labelle, QC]

Thank you, Ms. Ryan.

Thank you very much, Mr. Chair.

[The Chair, Conservative, Kelly McCauley]

Thank you.

Ms. Block, please go ahead.

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

Thank you, Mr. Chair.

Thank you, Ms. Ryan and your colleagues, for joining us today.

I am going to focus on your economic and fiscal outlook. I really want to zero in on one of the statements in the highlights. It says, “Assuming no new measures are introduced and existing temporary measures sunset as scheduled; the budgetary deficit is projected to decline to $58.2 billion by 2030-31”. I want to ask for more of an explanation of that, but perhaps I'll ask my first question.

Your report showed that the debt-to-GDP ratio would be “flat over the medium term”. Is that based on the same assumption: as long as there is no new funding introduced and old temporary spending sunsets?

[Annette Ryan]

That's correct, Ms. Block.

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

Is this a reasonable assumption? This is getting back to my first question around an explanation.

[Annette Ryan]

I think it's difficult to portray all possible actions that a government might take. For that reason, we wanted to have a baseline so that people could understand what's in and what's out, and from there, reasonable people can take their own perspectives about what the government may do moving forward in terms of things like the renewal of the Canada health transfer, which is currently on a track to moving to much lower growth for provinces and territories per current legislation.

People may differ on whether the government will move to take that back up to the traditional 5% to 6% range. That's not in our forecast. It's not in our medium-term track. We wanted to be clear and transparent so that as people look at these types of measures moving forward, they can say, “Okay, that's not in, but we anticipate that would be a reasonable thing to do.” Then if the government does that, you know, and you can do calculations of where that takes us in terms of debt to GDP and so on.

That was the underlying logic.

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

Just for my own understanding, how many times in the last 10 years has the government not introduced new spending? Did you take that into consideration?

[Annette Ryan]

It would be very few times, if not definitely zero.

The question of how we can best support a discussion of the fact that the fiscal track has gone up year after year in budget after budget is very much the reality. We think we could do better in terms of putting that forward in a separate document very soon, which would make it more comprehensible for parliamentarians and average Canadians to benchmark that. You can take a year like 2025. When it was first forecast, expenditures—I'm not going to be accurate here—would have been roughly $420 billion, and then they rose through time to the level of $510 billion that we're at now.

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

Getting back to debt to GDP, if the government introduces new spending in the next budget, for example, how much new spending would it take for the medium-term forecast to show an additional increase to Canada's debt-to-GDP ratio?

[Annette Ryan]

It's a calculation that you for sure could do depending on what you think GDP is going to do. There's certainly some sensitivity work we could do in that space. It goes to the government's assertion that by investing more, they're going to expand the base and get a virtuous circle of more GDP, but the government has also been clear that a number of risks could transpire. If it doesn't come through, then the debt is certain to remain.

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

On page 5, you note that the increases to the government's revenues are being generated by higher energy prices, not stronger economic activity. Is that correct?

[Annette Ryan]

I would say that currently, a lot of the government's revenues have been generated by energy prices.

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

Thank you.

[The Chair, Conservative, Kelly McCauley]

That's your time.

Ms. Sudds, go ahead.

[Jenna Sudds, Liberal, Kanata, ON]

Thank you very much, Chair.

Thank you, Ms. Ryan and all of your team, for being with us here today.

I'm going to continue on a similar track, as one of the things that caught my eye in your analysis of the supplementary estimates was the reduction in projected public debt charges. Given that debt servicing costs are often a major focus of fiscal debates in this committee and, of course, in the House, I think it's important that Canadians understand what's driving those changes.

Your report notes a reduction of approximately $1.5 billion in projected public debt charges. Can you explain what factors have contributed to that improvement and tell us a bit about it in relation to Canada's current fiscal outlook?

[Annette Ryan]

Thank you for drawing attention to that. I think it's important to shed light on the positive news as well.

That type of analysis shows up both in the study that we did on the supplementary estimates (A), which is the track of what's being put before Parliament right now, and in the economic and fiscal outlook, where we project lower debt service costs, versus previous forecasts, as being a positive factor for the forward deficit and debt projections.

Principally, conservative budgeting approaches showed up as being warranted and prudent so that as conditions came forward to have a better interest rate profile than had been previously forecast, that let those charges come in lower than previously forecast.

[Jenna Sudds, Liberal, Kanata, ON]

That's excellent. Thank you for that explanation. It's very helpful for those who are paying attention.

Moving on, or pivoting slightly, we're certainly living in a period of considerable global uncertainty. Trade relationships, of course, are shifting, geopolitical tensions remain elevated and many advanced economies are facing fiscal pressures after years of responding to successive crises.

Looking strictly at the fiscal indicators and the economic outlook, does Canada enter this period of global uncertainty from a position of relative strength compared to most advanced economies?

[Annette Ryan]

Your question is well framed in flagging a context that is still precarious and will give us some bumpiness and some scruffiness going forward.

There are many reasons to think that Canada comes into this period from an advantageous position. We spoke earlier about the economic conditions that are positive, including our natural resources—which are definitely always a strength for Canada—and our vibrant, educated workforce. Our tax levels compare favourably, in many ways, to those of other countries, and our federal debt is lower on a comparative basis than in other G7 countries. Those are all positives that work in Canada's favour.

That said, our business conditions have been concerning for quite a while. Our productivity numbers, our business investment, our research and development and our entrepreneurship numbers have been flat for quite a while, and that has translated similarly into a lack of growth in GDP per capita over an extended time period. That raises concerns as well.

[Jenna Sudds, Liberal, Kanata, ON]

Would it be fair to say that maintaining fiscal capacity today gives Canada more flexibility than many of our peers to respond to future economic and national security challenges?

[Annette Ryan]

That is absolutely a straightforward statement.

[Jenna Sudds, Liberal, Kanata, ON]

Thank you.

I think that's my time.

[The Chair, Conservative, Kelly McCauley]

You have 13 seconds. OGGO thanks you.

Madame Gaudreau, you have two and a half minutes, plus 13 seconds of Ms. Sudds' time.

[Marie-Hélène Gaudreau, Bloc, Laurentides—Labelle, QC]

Thank you, Mr. Chair. That's kind.

Ms. Ryan, I have three follow-up questions about major projects and growth.

In terms of public finances, is the main risk today surplus investment or a deficit in productive investment? It's about the quality of investments.

[Annette Ryan]

You would need to clarify what you mean by surplus and deficit.

I'll start by saying that one of the arguments that's been made in the last decade is that the lack of major projects contributes to the lack of productivity growth. In other words, there's a deficit in terms of major projects.

Your question relates to the bottleneck and constraints associated with having a large number of major projects that we want to advance at the same time. The availability of labour, management skills and funding must be taken into account to advance so many projects at the same time.

[Marie-Hélène Gaudreau, Bloc, Laurentides—Labelle, QC]

This brings me to the following question: When it comes to fiscal quality, are there sectors where public spending is increasing faster than it is delivering results?

[Annette Ryan]

I understand the logic of your question, but I don't have an answer for you today.

[Marie-Hélène Gaudreau, Bloc, Laurentides—Labelle, QC]

Is it possible to answer it?

[Annette Ryan]

I would ask you to—

[Marie-Hélène Gaudreau, Bloc, Laurentides—Labelle, QC]

I'll put the question in writing for you.

I'm done, but I'll add that the problem isn't just how the money is being spent. It's also about the purpose behind it.

My time is up. Thank you.

[The Chair, Conservative, Kelly McCauley]

Thank you.

Colleagues, I just got a note from one of our associates in the House saying that there's a vote coming. We'll have 30-minute bells, of course. If the lights flash, can we agree that we'll continue, at least until we get through our last two interventions?

[Some hon. members]

Agreed.

[The Chair, Conservative, Kelly McCauley]

That's wonderful.

