Industry and Technology Committee on May 7th, 2026

[Ted Falk, Conservative, Provencher, MB]

Thank you, Mr. Chair.

Thank you to all of our presenters today. I appreciate the testimony that you've provided to this committee.

We've heard a lot about sovereign compute and Canadian-controlled infrastructure.

In practical terms, what does AI sovereignty mean to you, Mr. Perry?

[Daniel Perry]

I would say that what it means to us is that we control our data, that it is stored here in Canada, that it's transferred here in Canada and that we have control over it.

Something that is very concerning, not just to CCI but also to our members, is the U.S. CLOUD Act, which is how the U.S. government can compel companies to provide data that's stored on their servers. Even with a Canadian company, my health data might be stored on a U.S. server, and the U.S. government can demand that it be provided. That's obviously forgoing not just my privacy but sovereignty as well, when we get to more technical issues of national security and other parts of how the government is working.

For us, it would be leveraging and finding opportunities to build sovereignty here in Canada and building a stack that is mostly Canadian, because we don't have the technology right now to be able to build out a full stack, but we want to make sure that we do the best we can to ensure that we're protecting Canadians, protecting their data and protecting their privacy, and that starts with sovereignty, so we need to own it. We need to be able to control it if we want to be able to protect ourselves.

[Ted Falk, Conservative, Provencher, MB]

Thank you.

We've heard from a lot of witnesses during this study that we do a lot of developing here in Canada. We spawn a lot of ideas here, but when it comes to commercialization and expansion of those ideas, it usually lands up on foreign soil somewhere.

When you consider the resources that we have here, whether IP or people, what do you think our strategic or competitive advantage as a country is?

[Daniel Perry]

We are a very well-educated country, and we have seen that. That's why we are some of the greatest founders when it comes to artificial intelligence.

The challenge is how we commercialize it. Our IP practices in Canada need to be strengthened. We need better ways for people to come up with these great ideas and then transition them into companies and be able to grow them here.

One of the steps is access to capital, making sure we have capital systems in our country that can support these businesses, whether those are the banks, private investors or even the government to a certain extent. The next part is finding customers. One of the biggest challenges that our members find is selling to our Canadian government, and that is one of the biggest opportunities.

As I mentioned, procurement in Canada across federal, provincial and municipal governments makes up about 14% of our GDP. If we can raise that even slightly more towards Canadian innovators and Canadian companies, that will have a large effect.

Another challenge is that, when our companies go to sell abroad, the first question they get asked is, “Are you selling to the Canadian government?” and then the follow-up question is, “Why not?”

The challenge is that it's a very complicated process that favours the incumbents and favours bigger companies because of the hoops you have to jump through in order to be able to sell to the government. To be quite frank with you, a lot of scaling firms don't have the capacity, and they don't have the time. When we are making buy Canadian policies, we really need to understand who we're targeting these towards and make sure that the requirements in them meet the needs of the companies, understanding what talent we have here in Canada, and making sure that we're putting that talent forward and ensuring that they have access to the procurement process.

[Ted Falk, Conservative, Provencher, MB]

In your comments, you made a reference to a branch-plant economy here.

Do you want to expand on that idea a little bit? What do you mean by that?

[Daniel Perry]

The branch-plant economy is when we have an economy here, but the assets don't stay here. The IP is stored elsewhere, in America, China or Asia. We do all the work. We come up with the ideas, but they leave the country. It goes back to the home country of the headquarters of the company.

That's why it's very important when we're making decisions about what a Canadian company is and how we support it. We need to understand where the management team is. Are they here in Canada, or are they elsewhere? Is the IP stored here? Where are the profits going? If they're flowing back to another country, that's not really providing value to Canadians.

At the end of the day, as I mentioned, a bulk of the S&P 500 is made up of intangible assets like IP, data and brands as well, so we really need to have a better understanding of what those assets are and how to better leverage them.

[Ted Falk, Conservative, Provencher, MB]

We've also heard testimony that the industry and the folks working in AI desperately want regulations, and they want to know where the guardrails are. In the minute we have left to talk about this, can you present some ideas to this committee of where the guardrails should be and what boundaries we need to establish when developing AI policy?

[Daniel Perry]

When it comes to the guardrails and boundaries, I think we need to introduce something. At the end of the day, in order to move forward, we need to have agreeance as a country on where we're going. How we got here today.... We have agreeance on speed limits and we have agreeance on which way we travel on a road.

There need to be some basic guardrails in place because, at the end of the day, AI is changing rapidly. At the beginning of the year, AI looked different from how it looks now. We need to get the framework in place to help these companies move forward so that we can regulate them to a point that they can continue to grow but we're not over-regulating them. Having a foundation in place is a good step forward.

