Industry and Technology Committee on Nov. 19th, 2025

[Robert Huebert]

We have to do something about fighter pilots. This is one of the frustrations that we in academia face. We hear from all of our colleagues, and we hear from people about how badly the number of pilots we have has been allowed to deteriorate. This is why we have such difficulty engaging in this conversation.

Would pilots come? Pilots are going to come if, in fact, you give them any platform. We know that from when we got the CF-5. That was clearly an inferior fighter that was made for particularly political reasons rather than for strategic reasons. Pilots are pilots. They're going to say that it's fine, and they're going to come in.

If you get the F-35, the advantage of that is, of course, the technological challenges are such that it appeals to the people with that type of mentality—the Billie Flynns, the Stephen Fuhrs—who want to be fighter pilots and want to come in. If you were to talk to Stephen or Billie and ask if it mattered if it was an F-35 or a Gripen, they would say that it didn't, as long as they could be a pilot. That would be the first response. If you asked them, if they had a choice, which of the two they would pick, I think you'd probably find them both going for the higher technology as pilots, not as politicians.

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

Thanks so much.

[The Chair, Liberal, Ben Carr]

Thank you very much.

Ms. O'Rourke, you have the floor for five minutes.

[Dominique O'Rourke, Liberal, Guelph, ON]

Thank you, Chair Carr.

Again, I'm going to reiterate my amazement. Federal budget 2025 proposes historic investments in defence because of the position that we are hearing our witnesses describe. What we're hearing across the way is, “How quickly can we buy these planes?” and “How can we recruit more people?” However, just on Monday they voted against that, so I want to state my profound discomfort with a lot of the conversation.

I also want to say that with respect to the F-35s, we are here for a broader conversation on the whole defence industrial strategy, not just the F-35s. However, President Trump said publicly that he would reduce capacity for F-35s by 10%. His tariffs on Canada, which are part of our conversation about finding other trading partners, on such critical minerals as aluminum put a huge strain on the F-35 supply chain in Canada, with the intent of bringing Canadian jobs to the U.S. We have no reason to believe that this would not continue.

Those are practical, realistic concerns. I don't believe those are emotional concerns. I'd like to park that for the moment, because we're deep in a procurement conversation here, when really the topic is the broader defence industrial strategy.

Mr. Hodgett, we had a witness here a few weeks ago who told us about plans to create a defence bank that is a multinational bank. Do you think that would be helpful? What considerations should we be thinking about in that regard?

[Hugo Hodgett]

The defence security resilience bank is in concept a very effective way of securing the overall capital buttressing, I guess you could say, for large-scale providers. There is no doubt that this organization and its flow-throughs to, really, the major banks would be an extremely powerful capability in terms of enabling a greater depth of wallet that allows for these organizations to accept more risk in things like deep tech, defence procurement and some of the more capital-intensive capabilities that come with the defence industrial strategy.

It is very likely that having that organization, especially if it were centred in Canada, would not only increase the amount of defence investment but also attract a significant amount of additional tech talent and intellectual property into the country, as it would be a magnet for organizations that seek high amounts of capital in order to create very high-tech capabilities.

I hope that answers your question.

[Dominique O'Rourke, Liberal, Guelph, ON]

It does, thanks. The goal here is to make recommendations on the defence industrial strategy. If that's a new source of capital, then it should be explored.

Canada is trying to diversify our defence partnerships beyond the United States, but not excluding the United States, obviously. We're highly integrated with the U.S. through NORAD and the international traffic in arms regulations-controlled supply chains. How does that reliance on U.S. markets shape the opportunities and risks facing Canadian defence companies? How can Canada balance the advantages of that U.S. market through NORAD with the need to diversify into other allied emerging markets?

I'll direct my questions to Dr. Huebert.

[Robert Huebert]

Thank you very much.

I think at the heart of your question is the realization that the North American continent needs to be defended, of course, by the two North American countries. Now, the problem...and to a certain degree it comes from what you said in your opening commentary, of course, on the challenges we're facing with Trump. There is no question whatsoever that Trump has posed one of the most difficult challenges to the Canadian-U.S. defence relationship that we've had since the 1940 Ogdensburg agreement was reached between the two countries.

The reality is that, on the other hand, as the threats we are facing from both China and Russia start developing—we can see the weapons technology back to 2008—and as we try to respond and meet it, we have to say, okay, we have the Americans who are very destabilizing under Trump, no question whatsoever. The supply chain and all the very good things that you said are very true, but Trump will be gone in three years or he will be dictator, in which case that completely changes our defence relationship with the Americans, and that's part of the reality.

The point of how NORAD co-operation is working is the fact that we will—regardless if Trump is a dictator or he is gone in three years—still be facing the ongoing, growing, strategic threat of Russia and China. I suspect what that will cause is that Americans will come back to the realization that, yes, to protect themselves, they have to work with us. This is something that Trump has done very significant damage to, but it will return to us.