Next we have Ms. Jansen for five minutes, and then we'll finish with Ms. Martin for five minutes.

Go ahead, Ms. Jansen.

[Tamara Jansen, Conservative, Cloverdale—Langley City, BC]

To follow-up on my colleague's question, can we get you to produce a report on the projected future costs to our GDP due to red tape and regulatory uncertainty?

[Annette Ryan]

I would be happy to work with you on how you would define those things and see what's possible.

[Tamara Jansen, Conservative, Cloverdale—Langley City, BC]

Thank you.

The government has said that this year's deficit will be $65 billion, and your office has said it will be closer to $72 billion. Who should we believe, you or the government?

[Annette Ryan]

I would say that our forecast reflects probably an extra two months' worth of information, at least—

[Tamara Jansen, Conservative, Cloverdale—Langley City, BC]

Could we say that the government's books are in worse shape than the government is telling Canadians?

[Annette Ryan]

In the two months' difference between when we published our update and when the government locked down its forecasts, there was more bad news than good.

[Tamara Jansen, Conservative, Cloverdale—Langley City, BC]

The report says that there's less than a 1% chance the government's deficit-to-GDP plan will unfold as projected. For the average Canadian watching at home, does that mean that there's a 99% chance the government's plan will not unfold the way they say it will?

[Annette Ryan]

I think that is a fair statement, unless the government takes action to correct how bumpy the economy can be.

[Tamara Jansen, Conservative, Cloverdale—Langley City, BC]

Would you describe that as a significant fiscal risk?

[Annette Ryan]

I would describe that as a risk to the anchor itself. There's probably more margin to manage safely and prudently within that space, but the anchor itself has some design issues.

[Tamara Jansen, Conservative, Cloverdale—Langley City, BC]

If a business person went to a bank with a financial plan that had a 99% chance of failing, they would never get a loan. With that in mind, should Canadians be concerned about the government's current economic situation?

[Annette Ryan]

The implication of that work is to say that because the economy remains subject to so many risks and because the anchor is so sensitive to movement in the deficit as well as the GDP, it's going to be a tough target to hit.

[Tamara Jansen, Conservative, Cloverdale—Langley City, BC]

Does your report suggest that the government has left itself very little room for error if the economy weakens further?

[Annette Ryan]

I would say that it has left itself little room to hit the declining deficit-to-GDP target year over year in a consistent way. I think there remains room to respond to economic conditions separate from that.

[Tamara Jansen, Conservative, Cloverdale—Langley City, BC]

Your office forecasts economic growth of about 1.6%. The Bank of Canada forecasts 1.5%, and the government forecasts 1.9%. Would it be fair to say that both the PBO and the Bank of Canada are more cautious about Canada's economic outlook than the government is?

[Annette Ryan]

Our forecasts reflect more news throughout the year, because they were published after the government locked down its forecast, and they are definitely more pessimistic than the government's.

[Tamara Jansen, Conservative, Cloverdale—Langley City, BC]

Would a difference of 0.3 or 0.4 percentage points in economic growth have a meaningful impact on government finances over several years?

[Annette Ryan]

Yes, it would.

[Tamara Jansen, Conservative, Cloverdale—Langley City, BC]

Does using overly optimistic growth assumptions make the government's finances appear healthier than they may actually be?

[Annette Ryan]

Time will tell on where it lands, but in a straightforward way, if the assumptions are too high, the forecasts will be too high.

[Tamara Jansen, Conservative, Cloverdale—Langley City, BC]

What are the biggest risks that could cause the Liberal government's fiscal projections to miss their targets?

[Annette Ryan]

There are a number of fiscal risks. People are very cognizant of the trade situation, especially with the U.S. The ongoing conflict in the Middle East has implications for oil, for trade, for supply routes and for supply chains. I think global stock markets are an increasing source of risk in that people are very concerned that the valuations we're seeing right now may be overly inflated, and it could be painful to see them unwind.

[Tamara Jansen, Conservative, Cloverdale—Langley City, BC]

If you take away Canada's connection to the U.S. market, basically you take away one of the biggest reasons that companies choose Canada in the first place. Would you say that's a big risk?

[Annette Ryan]

I think it's straightforward that Canada has significant ties to the U.S. and that what happens in the U.S. has always had big implications for Canada.

[Tamara Jansen, Conservative, Cloverdale—Langley City, BC]

Your office projects that spending will be roughly $6 billion higher by 2030 than the government projects. Is that correct?

[Annette Ryan]

I think that holds.

[Tamara Jansen, Conservative, Cloverdale—Langley City, BC]

That means your office expects government spending to be higher than the government says it will be.

[Annette Ryan]

Our forecast saw a lot of revenue weakness, especially in personal income taxes. That's part of that.

[Tamara Jansen, Conservative, Cloverdale—Langley City, BC]

Does that spending gap remain after accounting for the government's CER initiative?

[Annette Ryan]

We've built the CER into that track, yes.

[The Chair, Conservative, Kelly McCauley]

That's our time.

We'll go to Ms. Martin, please. Welcome back.

[Danielle Martin, Liberal, University—Rosedale, ON]

Thank you.

I thank the witnesses for being here.

Thank you for your reports.

I'd like to explore a bit about the economic and fiscal update of June 2026, specifically around the notion that, in your words, “Net exports are projected to remain a persistent drag”, given the situation we find ourselves in, particularly with the unjustified tariffs being levied against Canada and many other countries, of course, around the world.

What would happen if there were to be even a partial tariff rollback by the U.S. over the course of the coming quarter or two? What would the impact of that be on our fiscal outlook?

[Annette Ryan]

It would definitely be positive. We haven't costed specific scenarios of specific tariff tracks. Our forecasts are based, essentially, on a status quo tariff environment, but it would definitely be positive and help in a number of direct and indirect ways.

[Danielle Martin, Liberal, University—Rosedale, ON]

What if we were able to diversify our trade and have our net exports rise as a result of trade agreements with countries other than the U.S., given the situation that we find ourselves in with our largest trading partner?

[Annette Ryan]

Trade diversification and greater trade with other countries would definitely be a positive.

[Danielle Martin, Liberal, University—Rosedale, ON]

Would you say, then, that focusing as a government on trying to reach an agreement with the U.S. to either partially or fully roll back these unjustified tariffs and focusing on trying to diversify our trade with other countries are two strong strategies for trying to boost GDP growth, given what's within our control as a country?

[Annette Ryan]

I would agree with that.

[Danielle Martin, Liberal, University—Rosedale, ON]

Thank you.

I'd like to ask a couple of questions around population growth and demography.

You have some estimates around growth stabilization over the medium term that are at a lower rate than has historically been the case for Canada. What do we know about the drivers of the demographic shift in the Canadian context?

[Annette Ryan]

I think we've updated our demographic profile to be consistent with the recent changes in the government's policy stance in respect of immigration in particular. The profiles that you see have been updated to essentially align with that much lower growth scenario.

[Danielle Martin, Liberal, University—Rosedale, ON]

What about within our country in those communities in which we're seeing greater than the average population growth? What do we know about those drivers of demography?

[Annette Ryan]

I would say the changes in demography inside of Canada were not part of this study. That would be outside the scope of this work.

[Danielle Martin, Liberal, University—Rosedale, ON]

Walk with me here. It's my understanding that, in general, Canada has had a slower rate of population aging than many other comparator countries, in part because of our immigration policy, of which Canadians are I think rightly proud, and also in part because newcomer communities and indigenous communities tend to have higher birth rates. Therefore, our demographic shift has been slower than, for example, in many European countries or other comparator nations.

Is that consistent with your understanding of what shapes the particularly Canadian story around population aging?

[Annette Ryan]

I'll ask Caroline to take this.

[Caroline Nicol, Advisor-Analyst, Office of the Parliamentary Budget Officer]

I can give a bit of background about how we do our demographic modelling.

