Industry and Technology Committee on Nov. 17th, 2025

[Gabriel Ste-Marie, Bloc, Joliette—Manawan, QC]

Okay.

Canada can position itself, then, to be the hub for this technology.

How does Canada compare with other countries on the international stage?

[Namir Anani]

Canada is very well positioned in terms of research, research excellence, and especially in the field of artificial intelligence and quantum technologies.

It's important to support research and do so quickly, because now is the time to do so. In terms of global competitiveness, it will be crucial for Canada to secure its presence in the field.

[Gabriel Ste-Marie, Bloc, Joliette—Manawan, QC]

Thank you very much.

[Namir Anani]

You're welcome.

[The Chair, Liberal, Ben Carr]

Ms. Borrelli, the floor is yours for five minutes.

[Kathy Borrelli, Conservative, Windsor—Tecumseh—Lakeshore, ON]

Thank you, Chair.

Mr. Graydon, Canadian business investment per worker is roughly 50% to 70% of U.S. levels. Does the Liberal 2025 budget meaningfully narrow that gap, or are your member companies still planning to expand their capital expenditures abroad?

[Michael Graydon]

I think it's early going. I think most members are just trying to digest the budget at this particular point.

I can also suggest that most of the energy is being put into understanding where the benefits are for those actual capital investments themselves: the machinery, the buildings, etc. It's still very early going at this particular juncture.

[Kathy Borrelli, Conservative, Windsor—Tecumseh—Lakeshore, ON]

Until now, when capital investment has flown outward, which countries or regions are your members favouring and why?

[Michael Graydon]

It's almost entirely to the United States. I think part of it is that it's easy to trade—or it has been—between Canada and the United States. We're looking at consistent languages and consistent understanding of the marketplace.

The distribution component of it is quite easy. You're putting it on a truck, not a boat, and you're able to meet the supply chain needs that are required, so the majority of it has gone south.

[Kathy Borrelli, Conservative, Windsor—Tecumseh—Lakeshore, ON]

Are there any legislative changes Canada could make that would help companies keep their investments here? What could keep companies here?

[Michael Graydon]

I think some of the moves that have been identified in the budget could, and I think there has been a lot of talk in the past around trying to incentivize capital investment. Our tax policies in this country are very high. The access to labour is very low on occasion.

In terms of more investment in regard to stimulating those dollars spent on manufacturing, I think the opportunity is there and the market is there. I think we do have some very good trading arrangements outside of the United States to leverage as well. We need to seize the opportunity to take advantage of those.

[Kathy Borrelli, Conservative, Windsor—Tecumseh—Lakeshore, ON]

Can you give us an example of the kind of Canadian company or technology that risks being scaled, funded or commercialized outside of Canada because our environment isn't competitive enough?

[Michael Graydon]

I think all in our sector are potentially vulnerable to those components of it. That said, remember that Canada is 40 million-plus people. It is a good market. Even if the manufacturing evaporates from this country, these organizations that transition to the United States will still look very favourably on the Canadian consumer as an opportunity, but there could be cost implications there, too, because of the uncertainty of the relationship with the United States, especially on the food side.

We have lost some of our food sovereignty in this country. When you're getting almost half of the centre-store food product in a grocery store coming from someplace else, it's not a good place to be. We didn't used to be like that. Where companies now are producing maybe 30% of their volume at a Canadian plant and 70% in the U.S., it was the reverse over 20 years ago, and over time it has just slowly evaporated. As I said, I think we're getting to the point where, if we're not careful, we're at a tipping point.

I think it's also important to recognize that while small to medium-sized enterprises make up the majority of the plants in this country, where the volume sits is in the large manufacturers. It's the 80:20 rule, where 20% of the manufacturers make 80% of the goods, because they have the scale.

It's those organizations that also have significant capital to be able to employ in manufacturing in this country, but it goes into a global capital pool. You need to deploy your capital where you get the best return on investment, and Canada is not a great place for that right now.