[The Chair, Liberal, Ben Carr]

Thank you very much.

Mr. Bardeesy, the floor is yours for six minutes.

[Karim Bardeesy, Liberal, Taiaiako'n—Parkdale—High Park, ON]

Thank you.

Thanks to all the panellists.

I have a few questions about company formation and capital accumulation, and a couple of questions about the relationship between AI adoption and worker displacement.

We heard from the previous panel about the prospect of an assurance and insurance economy around AI. Now, from this panel, we're hearing more about the opportunities around data and data sovereignty, and their relationship to AI sovereignty.

I'll start with the CCI folks. What are the specific opportunities you're seeing around company formation that take advantage of some of the specific and unique data pools that might exist in Canada or elsewhere?

[Laurent Carbonneau, Vice-President, Policy and Advocacy, Council of Canadian Innovators]

That's a great question. It's something we actually talked about in our report to the minister in the scope of his task force.

The first piece, which Daniel walked us through, is the pillars of what we recommended. We said to look overall at the picture of scale, because if Canada isn't a place where you can scale a business, it's not going to be a place where you can scale an AI business.

The second piece is sovereignty. We need to be sure that we control our own light switches and plumbing to the maximum extent that we can. That still makes sense commercially.

The third piece, going to Mr. Falk's question, is, what assets we have that are unique. To pick up on Simon's comments earlier about the five-layer cake, the application layer is also incredibly reliant on really high-quality, domain-specific data. We have really good data in Canada. Those pools of data are typically not well governed. They are very split and there's a lot of public sector data that isn't well leveraged that we could be leveraging a lot better.

In the scope of the AI strategy that I understand is forthcoming, one thing that needs to be highly prioritized is how we make public sector data that is domain-specific and high-quality, like geospatial data, agricultural data and mobility data, available to Canadian innovators in a way that helps them scale their businesses and creates a unique selling point for Canada.

[Karim Bardeesy, Liberal, Taiaiako'n—Parkdale—High Park, ON]

What private sector, data-safe sources are most germane to this? Obviously, we have some concentration in the economy, which creates some issues, but it also creates pools of data that are maybe larger than they are in some other sectors.

[Laurent Carbonneau]

That's a great question. I don't want to get too much into the weeds here on what might or might not be appropriate. Companies that own their data are free to make decisions about how they make that available, subject to privacy laws, etc., but we have a very data-rich financial sector and other sectors throughout the economy that are more regulated than others and might have access to lots of really rich data.

We caught the tail end of the last panel on industrial AI and physical AI. There's really interesting work going on in the robotics space in Canada. I think we're underrating ourselves as a player in that space, and there's some really good potential there. How that can be leveraged more broadly is, I think, an open question. It would be an interesting avenue to pursue a more fulsome discussion.

I would definitely start by looking at these places, like telecoms and the financial sector, that have very data-rich assets but are quite regulated. At this point, I don't think we quite know what to do with them.

[Karim Bardeesy, Liberal, Taiaiako'n—Parkdale—High Park, ON]

Thank you very much.

I'll move on to Mr. Ahdoot and Ms. Simmons. I have a couple of questions.

From your perspective as company leaders or founders in your spaces, when you see AI technologies available in your spaces, how do you think about the adoption of those technologies and their relationship to your present or future workforce, including workers you might not need to hire because of the adoption of these technologies?

[Simon Ahdoot]

I think that when I look at the adoption of AI technologies, what I really look at is the additional headroom it gives me for the capacity I have, and my ability to be more competitive in delivering services, because in the IT space, in the technology space, things can move really quickly. AI as a technology that's really mainstream is maybe three or four years old, so that's really quick for such a huge impact. The ability to navigate that quickly is critical.

What I'm seeing directly within my organization is to be able to streamline a lot of processes, accelerate the change and make it so we can adapt to it much more quickly, scale up more quickly, so we can respond to those demands as they come, without needing to walk into that very extensive time it takes to build up capacity, so we can accelerate the building up of capacity and deliver better service. We wouldn't want to scale down, and we wouldn't want to increase the time to scale up too much. That's the main thing.

The other thing I would hope is that if all the other pieces that come around this—the accounting work and the legal work—accelerate, that would be very valuable. I just saw an example where we're working on a new facility and we work with a firm that handles the design. They leverage AI and are able to turn around a new design within a few days. We're able to be much more responsive, much more rapid, in finding the right design than we would be otherwise.

[Karim Bardeesy, Liberal, Taiaiako'n—Parkdale—High Park, ON]

Thank you.