Essentially, as part of our economic outlook, there is a combination of our own modelling on the immigration flow in the short term kind of converging with the medium-growth scenario from StatsCan. The different dynamic happening in different parts of the country is part of our base estimate because that's reflected in their own modelling.

[Danielle Martin, Liberal, University—Rosedale, ON]

Given that this is the case, it would seem that investing as a government in growing capacity among young people, investing in newcomers and making sure that they can achieve their economic potential, as well as investing in indigenous communities so that indigenous youth can achieve their potential, would be good ways to mitigate the demographic shift we're seeing in all advanced economies. Would you agree with that?

[A voice]

I would.

[Danielle Martin, Liberal, University—Rosedale, ON]

That's great. Thank you very much.

I think that's my time, Mr. Chair.

[The Chair, Conservative, Kelly McCauley]

You did that with one second to spare.

Ms. Ryan and team, thanks for being with us again. We certainly appreciate it.

Of course, you are always welcome. We'll look forward to seeing you back for another meeting, probably in early July, when I call our next batch of meetings. Have a wonderful summer.

Colleagues, we're going to suspend quickly, but hang on for two seconds, because I need to discuss a couple of things off-line.

[The Chair, Conservative, Kelly McCauley]

We are back in session. Thank you, everyone, for your patience.

Welcome back, Mr. Cloutier.

We're going to hear opening statements from Mr. Cloutier and then Ms. Laramée.

Colleagues, because we have someone online, if you're putting out a question, please make sure that you advise who you're directing it to.

We have 15 minutes. We'll hear the two opening statements, and then when we find our other witness, we will hear from him after we vote.

Mr. Cloutier, the floor is yours for five minutes. Welcome back. Thank you for changing your schedule for us.

[Daniel Cloutier, Quebec Director, Unifor]

Thank you, Mr. Chair.

Thank you, committee members.

Thank you for having us today and allowing us to contribute to your study on the buy Canadian policy. My name's Daniel Cloutier, and I'm the Quebec director of Unifor. Unifor is the largest private sector union in Canada. We represent 320,000 members, including 55,000 in Quebec, in virtually all sectors of the economy.

I'll get straight to the point. The trade war triggered by the United States reminds us of a harsh truth. Our economy has become too dependent on a single partner and our industrial capacity has eroded. The good news is that Canadians have understood that. They want us to buy what we make. By launching its buy Canadian policy in December, the government showed that it was listening. It's a good start, but we need to think bigger and go further.

Let me tell you about a case that sums up the whole issue: the Paccar plant in Sainte-Thérèse. It's the last truck assembly plant in Canada. The last one. Peterbilt and Kenworth trucks have been built there for decades. In January 2024, it was producing 92 trucks per day. Today, it produces barely 25. We've seen several rounds of layoffs since last spring. Nearly 800 jobs have been lost. Hundreds of families have been affected in just over a year.

Why? Because Mr. Trump imposed 25% tariffs on trucks and part of the production was transferred south of the border. The tariffs are unjustifiable and must be removed.

The company is trying to reinvent itself. It's turning to the Canadian market, to electric trucks. These are commendable efforts, but let's be clear. Without orders, these investments won't bring our members back to work. That is where the government has a direct lever. Federally, provincially and municipally, our public truck fleet managers, our Crown corporations and our police forces still too often buy trucks made abroad.

When the country is down to its last truck factory and public money is being used to buy trucks elsewhere, something's not right. That's why we have concrete recommendations. I will go through them in order of importance.

First—and this is essential—the requirements of the buy Canadian policy must be applied retroactively to markets with a strategic role in rebuilding the country and to high-value contracts, those over one billion dollars, that have not yet been awarded. I'm thinking in particular of Via Rail's $3‑billion contract for new cars and locomotives. Three billion dollars in public funds is exactly the kind of leverage that can build a supply chain, support thousands of jobs and anchor expertise here. We can't afford to let it leave the country.

Second, American suppliers must be excluded from preferential treatment in the next reciprocal procurement policy, regardless of the U.S.'s being a free trade partner. Reciprocity goes both ways. The buy American rule closes the door to our businesses. Meanwhile, our government contracts remain wide open to American businesses. The imbalance needs to be corrected.

Third, all of the government's powers to discourage offshoring must be considered. A legal opinion we commissioned is clear. The Foreign Extraterritorial Measures Act already exists. It can be invoked quickly, without new legislation, to sanction companies that comply with the United States' unfair trade decrees. It can be broadened. Sanctions can be made harsher. The reintroduction into Canada of goods that were produced here and are now being brought in from the United States could even be prohibited. The Paccar case shows that this isn't theoretical.

I'll say one final word about the reflex to accept the lowest bidder. The principle makes sense, especially when public finances are tight, but the lowest bill does not reflect the true cost to society. When our industrial footprint crumbles, our tax base shrinks along with it. Jobs, taxes and communities are disappearing.

A more flexible approach is therefore needed, one that incorporates other criteria. That includes local content, industrial footprint and our sovereign manufacturing capacity. Buying Canadian isn't an expense. It's an investment in our own resilience. Our members aren't asking for charity. They're asking for a chance to build here what we buy here.

Thank you for listening, and I'm available to answer all your questions.

[The Chair, Conservative, Kelly McCauley]

Thank you, Mr. Cloutier.

We'll now go to Ms. Laramée, please, for five minutes.

[Charlotte Laramée, Chief Executive Officer, Quebec Aluminum Industrial Cluster]

Mr. Chair, members of the committee, thank you for having me here today.

I'm Charlotte Laramée, chief executive officer of AluQuébec, the aluminum industry cluster. There is much talk about aluminum producers. Today, I'm here to talk to you about the rest of the value chain. I'm here to talk to you about small and medium-sized enterprises, SMEs, processing SMEs that supply the manufacturing sector, and equipment manufacturers that provide aluminum plants with innovative solutions.

These SMEs exist throughout Quebec and Canada. In Canada alone, there are more than 1,700 processing SMEs and over 50 processors, together representing approximately 30,000 jobs. While our equipment manufacturers are able to do business with aluminum smelters worldwide and are major exporters, our processing SMEs are somewhat confined to local markets, particularly because of the price of aluminum.

That's why a buy local policy like buy Canadian can only be applauded. However, the devil is in the details, and the needs on the ground must be taken into account to ensure that the policy is properly implemented. In our opinion, there are three main elements to keep in mind and three elements to understand. The first is the reality of SMEs. The second is how, even today, our calls for tenders and contracts are written. The third is how our aluminum value chain is structured in Canada.

We'll start with the reality of SMEs. For a buy local policy to benefit SMEs, it needs to be on their scale. Businesses, our SMEs, are telling us that the thresholds in the buy Canadian policy may be too high. The contracts are too big. We need to ensure that the scale of the contract is suited to SMEs. Similarly, contracts will certainly be awarded for renovation work, which are also likely to be of less value and may not fall within the framework of the buy Canadian policy. We therefore recommend the government avoid undertaking large showcase projects and instead focus on SME-scale projects so they are accessible to SMEs. Along the same lines, tenders should be divided into smaller batches so several SMEs can seize the business opportunities. Finally, once SMEs have qualified and are listed in the HS code catalogue as eligible to be given priority, it's important to ensure that, regardless of the contract size, they're used properly and given priority access to these business opportunities.

The second point is related to how tenders and contracts are still written today. First, there's the choice of material. Still too often, the choice of materials in tenders is set out, and aluminum is too often not even included. We're not asking for aluminum to be used everywhere. What we're asking the government to do is to use the right material in the right place, while allowing contractors the opportunity to demonstrate the appropriateness of the solution.

