Thank you very much, Chair.
I'm very sorry that I'm not there this afternoon with all of you in person, but, unfortunately, I had a mishap a few weeks ago, and I'm on crutches. I'm nevertheless very happy to talk to you about the views of Innovation, Science and Economic Development Canada concerning the defence industrial strategy.
Planned defence spending represents a generational opportunity to invest in Canada's defence industry and economy at a time when many of Canada's manufacturing sectors are facing unprecedented challenges. In 2022 the Canadian defence industry comprised over 620 firms, which contributed over $9.6 billion in GDP and 81,200 jobs to the Canadian economy.
Canada's defence industry is at the cutting edge of technology development, and our defence sector is a driver of innovation, investing at more than three times the research and development intensity of Canada's manufacturing sector. Beyond world-leading capabilities in the design and manufacturing of commercial aircraft, Canada also has strong capabilities in maintenance, repair and overhaul; training and simulation systems; unmanned aerial systems; earth observation; space robotics; combat ground vehicles; munitions; shipbuilding; sonar technologies and more. Canada also has established and emerging capabilities in dual-use areas like artificial intelligence, cyber, quantum, biomanufacturing and critical minerals.
As you will be aware, the government has committed to publishing a defence industrial strategy later this year aimed at strengthening our domestic industrial capacity to meet the needs of the Canadian Armed Forces and those of our allies. Our goal is to reduce Canada's long-standing dependence on foreign suppliers by leveraging Canada's traditional defence, commercial and dual-use strengths to support CAF requirements where feasible. This will require focused investment in key defence industrial priorities, as well as ensuring that federal procurements are leveraged to strengthen industrial capacity through various tools. Canada's domestic market is quite small, so we are also committed to ensuring that we create an industry that is well positioned for export opportunities.
The defence industrial strategy, DIS, has not yet been finalized, but ISED and the Department of National Defence are working together to advance this work. More details will be forthcoming in the coming months, but in the meantime, Chair, I'm happy to talk about some of the existing building blocks for a more comprehensive strategy.
ISED is well positioned to play a leading role in the development and implementation of the DIS, and the Minister of Industry has publicly discussed her vision for the strategy, using a framework of buy, build and partner. This means leveraging the government's purchasing power to create benefits throughout the supply chain, building up Canada's industrial capacity in key areas and developing strategic collaboration with international allies.
As you may know, since the late 1950s, ISED has housed various programs that have funded companies for civil and defence activities. Today, ISED has a number of programs, such as the strategic response fund, innovative solutions Canada and our global innovation clusters program, which support the development and commercialization of technologies across the industrial economy, including defence. There are opportunities to leverage existing innovation programs in the short term to get funds out quickly to Canadian industry.
Also within my department's portfolio, the National Research Council is a key partner for Canadian industry, helping to bridge new technologies to market through programs such as the industrial research assistance program. We are examining ways that the NRC, with its world-class testing and research facilities, can play a greater role in supporting defence.
I would also note the role that regional development agencies can play in supporting the development and integration of businesses, mainly SMEs, into defence supply chains. Our tool box includes the national shipbuilding strategy, which, since 2010, has been helping to restore our shipyards, to rebuild our marine industry and to create sustainable jobs in Canada.
Canada also has an offset policy—the industrial and technological benefits policy, ITB. The ITB policy requires that a firm awarded an eligible defence or Canadian Coast Guard contract undertake business activity in Canada equal to the value of the contract. It's estimated to contribute approximately $4.7 billion to Canada's GDP and over 40,000 jobs annually in Canada. Many of the most successful defence, aerospace and marine firms operating in Canada have benefited from the policy, including companies such as CAE, MDA Space, Héroux-Devtek, IMP, PAL Aerospace and Genoa Design.
The last point I'd like to make is that a defence industrial strategy must include procurement, which is our most powerful tool. Canadian defence firms have indicated that the number one thing that the government can do to support their growth is for the Canadian Armed Forces to purchase from Canadian industry, so we're reviewing ways to improve the procurement process and to ensure that Canadian industry is engaged early on.
In closing, and before I turn it over to my colleague, Wendy, the forthcoming defence industrial strategy will ensure that our historic investments are focused on building and sustaining Canada's defence industrial base to meet the needs of the CAF and our allies while driving economic growth, resilience and innovation across the broader Canadian economy.
Thank you.