Government Operations Committee on June 16th, 2026

[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.