Tenders also still too often favour the lowest bidder. They should give priority to the total cost of ownership. Aluminum is sometimes more expensive to purchase but is worthy of consideration given that it resists corrosion, requires little maintenance, has a long lifespan and has remarkable end-of-life value. If the buy Canadian policy is to deliver the best value for taxpayers, the cost on the initial invoice cannot be the only thing that matters; the government should consider a product's total cost of ownership.

The last element of this point is risk sharing. You surely know that there's a lot of time between the signing of a contract, its implementation and its completion. The current geopolitical context, with the trade war and the situation in the Middle East, shows how much the price of our raw material is affected.

Just for aluminum, between January and today, the price has increased by 15% to 20%. A contract that was profitable a few months ago may no longer be profitable a few months later, and may even result in a loss. We recommend including escalator clauses in contracts to reflect changes in the value of the raw material.

The third point is related to how our aluminum supply chain is structured in Canada. This value chain is neither Canadian nor American. It's North American. There are things we can't do in Canada, such as plates and foil. We have no rolling mills, for example.

A buy Canadian policy must therefore not isolate us as a country, but rather protect our expertise and allow what we can't produce to be brought in.

However, we'll need to be very careful about the partners we choose. There are partners who play by the same rules we do. Think of Europe or the United States. Other partners, though, have non‑market economies, subsidize their industries, flood our market—even more so since the United States closed its borders—and are completely weakening our value chains here. I'm thinking specifically of China, Turkey and Taiwan. These countries have a huge impact on Canadian extruders in particular. We have a structured value chain in that regard, and this completely weakens our economy and our local businesses.

For SMEs, a buy Canadian policy isn't just a measure; it's a north star giving them guidance on where they can sell, where the business opportunities are and how they can adjust their investments to seize those opportunities. However, when implementing this type of policy, the government must also ensure that the right conditions are in place for our SMEs to seize those business opportunities.

I'll conclude with one last observation. The buy Canadian policy is an excellent initiative. It's ambitious and addresses an urgent situation, so it probably won't be perfect. What we're asking is that you work with the industry so that the policy remains flexible, responsive, and can adjust as necessary.

I'll conclude by saying that our SMEs and aluminum industry are not looking to be saved. What we want are business opportunities and predictability, and the ability to compete in a free trade market on a level playing field with partners. This policy truly makes it possible to prevent the erosion of the strategic Canadian value chain that is aluminum, and I want to thank you for that. The aluminum value chain serves critical sectors such as defence, aerospace, the Far North, infrastructure and construction. When the government talks about buying Canadian, the issue is this: Does it want to simply promote buying local or to ensure the sustainability of a key industry for years to come? Thank you.

[The Chair, Conservative, Kelly McCauley]

Thank you very much.

With that, we will suspend until we're done with our vote.

[The Chair, Conservative, Kelly McCauley]

Thank you, everyone. We appreciate your patience. We're back in session.

Mr. Marcil, welcome. We'll open with you for five minutes, please, and then we'll start our round of questioning.

[Olivier Marcil, Vice-President, Public Affairs and Communications, Alstom]

Thank you very much, Mr. Chair.

Mr. Chair, members of the committee, I am pleased to be here today to contribute to your work on buy Canada policies and on the role that public procurement can play in supporting our economy, creating jobs and building long-term industrial resilience in the manufacturing sector.

Canada is at a pivotal moment.

Across the country, and for several years now, governments have been investing heavily in infrastructure and public transportation systems. The question is whether we will use these investments strategically as a lever to strengthen our industrial sovereignty, rebuild our supply chains and create lasting economic value for Canadians.

As experts in rail mobility, with experience delivering tramway, light rail, subway, commuter rail and high-speed train projects across Canada, we believe the answer is yes.

Alstom is the only global passenger rail company with manufacturing facilities in Canada. We employ over 5,000 Canadians, including 1,000 engineers, and we operate major facilities in Saint-Bruno-de-Montarville, La Pocatière, Thunder Bay, Kingston and Brampton. Moreover, Saint-Bruno is home to Alstom America's headquarters, overseeing activities from Canada to Chile.

The Caisse de dépôt et placement du Québec is our largest shareholder worldwide. This leadership presence reflects Canada's importance within our global organization and demonstrates that Canada is not simply a market for Alstom; it is home.

Our trains are designed, engineered, manufactured, tested, commissioned, operated and maintained here in Canada by Canadian workers. Every day, Alstom employees deliver transportation solutions that connect people to jobs, students to schools, businesses to customers and communities to opportunities. We are proud to support major transit and rail systems in cities including Toronto, Montreal, Ottawa, Waterloo, Vancouver, Edmonton and, soon, Quebec City. Millions of Canadians rely on these systems every day.

Beyond our own workforce, we support a broad Canadian supplier network of over 900 companies—small, medium and large—representing hundreds of additional jobs and millions of dollars in GDP contributions. We have seen what is possible when governments establish clear local content requirements.

Last January, we announced a $2.3-billion Canadian contract with the Toronto Transit Commission to deliver a new fleet of 420 subway cars, before options. Thanks to the leadership of all three levels of government, this new subway train project includes a minimum of 55% Canadian content and will generate up to 945 direct, high-paying jobs in Canada and will support 1,700 indirect jobs, providing a strong, concrete return on investment for taxpayers. This is a clear example of what a buy Canadian policy can achieve.

Around the world, countries are increasingly using public procurement as an industrial policy tool.

The buy America act has enabled the United States to attract investment, build new production and innovation capacity, grow its manufacturing sector and create skilled jobs. The U.S. government has provided certainty that public investments will generate domestic economic benefits, and manufacturers have responded in order to maintain access to U.S. government contracts.

Historically, Canada, as a small open economy, has felt it necessary to rely on open markets to create wealth. That was effective—until our partners stopped offering the level of reciprocity we expected. In the face of supply chain erosion and the decline of our manufacturing sector—primarily to the benefit of the United States—a strong and clear buy Canada policy can help reverse this trend.

We recognize that increasing Canadian content will not happen overnight. Rebuilding supply chains will require time and investment.

It begins with a choice: to invest in ourselves, to select our products, to prioritize our expertise.

At Alstom, we believe public procurement remains one of the most powerful tools governments have to support this growth. We are ready to answer that call, with the support of our customers, suppliers, union partners and employees.

Thank you.

[The Chair, Conservative, Kelly McCauley]

Thank you.

We'll start with Ms. Block for five minutes.

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

Thank you very much, Chair.

Thank you to the witnesses for joining us.

I would like to start my questions with Mr. Marcil of Alstom.

In a June 8 press release, you announced that Alstom received a renewed funding agreement from Export Development Canada in order to enable your company to “expand low-carbon rail...in markets around the world”. Is that correct?

[Olivier Marcil]

It's correct.

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

Can you tell us which countries that would involve?

[Olivier Marcil]

Alstom is working in more than 60 countries all around the world. As you know, the mandate of Export Development Canada is to support Alstom customers worldwide so we can have access to those markets and develop some of those products. Those markets are very different. They could be from eastern Europe to Latin America, for instance. It all depends on the projects and the moment. The agreement with EDC offers Alstom their full suite of financial products, which we can offer to our clients, moving forward. Our intention is to use them to develop different projects—it could be high-speed commuter rail, for instance—all around the world.

What is specific about this agreement, and highly interesting, is that we are committed to continuing to grow our local supply chain and scaling up some of our local companies so they can support Alstom in different markets, moving forward, not just the Canadian market. That's very important, because over the last few years, we've seen the rail industry supply chain move south of the border. The United States has a very strict regime of buying American. Canada was not asking for a lot in terms of economic impact in Canada.

The natural decision of an industrial player is to establish a plant in the United States to deliver in the United States market and export to Canada. With Export Development Canada, we will try to reverse this trend by starting to scale up our local supply chain here in Canada while supporting Alstom in different markets.

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

Thank you very much for that.