Now, getting back to the crux of your question, the NORAD modernization, as was released in that Globe and Mail story that talks about how much Canada is participating already with the northern shield and into their golden shield, illustrates this understanding. That is going to have to drive a lot of the co-operation and business opportunities at the same time, because that threat will exist regardless of the overlay of the politics. The question is whether or not the politics and the reaction to these three years of Trump does enough damage to actually do a favour for our enemies in that context.

[The Chair, Liberal, Ben Carr]

Thank you very much.

Mr. Ste‑Marie, you have the floor for two and a half minutes.

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

Thank you, Mr. Chair.

I have a question for the two or three university professors here. My question concerns the contribution of universities to the objectives of the new industrial strategy. How do the witnesses view the role of BOREALIS?

My time is limited. I would like Mr. Huebert to respond first, in one minute or less. Afterwards, if I have any time left, I would like Mr. Fergusson and Mr. Hodgett to respond as well.

[Robert Huebert]

BOREALIS demonstrates the fact that the universities, if they're properly engaged, are dying to get into this discussion. I see this at my university. I see the discussions both amongst the social scientists who have continued and who did very well, by the way, through the former program, the security and defence forum, which provided us the means into that...but at the same token, with the arrival of BOREALIS, with the government taking this seriously, I see my science and STEM colleagues very interested in raising this issue. First, they do important work on it, and second, they believe in the context of being able to provide for Canadian security. Anywhere government can provide this type of leadership is something that has to be encouraged and sustained.

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

Thank you.

Mr. Fergusson, do you have any comments?

[James Fergusson]

Very briefly, I want to make two quick comments.

Defence products moving between Canada and the United States are tariff-free. There are no tariffs on them. Exactly how critical material and aluminum and steel tariffs in the commercial sector apply when you get into the defence world, I don't have the answer to that, but be very careful to think that those follow. It's a different situation.

Secondly, I would like someone to give me some evidence on why our defence relationship with the United States has been hurt at all despite the tariffs and Trump's announcements. There's no evidence of that. You talk to DND and you talk to Canadian military personnel in NORAD, everywhere, and defence co-operation continues outside or what I call under the radar.

Now, to your question—very briefly—before this came out, the interest in universities in defence security and spending was zero—they couldn't care less. Now they smell money. Let me be blunt. They smell money that can be used, and that's what they're interested in. Turn the tap off, and they will go back to where they were before.

I'm sure my colleague, Robert Huebert, knows this. They're keen now. They weren't keen in the past. I worked with them, trying to get support for the university for our research and our centres. We got nothing except, “Great work. Thanks, but go away. Don't bother us.” That's the reality, and I understand that reality. It's the way the world works.

[The Chair, Liberal, Ben Carr]

Thank you, Mr. Ste‑Marie.

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

I want to thank the three witnesses.

[The Chair, Liberal, Ben Carr]

Mr. Ellis, You have five minutes.

[Ellis Ross, Conservative, Skeena—Bulkley Valley, BC]

Thank you, Mr. Chair.

My question is for Mr. Fergusson.

Our U.S.-Canada relationships are at an all-time low. We have increased tariffs and new tariffs. Everything we do angers the Americans, such as the digital services tax or ads running on American networks that are characterized as foreign interference.

What kind of a message are we sending to America when we talk about buying jet fighters from Sweden, namely the Gripen? You commented on this earlier. What kind of a message are we sending to our American counterparts?

[James Fergusson]

We have to be very careful about confusion or spillover from the general economic and political issues surrounding our relationship with the United States and the defence relationship with the United States.

For decades, that relationship with the United States has been very close. Politically, no one really pays attention to it. It doesn't run at the executive level. I doubt that President Trump has any idea about the level of defence co-operation, but DOD knows. Despite the problems politically and economically on the commercial and civilian side, etc., the defence relationship continues to work. We cannot allow that part and the problems we have to spill into that relationship.

Let me put it to you bluntly: We can't awaken Trump to this because if we do, we all know how he just goes off the deep end every now and then. I always tell everyone to stop listening to Donald Trump. Don't listen to him anymore. See what the Americans are doing.

On the defence co-operation level, wherever we go, it has continued to move along as it's always moved along. I don't think this is a problem unless we make it a problem, and if we make it a problem, you will get a response and it won't be in our interest. The Americans will act in their interest, and for now, the United States DOD, the military and the defence world believes Canada is a vital partner in the defence of North America. As long as we keep that insulated, this will continue and integration with them will continue, because we are integrated with them. We have to recognize that. It's reality.

[Ellis Ross, Conservative, Skeena—Bulkley Valley, BC]

Because of licensing, the U.S. has the ability to block export sales of the Gripen to other countries, and that includes the motor that drives this jet. I'm not really talking about the efficiency of having an agreement to buy F-35s, but if we do anger the American government again through some other mechanisms apart from the tariffs, the digital services tax and the ads, for instance, as you make clear, if Trump finds out we angered them again and then he finds out we're going to buy a Gripen from Sweden, is there going to be an issue with licensing with Canada buying a Gripen fighter jet from Sweden?

