Industry and Technology Committee on May 25th, 2026

[Ted Falk, Conservative, Provencher, MB]

With the EVs, we know that there are several EV investments that the Government of Canada has made, and we know that some of these plants are not moving in the direction that was anticipated. I'm just wondering, could some factories leave or shrink once they're offered a better deal from another country? Have you done that analysis?

[Mark Schaan]

Over the recent years, the federal and provincial governments have collaborated with industry and attracted significant investments to support the transition to electric vehicle production and establish a Canadian battery supply chain. We recognize that any industrial transformation takes time, and that responsible risk-taking is part of supporting innovation in a competitive global economy.

While the time frame for specific projects may vary with market conditions, our automotive industry remains well positioned for long-term success. Each individual project, obviously, will go on its own trajectory. The government seeks to support those investments as they materialize, and, obviously, it continues to work with industry as it responds dynamically.

[Ted Falk, Conservative, Provencher, MB]

I'd like to get one more question in quickly. We know the EV market has shrunk down to 8% of overall Canadian vehicle sales. There's roughly $34 billion of investment the Canadian government has committed to. How much of that is at risk?

[Mark Schaan]

I think that, of the overall envelope of funding we provided for the auto industry, we've tried to dynamically respond to the realities of the industry. It would be difficult for me to talk about a percentage of risk, because I think we continue to work with industry to ensure that we can be there for what they need.

[Ted Falk, Conservative, Provencher, MB]

Is the money all out the door?

Oh, was that it?

[The Chair, Liberal, Ben Carr]

Yes, Mr. Falk, that was it. I permitted an extra question for you there.

We're going to you, Mr. Bardeesy, for six minutes, sir.

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

Thank you very much. I have a couple of questions about auto and then a couple of questions about other policy files.

In the earlier round, there were some questions about the automotive remissions framework. I'm wondering, can you just explain the government's thinking for the creation of the remission frameworks and then, maybe, provide an explanation of how it works?

[Mark Schaan]

Thank you for the question.

As it relates to the remissions framework, we want to make sure that the framework aligns Canada's trade policy with the industrial and workforce objectives, including exploring the introduction of a tradable credit system. The initial remissions framework, as the minister noted, was essentially to try to respond to the tariffs that were in place and to ensure that, as we were collecting countertariffs, there would be the opportunity to disburse those funds.

I think the opportunity that now presents itself in the revised auto strategy is to look at a tradable system. A public consultation has been launched, and it is focused on leveraging that framework to reinforce domestic production and attract investment. How can we ensure that there's reward for folks who are making significant investments here and allow that remissions framework to essentially, potentially, allow for their overall production to continue to be exported and imported at reasonable tariffs?

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

The framework also rewards companies that are doing the manufacturing here in Canada, at levels that are consonant with or in excess of what is being sold here in Canada.

[Mark Schaan]

That's right. As noted, the public consultation imagines a credit system that provides significant incentives to allow for enhancements to production here, including for the purposes of export.

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

There were a few questions as well about the future export footprint of Canadian autos outside of the United States. I'm just wondering, can you speak more generally to not just the vehicle itself but some of the inputs into vehicles, including software and critical minerals, which then result in battery supply chains? Can you speak to the growth of that part of the assembly and auto sector as being different from what we've seen, perhaps, in past generations of auto assembly in Canada?

[Mark Schaan]

The traditional logic has been that the auto value chain is one of heavy inputs that potentially restrict the overall mobility. However, the reality is that, increasingly, cars become more agile and dynamic. The overall automotive sector becomes one that is a pairing of inputs on the critical minerals side at the very beginning of the value chain through to the actual dynamic parts process and then through to software and continued electronics, so that you actually have a greater amount of potential to influence the overall supply chain with areas of comparative advantage.

Take a firm like BlackBerry, for instance. In its automotive division, it is producing significant amounts of software to try to ensure the continued mobility and protection of the vehicle. You can also look at some of the areas where you may have specialized vehicle capacity that is more exportable or potentially of a comparative advantage because it's a niche market.

The auto strategy seeks to make sure that where Canada has opportunities within that full chain—whether it be all the way at the input side through to the output side of whether or not its actual application is living on top of the vehicle itself—we're pursuing where Canada can play to its strengths.