Will you table for this committee an outline of which countries EDC is giving you funding to build in, as well as the dollar amount from EDC?

[Olivier Marcil]

Do you mean, can I provide the committee with the different agreements we have? It's probably—

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

Just give a list of the countries and the dollar amounts. I certainly understand commercially sensitive information.

[Olivier Marcil]

That's exactly it.

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

I just want a list of the countries and—

[Olivier Marcil]

I will come back to the committee with the proper information related to this.

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

Thank you.

The government is looking to procure projects with Canadian content. How much of a project's cost is spent complying with emissions regulations here in Canada in, for example, the procurement of metro trains?

[Olivier Marcil]

I'm not sure I understand the full scope of your question. Are you talking specifically about the cost of the project in Canada? When you say “emissions”, are you talking about—

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

I mean the environmental emissions regulations here in Canada. Is there a cost for a company like yours to comply with the emissions regulations here in Canada?

[Olivier Marcil]

No, there's no real impact, I would say. It's really minimal.

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

Okay.

[Olivier Marcil]

We are in the rail manufacturing sector producing rail systems. We do not produce diesel locomotives. It's all about green propulsion systems and electric systems. It's not very difficult for us to demonstrate the impact.

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

Beyond steel and aluminum, what other components does your company use in building trains?

[Olivier Marcil]

Trains nowadays are very complex products. Back in the day, we said that they were steel cans on rails. Now they're almost computers on rails.

There are still a lot of components in the manufacturing of car bodies. From Canada, we have primary parts like aluminum and steel. That's one thing. We look at the different components. Think about the roof, car body, radio, isolation and harness. There are all sorts of components that can come from Canada. It depends on the project.

Sometimes there are very specific elements requested by our customers. It's possible that we're unable to procure those elements in Canada. That's very true.

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

Chair, can I ask one last question?

[The Chair, Conservative, Kelly McCauley]

You have one minute and 10 seconds.

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

Okay.

Do you pay the cost of the carbon tax on the materials, such as the steel you're using? How significant is that cost?

[Olivier Marcil]

I can't tell. I need to look specifically at who is paying the carbon tax on these components. Is it the producer or is it us as the buyer? I need to check. I'll come back to you on that.

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

Thank you.

[The Chair, Conservative, Kelly McCauley]

Ms. Martin, you have six minutes, please.

[Danielle Martin, Liberal, University—Rosedale, ON]

Thank you, Mr. Chair.

I thank all the witnesses for their shared enthusiasm. It warms my heart to see the enthusiasm of three such different witnesses for the government's buy Canadian policy.

I'll start with you, Mr. Marcil.

I represent the riding of University—Rosedale, which is in the heart of downtown Toronto. Line 2 of the TTC runs right through the heart of my riding. It's exciting for me and for my constituents to contemplate the notion that our new subway cars will have been built here in Canada and in Ontario.

From your perspective, what does that mean for the people of my community? How can we work together with you to tell the story of what buy Canadian means for riders who are getting on a Canadian-built subway car on our line 2 subway?

[Olivier Marcil]

Torontonians and transit users of the subway cars will have access to brand new last-generation subway cars with all the latest amenities. It's important for Toronto.

I think we all know that the growth of the city is exponential. Right now with the FIFA World Cup, we're seeing the number of people who are using transit in Toronto, and it's a challenge. We're also operating and maintaining the GO Transit network. We've been asked to step up to make sure we offer a flawless service to the population. That's really important. Line 2 is currently one of the busiest lines of metro cars being used in the world.

On top of that, our supply chain is very diverse. It goes across Canada. Obviously, we have some companies from Toronto, but we also have companies from B.C., Alberta, Quebec and all around Canada that are working with us. Some of these suppliers will benefit from the new subway train project, that's for sure.

[Danielle Martin, Liberal, University—Rosedale, ON]

This links to my next question, actually, which is about the supply chain. Can you describe briefly for us how the buy Canadian policy works its way down the supply chain?

I'm also curious about Madame Laramée's perspective. We all want to see small and medium enterprises supported in Canada. This government is investing, understandably, in big, important nation-building infrastructure projects that require a volume of supplies that can make them tricky and difficult.

I'm interested in understanding how buy Canadian works its way through the supply chain, whether it's for line 2 or anything else, and how we can be inclusive of small and medium enterprises in these big nation-building projects.

[Olivier Marcil]

Maybe I can go quickly, and then Charlotte can finish.

When we think about Canadian content, there are two main elements we must take into consideration. The first part is where we are producing goods. Alstom, for instance, is the only passenger rail rolling stock manufacturer that has a footprint in Canada. We have the facilities, we have the employees and we have the expertise. I wouldn't say it's easy, but we have an opportunity to use our footprint to respond to the local content requirement. That's not the whole solution. We can do this but not reach over 50% in Canadian content.

The second part of the equation is the supply chain. This is probably where most of the work in the rail sector will come from. A lot of our supply chain needs to be reshored in Canada. It moved south of the border for a lot of things. The best example is stainless steel. We used to produce stainless steel in Canada. We don't anymore. It moved south of the border. To bring it back, we need volume, predictability and stability. This will come with the large contracts that will be steadily offered with a buy Canada requirement that is strong, clear and predictable. Companies will think about making new investments in Canada and will rebuild their capability in Canada to have access to those contracts.

We cannot move forward when there's a contract with a local content requirement but another one without one, and we yo-yo like that. It needs to be consistent. This comes from the government.

[Danielle Martin, Liberal, University—Rosedale, ON]

I want to come back to Ms. Laramée, but before we run out of time, Mr. Cloutier, on this question of the lowest bidder, can you say a bit about what it means for good union jobs in Canada to have some flexibility around the lowest-bid approach when we think about a buy Canadian strategy that is also about uplifting Canadian workers?

[The Chair, Conservative, Kelly McCauley]

You have about 25 seconds, please.

[Daniel Cloutier]

I'll give you a striking example. Paccar is currently trying to secure a truck contract with the City of Laval. Our understanding is that the company is going to lose the contract over less than 1% of the contract's value. Clearly, the repercussions on the manufacturing sector in Canada are not taken into account when such choices are being made.

[The Chair, Conservative, Kelly McCauley]

That's our time, but it was a great example in the time allowed, Mr. Cloutier. Thank you.

Ms. Gaudreau, please go ahead for six minutes.

[Marie-Hélène Gaudreau, Bloc, Laurentides—Labelle, QC]

Ms. Laramée, I just want to check one thing. Have you been consulted? Essentially, since December, when someone stole a—

[Charlotte Laramée]

We were consulted.

We worked with the Public Services and Procurement Canada team to set up the HS code catalogue for aluminum.

[Marie-Hélène Gaudreau, Bloc, Laurentides—Labelle, QC]

Did they tell you that they would continue to consult you?

[Charlotte Laramée]

We haven't had a response. We're still having discussions with them on certain products, but it's more to see what we do or don't do in Canada. We're working on our aluminum flows. However, for the buy Canadian policy specifically, we haven't received a response at this stage.

[Marie-Hélène Gaudreau, Bloc, Laurentides—Labelle, QC]

That is needed. I heard you clearly.

Mr. Cloutier, in your opening remarks, you said that the buy Canadian policy is a good start. However, what does that mean in concrete terms?

[Daniel Cloutier]

The Via Rail contract is one example we give. The $3‑billion contract for locomotives and railcars ensures a supply chain and quality jobs for years, including for maintenance of the railcars. There's also the Paccar example, which I just gave.

In many cases, what we understand and what we're sometimes told is that the administrative authority can of course tolerate a certain degree of flexibility. However, the pressure to select the lowest bidder is so strong, and the fear of being sued or being seen as a poor manager is so great, that the flexibility isn't applied. We believe it needs to come from the top, with a clear message from Treasury Board saying that this is what it wants. That is necessary both federally and provincially.