[James Fergusson]

You are correct. As far as I understand, the Gripen uses U.S. engines, which are under U.S. export controls. Therefore, with those engines, where the Gripen gets sold will be under U.S. export controls. They have to follow the licences of the Americans with consequences.

It's important to understand, with regard to our relationship with the United States, we aren't under or we don't need.... Normally, export controls have to go from the department to the State Department and then through the process there. We are exempt from that. They have reliable trust in our export controls so those goods come back and forth because we're similar on these things. It makes for a much more amenable environment for Canadian industries because we get exempted from lots of things. We get treated differently.

There are always hiccups in this. It's always been little things, like Congress gets involved, etc., but no matter what you do, we have to recognize American technology is under American export controls. Companies violate those controls at their peril, and there will be implications.

As for your final point, I don't know what the punishment would be. I don't know how the United States would treat this. They may do nothing about it. Companies will be concerned about investments here and about reliability on our part. The real question is not American reliability. Sometimes I start to think it's our reliability. How trustworthy are we going to be—and we have been—and what's the impact?

I can't predict this, but there are enough indicators to think there are going to be concerns. Independent of buying the F-35, there are simply strategic economic reasons why we need to buy that and not have two supply chains. That's a major waste of money.

[Ellis Ross, Conservative, Skeena—Bulkley Valley, BC]

Thank you.

[The Chair, Liberal, Ben Carr]

Ms. Acan, the final five minutes go to you.

[Sima Acan, Liberal, Oakville West, ON]

Mr. Huebert, considering the F-35's lockdown operating architecture limiting the ability for domestic modifications or incorporating domestic technology without relying on external partners, the F-35 is essentially a flying computer and Canada does not have access to the source code. This means Canada cannot independently modify the software, update the threat libraries or fix bugs without U.S. permission or assistance.

Could you clarify to what extent Canada can independently implement changes or customizations to these systems?

[Robert Huebert]

Your point answers itself. We have limited ability to do it on our own. That's the whole design of this technology. The reason why the technology is developed in that context, of course, is that the Americans ran into certain difficulties with some of the technology from their F-22s getting into the hands of their adversaries.

What we have to come back to is that, theoretically, the Americans could cut off this technology. We come back to the central point, which is that we're heading into a much more dangerous international environment where the physical protection of North America is increasingly coming into question. Ultimately, what balances any theoretical discussion is, yes, the Americans have the theoretical ability to cut off the supply of that information, but from their own personal domestic requirements, why would they do that?

If they are ultimately trying to defend North America and they have realized the growing threat from the new weapon technologies—particularly the missiles that both the Chinese and the Russians have—there is really little way of understanding any motivation for the Americans to turn around and say they're not going to let the Norwegians, the Finns, the Danes or the Canadians have this technology.

As long as the international system is becoming more dangerous, even with somebody such as Trump in charge, the Americans have no motivation whatsoever for cutting that off in the event of a growing crisis and everybody agrees that we are facing that growing crisis.

[Sima Acan, Liberal, Oakville West, ON]

Thank you very much. It's still based on somebody else's decision at the end of the day.

Mr. Huebert, I'm not a military expert and I don't have a preference based on the systems—a defence professional would have the expertise on that—but based on my quick calculation, for a hypothetical fleet of 88 fighter aircraft operating over a 50-year lifespan with an average of 180 flight hours per aircraft per year, the total life-cycle operating cost appears to be approximately $26 billion for the F-35s compared to $6 billion for the Saab Gripen.

From an industry and defence perspective, could you comment on the factors driving this difference in operating costs and how these figures should influence procurement and long-term fleet management decisions?

[Robert Huebert]

It's an excellent question.

One of the problems we face, though, is that it's very difficult to get a proper understanding of those terms. If you trace how the Auditor General, for example, has tried to come up with full-life costing of what these units are, of course, now there's push-back saying that full-life costing doesn't take into effect what military units have to do.

I would stand your question and say, from an economic perspective, I don't know if I can say enough on the specific numbers to have confidence. My question would be, out of those two, which one is more likely to provide Canadian security in the event of a war? In other words, we have to look at what we're buying defence equipment for. It is either to deter or to fight a war.

We're left with this situation. Perhaps the argument may emerge that over an entire 50-year period, the Saab ends up being cheaper, but two assumptions have to come forward. One is, in fact, that we don't have a war in that period with the Chinese and the Russians. Second of all, ultimately, when it comes to the ability to deter those two countries from fighting, which of these two weapon systems is going to be better at doing it? For me, that becomes the important question, rather than if we can figure out, in a 50-year life cycle, which one ultimately will have cost us the most.