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

Presumably, that also includes the kinds of investments that the government might be making in research and IP protection, the kinds of things that can result not only in more exportability but also in more value capture in Canada. That would be part of the overall thinking around the policy.

[Mark Schaan]

Absolutely. You need to take it as a basket of approaches, including for those that are in either the software or some of our ICT sectors, where they may not be seen as traditional auto parts providers but are actually now part of a connected approach.

Our overall strategy is trying to rest as much intellectual property here in Canada, maximize the comparative advantage of our overall IP generation and then find the places where it can slot into appropriate sectors. That's part of the broad vision.

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

The estimates also reflect some increased investments in research more broadly through the three main granting councils and also through defence research.

I'm wondering if you could share the intended impact of those investments, not just for the researchers themselves but for the potential downstream beneficiaries in the economy.

[Mark Schaan]

It's worth understanding the research as, in many ways, an industrial strategy. You can take everything from the $1.7 billion of the impact+ program, attracting talent to the country, to the significant increases to the granting councils and then the work that those councils and some of our applied research programs are doing, playing in things like the defence industrial strategy, where you can really see the connection between base intellectual capacity and actual industrial output. It's even things like the recent additions to the college and community innovation program and work through the National Research Council's IRAP. A bunch of these are pairing industrial capacity with academic capacity in order to fit into these sectors that are hot and emerging at the moment, where Canada has a real opportunity.

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

Thank you.

[The Chair, Liberal, Ben Carr]

Thank you.

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

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

Thank you, Mr. Chair.

Good afternoon to the deputy ministers and other department managers.

For my first question, I would take us back to the time before the last election, when Mr. Champagne was the minister of Innovation, Science and Industry. He held round tables with the aerospace industries to identify their needs for the development of a national aerospace strategy that was promised for budget 2024.

Does the department intend to make the results of these consultations public?

[Mark Schaan]

I don't know if the results of the consultations have been published, but the results, in principle, are really reflected in the defence industrial strategy. As the minister said, it's really a strategy that includes all the capabilities and skills of the aerospace sector and that really aims to protect and promote the sector, including the business that is really the focus of the government's plan.

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

Okay. Thank you for that.

I have a question on a completely different topic, clean technology.

The number of projects supported by the department with a clean-tech component was 136 last year and is expected to drop to 17 this year, a decrease of 87%, according to departmental plans. I get the feeling that the government is abandoning the environment or writing it off.

Can you explain why the number of projects is being reduced by 87%?

[Mark Schaan]

There are funds that are really dedicated to clean tech. That said, as I said in my answer about the aerospace sector, it's now included in the other sectors. Projects are not being abandoned. The reality is that there is a clean-tech aspect in many other sectors and many other projects. Now, companies that are continuing down the path of clean tech in one sector really have an opportunity to access government support in another form that might better meet their needs.

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

In the departmental plans, it also says that the government will make targeted cuts to some entrepreneurship and innovation programs, as well as the Canada Foundation for Innovation, but it doesn't specify which ones.

Can you tell us which ones will face budget cuts? If you don't have the information here, you can send it to the clerk.

[Mark Schaan]

Innovation, Science and Economic Development Canada, or ISED, ensures that departmental spending is cost-effective and delivers results for Canada.

As part of the comprehensive spending review, ISED is directing and reprioritizing programs in its area of expertise, science and industry, to avoid duplication and improve alignment with the minister's specific mandate while eliminating impacts on stakeholders and clients. ISED is achieving efficiencies by consolidating its functions, simplifying its internal structures and processes, and reducing its operational footprint. We will continue to support economic growth across the country by focusing on an inclusive, equitable and ambitious Canadian economy.

The department is making spending cuts. The next plan will lay out more clearly what the key aspects are. It must be said that this is a three-year exercise, requiring the department to run it with agility while recognizing that the department has received new funding for the other priorities. That said, it will be clear in the next departmental plan.

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

I'll move on to another topic altogether.

We see that the government is doing a lot to attract foreign investment. Today, there is the delegation from India. Later this week, the Prime Minister is going to New York. That's a good thing, but there are still concerns about a takeover of companies or strategic sectors, such as critical minerals.

If I'm not mistaken, your department is the one that studies the impact of foreign investments, particularly on strategic sectors. Would it be possible for you to block such investments if they undermined Canadian sovereignty? How do you plan to analyze these foreign investments?