Thank you, Mr. Chair.
Thank you to the committee for the invitation. My remarks this evening will focus on the tradeoffs Canada faces as it prepares its defence industrial strategy.
The tradeoffs Canada faces are between three considerations: alliances and operational advantage; sovereignty and industry; and money. I wish to focus on these tradeoffs because they have not been properly acknowledged in our national discussion about our new defence investments.
I wish to focus on these trade-offs, because it has not been a wise approach to not consider them. As we move forward with significant investments in defence, we should be mindful of the opportunity costs that we face.
Let us begin with the trade-offs between our alliances and operational advantage on the one hand and our national sovereignty and industry on the other. We should be clear-eyed that moving away from American capability will likely affect allied interoperability with the United States military and our ability to maintain an operational advantage against peer competitors such as China and Russia. The reason for this is simple: No other ally spends as much on advanced military technology, and NATO interoperability leverages systems underpinned by the United States.
Building more sovereign Canadian capabilities and domestic industrial capacity will be costly and result in less advanced capabilities, in many cases. Take a sovereign cloud. Creating one will be expensive and leave us with less capability than cloud services offered by the major American cloud service providers, such as Amazon Web Services, or AWS.
In the defence space, in particular, a truly sovereign cloud would also diminish our interoperability with the United States, United Kingdom and Australia, who are relying on the major American cloud service providers.
Acknowledging this reality is not meant to cast aspersions on Canadian know-how or ingenuity. Companies like AWS simply spend far more and are much further ahead in this field. I am also not suggesting that a sovereign cloud is bad policy. Controlling our own data is, all else being equal, a good idea, but we must be clear-eyed that there are trade-offs involved, and we should be mature enough to acknowledge them.
Focusing on our alliances and operational advantage alone, however, comes with its own costs in terms of sovereignty. Canada has spent upwards of 75% of its defence capital budget on American capability because it gave the CAF advanced interoperable capabilities at relatively low cost, yet that has meant we don't have as much sovereign capacity as we might like or need now.
One exception is shipbuilding. Canada decided to emphasize both advanced technology and sovereign capacity in building the River-class destroyer. As critics are quick to point out, though, this approach has been very expensive.
Looking ahead, Canada could choose to maximize sovereign capacity in many other areas. This would benefit the Canadian economy and help with economic growth, but it could leave the Canadian Armed Forces with less capability and interoperability.
Alternatively, we could try to balance operational advantages, sovereignty and cost. This would work best for missions that are focused on the defence of Canada rather than fighting alongside the United States and other allies. This balanced approach, I would argue, should be what we aim to achieve as part of the defence industrial strategy, but we should recognize that it will not be easy to achieve.
Sustaining a large domestic defence industrial base, however, may require buying capabilities the military does not need, potentially paying firms to keep production lines open even when they have no orders, or helping these firms sell far more defence materiel to overseas, including to regimes that may not share our values and commitments to human rights and democracy.
These are the realities that a country of Canada's size must accept to keep a national industrial base afloat. I would encourage the committee to examine the French experience here as an example of what must be done to maintain a vibrant defence industrial base.
In sum, the defence industrial strategy offers Canada enormous opportunities, but those come with opportunity costs.
Thank you.