Ms. Simmons, I'm curious about the frictions or non-frictions in the quantum space, and the use of AI to do augmentation in the same kind of way that Mr. Ahdoot spoke about.

[Stephanie Simmons]

Absolutely. You'll hear across many different industries that it allows for a change of work, not just an expansion of work but a change. We've not reduced head count accordingly. We've actually accelerated our output. It's not just accelerating our staff, but also we are very excited about what quantum can do to further accelerate AI.

What I'm trying to communicate here is that this going to be a feedback loop where better computational structures, more fit for purpose, are on the horizon, which will change the capabilities further. It's one of these cycles where change is one of the constants of our lives, and we're getting good at and have to remain good at being responsive and adaptive to change. If anything, it's just allowing our staff to soak into that and to compete more in the global setting.

[The Chair, Liberal, Ben Carr]

Thanks very much.

Mr. Ste‑Marie, you have the floor for six minutes.

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

Thank you, Mr. Chair.

I'd like to welcome all the witnesses.

I'm going to start by addressing a comment to Ms. Simmons.

Ms. Simmons, thank you for your presentation. It was very insightful. In the coming months, our committee may conduct a study on the potential industrial applications of quantum computing and, more broadly, the second quantum revolution. We can come back to this then.

My questions will be for the Council of Canadian Innovators representatives. I'm also going to ask Mr. Ahdoot from the Hypertec Group to share his perspective.

Shared Services Canada has provided data on digital service contracts to the Standing Committee on Government Operations and Estimates for the past year. The value of the contracts is $3.2 billion. Half of them were awarded to foreign companies or subsidiaries of foreign companies. Half of the local contracts involved programming work on foreign platforms. We cannot, therefore, speak of sovereignty.

Realistically, what can be brought back home in all of this?

[Laurent Carbonneau]

Thank you for the question. I will answer in English to provide a slightly more technical response.

We just published a report called “Buying What We Build”. It's about public buying in Canada and what we can do with it.

To give a more fulsome answer, there are things we can do. There's a new buy Canadian policy in place that I think will be very helpful in moving the needle on this. Our recommendation to the government is that we treat the Canadian content portion, in services, of the policy as reflective of the innovative and value-added capacity that is added to the economy by companies doing business here and doing business with the government. In particular, we want to see that the Canadian content provisions for services reflect investment in IP, reflect investment in R and D in the country, reflect Canadian control and management, and reflect control of data.

I think if you added those criteria to how bids are assessed, you would see a switch to a more sovereign, more innovative and more value-added digital stack in Canada as part of the public service.

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

Thank you.

Mr. Ahdoot, what are your thoughts on this?

[Simon Ahdoot]

A big part of the challenge really revolves around how people become aware of products. That's one of the challenges that isn't often mentioned. American brands, foreign brands, are often consumer brands, so they're very well known. Marketing is on a different level. When you're looking for a computer, for example, you will often think of Dell or HP. You don't necessarily know which brands are more business-focused. I would rephrase the challenge slightly. How can we raise awareness of companies that are truly there to serve business and government so that we can give them equal footing in a competitive environment?

Things and needs change. Knowing what the needs are and being able to influence decision-makers is helpful. In IT, the following situation often occurs. A product is designed by one of the major American players. Then, a call for tenders that includes these new requirements is issued. We're able to do that, but not necessarily as quickly.

So you have to be at the table to know what's coming and be able to bid and meet the requirements. Personal computers have been around for a long time. Can they be managed remotely, or not? What are the devices? It can take months to meet these requirements.

Rather than being surprised by what the requirements are, we need to work in partnership to develop Canadian capabilities. I think this will greatly benefit Canada, while allowing us to be competitive abroad.

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

Okay, thank you very much.

You alluded to the fact that the government has adopted a buy Canadian policy, somewhat similar to the U.S. buy America policy. It's a commitment, but it's not bound by law. It's just a commitment based on the government's word.

Are you starting to see a change? Do you think it will take legislation to make sure the government does what it says?

My question is for the representatives of both groups.

[Laurent Carbonneau]

That's a very good question.

Honestly, I think it's a bit early for me to give a definitive answer on that. This has only been going for four months. I know the government now has a figure representing the value of the contracts awarded under this policy. I don't recall the exact number. I'm sorry.

I think it's a bit early, especially since we don't know exactly what it looks like when it comes to services. That's what interests us most. My concern is that, if we legislate a little too soon, we won't have learned all the lessons we should have learned before doing so. We should see how things play out a little more over the coming months and years before legislating on this.

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

Okay. Thank you.

Mr. Ahdoot, what are your thoughts?