Thank you for inviting me.
The Canadian Association of Defence and Security Industries, which I lead, represents over 1,000 firms that make up Canada's defence and national security industrial base.
The government's commitment to establish a defence industrial strategy—the DIS—is the right course of action at this historic time. This is overdue given the threats to Canada's territorial sovereignty. The government's investment of over $9 billion this fiscal year to get Canada to the NATO 2% of GDP requirement, plus the commitment to achieve 3.5% within the next decade, risks being squandered without an underpinning strategy.
Canada has not had a DIS in living memory. This is one of the sharp distinctions between us and our closest allies. Both the U.K. and Australia have had defence industrial strategies for decades and are constantly adjusting them in partnership with their domestic industries to meet evolving national defence and domestic economic objectives. This initiative is a very big deal for Canada and we need to get it right.
The leading expertise on the Canadian defence industrial base and its technologies and services, as well as the motivations to incent business leaders to invest in our future, resides within companies. To date, CADSI has not seen a fulsome draft document in written format that describes the strategy's objectives, tools, instruments and frameworks, or what capabilities the strategy intends to sustain, grow and create in Canada.
We would expect to be able to review and provide feedback on a document that holds such transformational power, as is common practice in other nations. Instead, we've been asked in a non-structured way for inputs on various elements or concepts that may or may not find their way into the DIS. The simplest way to put it is this: We've seen some of the ingredients, but we haven't seen the cake.
If Canada's DIS is to deliver the outcomes the Prime Minister has articulated, it will need to be adjusted over time with recurring industry input. This is why we've recommended the establishment of a defence industry ministerial forum where executives from Canadian defence firms would meet with the Minister of National Defence and the Minister of Industry on a regular basis to discuss and resolve major impediments and map out and grow the industry to meet the needs of the government and the Canadian Armed Forces.
Any good strategy pursues clear objectives. For the DIS, those objectives must be aimed at enhancing Canadian sovereignty, independence of action and economic health. As the Prime Minister said in his speech at the University of Toronto this past June, a strong economy is foundational to national defence and security. That basic point should guide this strategy.
Another core objective must be the health, growth and resilience of the Canadian defence industrial base. More than a decade ago, a previous government had an initiative to improve economic outcomes from defence procurements. They set an explicit target to leverage defence procurement and grow the defence industrial base by over 40% over a decade—set at a time of zero growth in the defence budget. That target, which was met, is far too modest given the massive increase in defence spending and the Prime Minister's ambition to get as much as possible out of that spending for the Canadian economy. We suggest a growth target of 100% over 10 years.
One foundational issue that I know has been tricky for the people working on the DIS is the concept of sovereign capabilities. This is the idea that Canada will decide on a set of defence and national security capabilities that it will have some control over or be able to supply independently. We wouldn't need to rely on another country to deliver them in an emergency or otherwise. These could be services and technologies that we know Canadian firms are good at producing now or that we need more control over. This list will evolve over time.
To conclude, I want to be blunt about something that some find controversial. Any meaningful Canadian DIS must give procurement preference to Canadian firms that produce or could produce what the CAF and other national security agencies need. It's that simple. This means that it is integral to and informs the work of the Defence Investment Agency. The government needs the mindset and the tools to operate on that basis. If the defence industrial strategy does not embody that philosophy, I don't think it will meet the Prime Minister's ambitions.
Thank you.