[Marie-Hélène Gaudreau, Bloc, Laurentides—Labelle, QC]

What elements would be needed for a true Canadian industrial strategy? It needs to be improved.

[Daniel Cloutier]

In our opinion, where possible, we need to move away from commodity markets and towards the manufacturing of value-added products that can serve our own needs and that, in some cases, could eventually be exported and open up new opportunities.

In many cases, there are self-imposed limits. For example, a lot of lumber is produced, but it remains a commodity market. Right now, the question being asked is whether we should produce more biofuel. That could somewhat offset what's no longer being done in lumber. However, it remains a commodity. The idea, then, is to process our materials ourselves, at home, first to use them and then to create wealth.

[Marie-Hélène Gaudreau, Bloc, Laurentides—Labelle, QC]

There's a lot of talk about the procurement policy, the policy on government contracts. Do we have a national industrial policy in Canada?

[Daniel Cloutier]

Not to our knowledge. We advocate for one, particularly for aerospace and forestry, as well as other sectors.

There's another great example in aerospace. Last year, or about two years ago, the government needed surveillance aircraft, and there was no call for tenders. Canadian companies, including Bombardier, said that they should at least be allowed to submit a bid. There wasn't even a call for tenders, and the contract was awarded to Boeing in the United States for a model that was outdated.

There was no consideration of whether it was the right model for the future, and our own suppliers were prohibited from bidding on the contract. Is there a policy? We doubt it.

[Marie-Hélène Gaudreau, Bloc, Laurentides—Labelle, QC]

This is something I've been fighting for, because the situation with Boeing was unacceptable.

I still have a little time left. Let's talk about the European model. In countries like Germany, France or South Korea, it's clear that the government plays an active role in developing industrial sectors. Should we follow that model more?

[Daniel Cloutier]

Yes, we believe so. We think the government can be a conductor of sorts when it comes to these industrial policies. We're not asking the government to be the investor or to nationalize anything. We're quite comfortable with the private sector taking care of it. Nevertheless, that vision needs to be developed. If that is to exist, it needs to be centralized somewhere, and that's the role of the government.

[Marie-Hélène Gaudreau, Bloc, Laurentides—Labelle, QC]

I'd like you to provide the committee with the elements of the model most appropriate for Canada.

My time is limited, and I'd like to ask you some questions, Mr. Marcil.

Should we buy Canadian or build Canadian? Since the beginning of the study, the topic has been public procurement and Canadian content. I'd like to make a distinction. Is the buy Canadian policy primarily a procurement policy, or should it become an industrial development policy?

[Olivier Marcil]

It can be both. If a Canadian product is purchased, that means that someone made it in Canada. It's primarily a policy that can be leveraged to revitalize our manufacturing sector, which, honestly, isn't doing very well compared with the U.S.'s. Whether it becomes a policy of industrialization or reindustrialization, it can be extremely useful. The government has resources; it awards enormous contracts in our sector, the defence sector and others. It provides a lever, and we certainly can't let that pass by.

[Marie-Hélène Gaudreau, Bloc, Laurentides—Labelle, QC]

It also has limits. There are barriers that prevent major railway projects from including more Canadian content, aren't there?

[Olivier Marcil]

I'll use the example of the Montreal subway. The last Azur train for the subway was built with 80% local content.

[The Chair, Conservative, Kelly McCauley]

I'm afraid we're past our time.

[Marie-Hélène Gaudreau, Bloc, Laurentides—Labelle, QC]

It's so pleasant to speak in French, though, Mr. Chair.

[The Chair, Conservative, Kelly McCauley]

Before we go to Ms. Jansen, I'll say that I understand we might have bells again soon. We'll be able to get through the 30-minute bells if we can agree that we'll power through when the light starts.

[Some hon. members]

Agreed.

[The Chair, Conservative, Kelly McCauley]

Wonderful. Thank you.

Ms. Jansen, you have five minutes.

[Tamara Jansen, Conservative, Cloverdale—Langley City, BC]

Mr. Marcil, the government says that Canada should be our own best customer with this buy Canadian project. At the same time, EDC, Export Development Canada, is helping to finance infrastructure projects outside Canada.

I'm trying to understand how Canadians measure the return they're getting from these foreign investments and how to track buy Canadian data at Alstom. The original EDC-Alstom agreement provided for up to $3.5 billion in financing support to pursue and deliver rail and transit projects outside Canada. Can you tell us how much of that financing has already been used to date?

[Olivier Marcil]

I don't have the data. We can probably provide it, within the limit of commercial confidentiality, as you can imagine.

[Tamara Jansen, Conservative, Cloverdale—Langley City, BC]

Thank you.

Can you identify the major projects that have benefited from this taxpayer support partnership?

[Olivier Marcil]

The projects used are the very same kinds of projects that EDC is using for different sectors around the world. That's their—

[Tamara Jansen, Conservative, Cloverdale—Langley City, BC]

There's no specific identity of a major project somewhere.

[Olivier Marcil]

In the case of Alstom, we're talking about rail projects.

[Tamara Jansen, Conservative, Cloverdale—Langley City, BC]

How many Canadian jobs have been created or maintained through those projects?

[Olivier Marcil]

Alstom is on a growth path in Canada. We have created over 1,000 jobs in Canada over the last five years.

Since the first agreement with EDC has been in place, we have continued to grow and to make tremendous investments in our facilities in Canada and in developing our supply chain.

[Tamara Jansen, Conservative, Cloverdale—Langley City, BC]

I understand it is 1,000 jobs.

How much Canadian content was supplied in those projects that we're not sure where they are?

[Olivier Marcil]

These projects do not have any requirements related to Canadian content. They're projects that are built in other countries. Alstom has a strategy of being multilocal, which means we build in Canada for Canada and we build in other countries for other countries.

[Tamara Jansen, Conservative, Cloverdale—Langley City, BC]

Does the financing you receive from EDC therefore require no reporting in regard to buy Canadian content?

[Olivier Marcil]

There's reporting.

[Tamara Jansen, Conservative, Cloverdale—Langley City, BC]

Is that on buy Canadian content?

[Olivier Marcil]

We report to EDC.

[Tamara Jansen, Conservative, Cloverdale—Langley City, BC]

Is EDC asking you to report on its buy Canadian content?

[Olivier Marcil]

Of course.

[Tamara Jansen, Conservative, Cloverdale—Langley City, BC]

Does EDC publicly report those figures, or do you?

[Olivier Marcil]

It's EDC. You need to ask EDC this question.

[Tamara Jansen, Conservative, Cloverdale—Langley City, BC]

Do they have public reports of your buy Canadian content?

[Olivier Marcil]

To my knowledge, they have reports on every investment they make for every client they have in Canada.

[Tamara Jansen, Conservative, Cloverdale—Langley City, BC]

Do they have reports on Canadian content issues?

[Olivier Marcil]

Yes, they do on Canadian content and any of the other metrics where they are tracking part of their investment.

[Tamara Jansen, Conservative, Cloverdale—Langley City, BC]

What percentage of the supported work occurred in Canada?

[Olivier Marcil]

Could you repeat the question?

[Tamara Jansen, Conservative, Cloverdale—Langley City, BC]

What percentage of the work that was supported by EDC occurred in Canada?

[Olivier Marcil]

I don't have the answer to that specifically.

[Tamara Jansen, Conservative, Cloverdale—Langley City, BC]

How about what percentage occurred outside of Canada?

[Olivier Marcil]

I don't have the answer to that either. You're very specific in your questions. I'm happy to come back to the committee—

[Tamara Jansen, Conservative, Cloverdale—Langley City, BC]

Yes, because it's a buy Canada study.

[Olivier Marcil]

—with the response.

[Tamara Jansen, Conservative, Cloverdale—Langley City, BC]

Please do. Thank you.