[Kathy Borrelli, Conservative, Windsor—Tecumseh—Lakeshore, ON]

Does the lack of a clear Canada-U.S. trade strategy in the budget create hesitation for long-term commitments?

[Michael Graydon]

At this particular juncture, it does. You're looking at.... Remember, even with the trade environment being calmer pre-Trump administration too, we still saw some elements of evaporation of capacity, so there are other factors that are contributing to it. At this particular juncture, the issues with the United States were a wake-up call to manufacturers in Canada. There's an opportunity here. Getting that stability will be very helpful, I think. As for some of the moves that the government is currently making to enhance capital investment, we need to continue those. It has to translate from words into actions. It's really down to execution right now.

[The Chair, Liberal, Ben Carr]

Thank you very much, Ms. Borrelli.

Mr. Bains, the floor is yours for five minutes.

[Parm Bains, Liberal, Richmond East—Steveston, BC]

Thank you, Mr. Chair.

Thank you to our guests for joining us today.

I'm going to go to Mr. Graydon.

You talked a lot about food sovereignty. I want to talk a bit about the regulatory framework in my home province, for example. If you're producing food and are looking at doing processing on that farm, you have to actually grow 50% of it. It's a fifty-fifty rule. Are you familiar with that? Is this type of regulatory reform needed where that is restrictive to having more processing plants here to increase our food sovereignty?

The other piece I want to ask you about is whether there could be a direct correlation between more food processing here domestically and the cost coming down for consumers.

[Michael Graydon]

I do believe that the cost for consumers will come down as we can consolidate some of the manufacturing in Canada, but it's a multistep process. Not only does the manufacturing need to be here, but also it will take some of the cost implications out of it. Getting that next level of primary processing where some of those agricultural outputs are actually produced in this country and not elsewhere will also have a very positive impact with regard to cost and affordability.

[Parm Bains, Liberal, Richmond East—Steveston, BC]

What are some steps that can be taken to achieve that?

[Michael Graydon]

There needs to be some attention to this sector. It is not in the dialogue. We've had a situation now where we've been talking about major projects. There hasn't been a single major project announced or discussed related to agri-food or food manufacturing in this country. We're focusing on issues and industries, some of which, quite frankly, are in crisis. I understand that, but if we're not careful, we're going to find that our food manufacturing industry is going to be in crisis, and then we're in real trouble.

We already see it in consumer health products. If you go back to COVID, remember that we did not make hand sanitizers. We do not make many of the products that we consume every day or use every day. We don't make toothpaste in this country anymore. We don't make mouthwash in this country anymore. Those are things that have slowly but surely evaporated away from this country. It needs to be part of the dialogue.

Part of the challenge we have is that, with all due respect to government, we don't have a home. Nobody in government talks to us. We tend to get sent to the agriculture minister. They're doing a great job, but that's not where the issues are. Their focus is more on the farm gate than on further processing and value-added manufacturing.

[Parm Bains, Liberal, Richmond East—Steveston, BC]

Thank you for that.

I know you talked a little about what's been introduced in the budget around the superdeduction and the accelerated writeoffs. Is this a potential solution to get some of these things and make it more attractive for manufacturers and processors to unlock some private investment here?

[Michael Graydon]

Absolutely.

We're seeing a real change in government right now. It is very obvious that the mandate from the Prime Minister's office has been to not penalize manufacturing and business. We've seen a marked change, especially in Health Canada, with regard to regulatory reform and red-tape reduction. We need to continue that momentum, because it is really positive. Then you add these tax incentives, and you see our interest rates starting to come down. We're starting to create an opportunity here for these investments. Now we need to leverage it and take full advantage of it.

[Parm Bains, Liberal, Richmond East—Steveston, BC]

Thank you for your time.

[Michael Graydon]

Thank you.

[The Chair, Liberal, Ben Carr]

Thank you very much, colleagues.

Thank you to our witnesses for appearing today. I appreciate your guidance and your insight.

Colleagues, I'm going to suspend briefly as we turn over to the second hour.