If a project receives EDC support, is there a minimum Canadian content requirement?

[Olivier Marcil]

There are metrics that Alstom needs to track and report to EDC. They could be of all sorts, and they include growth and jobs created in Canada.

[Tamara Jansen, Conservative, Cloverdale—Langley City, BC]

Right, but is there a Canadian content requirement? This is a buy Canada study.

[Olivier Marcil]

The EDC agreement is not directly related to the buy Canada act. It's not related. EDC is for export markets. Buy Canada is about building in Canada. Those are two different things.

[Tamara Jansen, Conservative, Cloverdale—Langley City, BC]

Yes, I understand that, but you're using Canadian money, and we're asking right here at a buy Canada study what kind of Canadian content we have.

How do Canadians track what they get out of buy Canadian content? Should Parliament be able to measure the Canadian economic return generated by this partnership?

[Olivier Marcil]

I think you do. I don't know if it's through this committee, but in other committees, EDC comes and reports on their activities.

[Tamara Jansen, Conservative, Cloverdale—Langley City, BC]

What due diligence does Alstom conduct to ensure that workers in its global supply chain are not being exploited or working illegally? I understand that you're very heavily involved in China. I think you have 11 projects there.

[Olivier Marcil]

We're in 60 countries all around the world. We have strong ethics—

[Tamara Jansen, Conservative, Cloverdale—Langley City, BC]

I'm specifically asking what your due diligence requirements are.

[Olivier Marcil]

We have due diligence, and it is public.

[Tamara Jansen, Conservative, Cloverdale—Langley City, BC]

What are they?

[Olivier Marcil]

We have a policy.

[Tamara Jansen, Conservative, Cloverdale—Langley City, BC]

Where do you report?

[Olivier Marcil]

We have an ethics and compliance policy, and we have supplier behavioural policies—

[Tamara Jansen, Conservative, Cloverdale—Langley City, BC]

Is the funding—

[Olivier Marcil]

—that we apply strictly throughout our supply chain.

[Tamara Jansen, Conservative, Cloverdale—Langley City, BC]

I'll quickly change. Is the funding you receive from EDC subject to the buy Canadian rules, yes or no?

[Olivier Marcil]

No, absolutely not. It's not the same. It's not a tool for buy Canada; it's a tool for exporting. That's different.

[The Chair, Conservative, Kelly McCauley]

Thank you very much.

Ms. Rochefort, you have the floor.

[Pauline Rochefort, Liberal, Nipissing—Timiskaming, ON]

Thank you, Mr. Chair.

Ms. Laramée, you said that the $5‑million threshold was too high for enough small and medium-sized businesses to take an interest in the buy Canadian policy. I don't know whether you mentioned it, but do you have a number in mind or something to recommend with respect to the threshold?

[Charlotte Laramée]

When Public Services and Procurement Canada initially presented the buy Canadian policy to the committee we were working with, the threshold to trigger the policy was said to be $25 million. There was also talk about a $250,000 threshold for materials. The $25 million seemed too high, and SMEs felt that $5 million was more realistic. They told us that the contracts were often for renovation work. In general, there are few new contracts; they're mostly contracts related to renovation. In this case, since the thresholds will be lower, they won't trigger the $25‑million threshold. The tenders need to be smaller, and the buy Canadian provisions need to be triggered more often for large projects, showcase projects. That's the concern SMEs have.

[Pauline Rochefort, Liberal, Nipissing—Timiskaming, ON]

Have you submitted those recommendations in writing?

[Charlotte Laramée]

No, it was an informal discussion with Public Services and Procurement Canada.

[Pauline Rochefort, Liberal, Nipissing—Timiskaming, ON]

It would be good if you could send them to us.

Mr. Cloutier, I really appreciated your comments. It's true that what's happening in Laval is unfortunate. It affects us all. Indeed, it's a challenge for municipalities, given the international trade requirements.

I'd like to read you something and hear your opinion on it. If time permits, I'd like to hear Mr. Marcil's and Ms. Laramée's opinions as well.

It says:

...when Canada limits access to its public procurement, other countries may do the same to Canadian businesses....

Still, others argue that Canada is “clinging to the fiction that ‘free markets’ still exist while competitors build protected ecosystems” and needs to adapt to the new realities. This requires a complete retooling of the system in order to serve economic sovereignty and national security.

I know you've made some comments, but could you share your recommendations on this?

[Daniel Cloutier]

I tend to agree with what you just read. It often seems as though the government suffers from naive optimism. As can be seen, several other countries, like the U.S. and those in Europe, have much more aggressive buy domestic policies. We're constantly told that isn't possible here, because of our international agreements. Why is it possible elsewhere, but not here? I think we need to wake up and give ourselves the tools to level the playing field.

[Pauline Rochefort, Liberal, Nipissing—Timiskaming, ON]

Thank you, Mr. Cloutier.

Mr. Marcil, what's your take on it?

[Olivier Marcil]

I would be in favour of the proposal too. It's very much in line with my presentation. Basically, these tools will help us regain industrial sovereignty that we've lost over time.

[Pauline Rochefort, Liberal, Nipissing—Timiskaming, ON]

Do you have any specific recommendations on how Canada should approach this challenge?

[Olivier Marcil]

The way the buy Canadian policy is currently designed is a very good first step.

Now, the government could set out more specific targets for content. In other words, it needs to be clearer. So far, there's been a lot of talk about discounts that could be given or about promoting Canadian content in the policy. That's the first element.

There's also a second element. All levels of government need to have a similar approach on this issue. Some procurement is under the direct jurisdiction of the federal government, while some is under the direct jurisdiction of the provinces or cities. In our field, it's not uncommon to see all three levels of government contribute funding to a public transit project. It's important to ensure a meeting of the minds and policy alignment on building locally.

[Pauline Rochefort, Liberal, Nipissing—Timiskaming, ON]

That's an excellent comment.

Ms. Laramée, I'd like to hear your point of view.

[Charlotte Laramée]

I stressed the point that our value chain is North American. That said, I believe we need to be careful. Buy local policies are very helpful and must indeed be aligned across the three levels of government. That's critical.

Conversely, there is still the concept of reciprocity. I think we have to choose the partners we want to work with. For example, I know that, in some areas, there is co-operation with the federal government and there are discussions about protecting local businesses from countries with non-market economies, such as China, Taiwan and Turkey. We're told that if we start imposing quotas or tariffs, we'll take access away from our international partners.

However, which partners do we want to work with? I think, once again, the devil's in the details. We need to choose partners with whom there's genuine reciprocity and alignment on volumes. For example, saying we'll work with Europe when it comes to aluminum processors isn't realistic. Our aluminum is more expensive in North America. Processed aluminum products won't be that easy to sell in Europe. Our value chain needs to evolve, but that's not the case for processing. When talking about reciprocity, the government needs to look at what's being discussed and what the volumes are, and ensure that it's a mutually beneficial transaction.

However, some countries are attacking and undermining our local supply chain. Right now, the aluminum sector is experiencing a perfect storm. We're losing contracts with the Americans while inputs from non-market economies are eating into our local market share. Because the procurement process favours the lowest bidder, we obviously can't compete with products that are 30% to 40% cheaper than what we're able to produce here. I don't think we'll be able to ignore the price. When we adopt a buy local policy, we also need to make sure we look at what else we're willing to do to protect our industry.

There was a question about whether it should be an industrial policy. For me, the answer is yes. It's about building buy local requirements into the policy.

[The Chair, Conservative, Kelly McCauley]

I'm sorry. We're quite a bit past our time, but perhaps you can take it up with Madame Gaudreau.

[Marie-Hélène Gaudreau, Bloc, Laurentides—Labelle, QC]

I have two minutes and thirty seconds left, and time is running out.

Ms. Laramée, just because we don't have much time, that doesn't mean you can't provide us with all the details and information on the issues that have emerged. Clearly, that's the purpose of the committee. If we don't have time to consult you, we'd like to have your point of view, even if it's not in the form of a dialogue.

It's the same thing for you, Mr. Cloutier. Here's a question about your recommendations: What does the buy Canadian policy absolutely have to have to be successful?

[Daniel Cloutier]

Earlier, I gave three concrete recommendations. I'd say it's quite urgent to review the rules around awarding contracts to the lowest bidder.

[Marie-Hélène Gaudreau, Bloc, Laurentides—Labelle, QC]

Ms. Laramée, what do you think about predictability?

[Charlotte Laramée]

Our companies need to be ready to invest and know where they should be heading. In defence, it's very hard to have predictability. Knowing where the opportunities will be and where the government will invest is essential, so we can structure our supply chain accordingly.

[Marie-Hélène Gaudreau, Bloc, Laurentides—Labelle, QC]

Yes, but it requires a geopolitical context. That would be good.

Mr. Marcil, what do you think?

[Olivier Marcil]

I agree with what my colleagues said.

The government should also look at what is defined as Canadian as opposed to what isn't. It's especially important to prevent people from being able to just open a post office box in Canada to claim they have a foothold here and thus qualify under the buy Canadian policy. The number of investments, the real economic impact, the employees and where the product is actually designed, among other things, must also be examined. There's work to be done on that. You can look to Ontario, which has started to consider the definition of what constitutes a Canadian product as opposed to what doesn't.

[Marie-Hélène Gaudreau, Bloc, Laurentides—Labelle, QC]

That's excellent.

Witnesses, we look forward to your briefs.

Thank you very much, Mr. Chair.

[The Chair, Conservative, Kelly McCauley]

Thanks.

We'll go to Ms. Block, please.

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

Thank you very much, Chair.

I'm going to ask questions of Ms. Laramée during this round.

Would it be fair to say that the effects of the punitive tariffs from the U.S. have been devastating to your industry?

[Charlotte Laramée]

Yes.

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

Absent measures in buy Canada, is a trade deal still needed for your industry to restore long-term stability?

[Charlotte Laramée]

Yes, it's essential. The negotiations surrounding the Canada—United States—Mexico Agreement are essential.

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

Can you answer that again, please?

[Charlotte Laramée]

It's very important to have good negotiations on CUSMA.

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

I'll now ask questions similar to those that I asked of Mr. Marcil.

Do you pay the industrial carbon tax on the aluminum you produce?

[Charlotte Laramée]

I don't know. I'm not a producer of aluminum. I represent the SMEs processing the aluminum.

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

Do you know if those who are producing the aluminum pay the industrial carbon tax?

[Charlotte Laramée]

I don't know.

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

You don't know if they do. Okay.

You would not know, then, what the costs of emissions regulations are on the aluminum industry.

[Charlotte Laramée]

No.

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

Do you know how much of the business done by the aluminum industry is done with the automotive industry?

[Charlotte Laramée]

A lot. It's in Ontario, mainly, but we know there are rolling mills in the U.S. The aluminum produced in Canada goes to the U.S., comes back to Ontario and goes back to the U.S. That's why it's a very integrated value chain.

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

We have the punitive tariffs from the United States and have the industrial carbon tax, which I'm going to assume our aluminum producers are paying. What is the effect of them with the allowance of Chinese-made EVs into the market?

[Charlotte Laramée]

I don't have the answer to that question. I don't know.

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

I'll ask you to speculate. Is it fair for your industry to have to compete with aluminum produced with forced labour?

[Charlotte Laramée]

No, it's not, and it's a big problem. That's why we're asking the federal government to act on it and protect our local industry from non-market economies. It's really killing our local industry—mainly the extrusion.

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

It undercuts the industry. The market shrinks for the aluminum industry as a result of these decisions. Is that correct?

[Charlotte Laramée]

It's a perfect storm. There's the market we have lost from the U.S., and then there are the incomes coming from non-market economies. They're literally taking all of the opportunities in Canada from our local industry.

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

Thank you.

I'm done, Mr. Chair.

[The Chair, Conservative, Kelly McCauley]

Mr. Gasparro.

[Vince Gasparro, Liberal, Eglinton—Lawrence, ON]

Thank you, Chair.

Thank you for being here.

Mr. Marcil, the Government of Canada is spending a significant amount of capital on infrastructure and housing. The buy Canada policy is one pillar of what we are doing to try to drive investment into our domestic economy. Alstom is a critical partner in delivering this investment while keeping economic benefits in the country.

In January 2026, as we previously discussed, the federal government announced its first award under the new buy Canadian policy. I'm referring specifically to the 55 new subway trains for Toronto's line 2, which will be manufactured in Thunder Bay.

Maybe you can talk a bit about what some of the economic benefits are that remained in Canada because of the buy Canadian policy that weren't really captured in the contract.

[Olivier Marcil]

I'll start with the workers. We're going to design, prototype and engineer the new subway train in Montreal. We will do all the subcomponents. The car body and shell will be welded in La Pocatière, Quebec, and shipped to Thunder Bay for all the final assembly. We're going to test the train in Kingston, and finally it will be commissioned in Toronto.

Of the people who will work on this train, 85% will be Canadian. In terms of working hours, it has a tremendous impact. We've talked about over 900 direct jobs for people working on it, and 600 will be at Alstom alone. That's for the working hours.

After that, it's about the expertise of the supply chain. The aluminum will come from Quebec, and the carbon steel will come from Ontario. Different components will come from all across Canada. In terms of the value of the goods and products that will be in the train, it will reach 55% Canadian. Obviously, we would like to go higher than that at some point, but there's a limit to what the supply chain can deliver, and some components are not in Canada, for all sorts of reasons.

People say a lot that sometimes we're paying a bit more for our products because they are Canadian instead of being from low-cost countries. That's true. We need investments in Canada to produce here, but the return on investment for the taxpayer is different. It's not just about the cost of buying the product; it's about what stays in the economy, what is circling back into the economy and what is coming back in taxes for the treasury. All of this needs to be counted when we're looking at a very large project like NST.

[Vince Gasparro, Liberal, Eglinton—Lawrence, ON]

Clearly you're a supporter of the buy Canadian policy.

[Olivier Marcil]

Yes.

[Vince Gasparro, Liberal, Eglinton—Lawrence, ON]

You talked about investment. I'd like to just drill down a bit on that, Mr. Marcil. Have you found that the buy Canadian policy has given your company the confidence to invest and reinvest in Canadian facilities and in workforce development more broadly?

[Olivier Marcil]

It is giving us that confidence. It is giving confidence to the whole industry, not just Alstom—and even to the competition. Our competitors will be incentivized to localize in Canada following this.

That's exactly what we saw, for instance, in Australia, which has a strong buy local policy. It's the same thing in the United States, Israel and South Africa. Even in Europe there are some elements of buy local within the European Union. That has a strong industrial impact in the long run.

We need to have consistency, stability and predictability within the policies moving forward when all the large projects come to the market. That's important for the whole industry.

[Vince Gasparro, Liberal, Eglinton—Lawrence, ON]

Well, you'll definitely get stability from our government.

Thank you.

[The Chair, Conservative, Kelly McCauley]

Thank you, everyone.

Witnesses, thank you very much.

Mr. Cloutier, thank you for joining us again after last week.

Ms. Laramée, I have one quick question. Has your industry asked for the government to launch an anti-dumping investigation into some of the items that...?

[Charlotte Laramée]

Not officially, but we are making a lot of representations to say that we have to protect local industry.

[The Chair, Conservative, Kelly McCauley]

Wonderful. Thank you very much.

Colleagues, if there's nothing else, we will adjourn. Whether the House is rising or not, depending on the rumours, we are still here Thursday for Canada Post.

We are adjourned.