National Defence Committee on Sept. 24th, 2024

[Dr. Justin Massie]

I know that Canada can count on the United States to help modernize NORAD and integrate artificial intelligence into the decision‑making process in order to see missiles arrive in North America. Fortunately, the United States is there.

I'm thinking of the Canadian soldiers currently in Latvia who don't have this capability. We see how drones and artificial intelligence make the battlefield completely transparent. We see the enemy all the time. Our Canadian soldiers don't have these defence tools to guard against a Russian attack. Therein lies the rub. Canada must do better for its own troops.

[The Chair, Liberal, John McKay]

The final question is for Mr. Collins.

[Chad Collins, Liberal, Hamilton East—Stoney Creek, ON]

Thanks, Mr. Chairman.

Dr. Huebert, I want to get back to the whole question of political will.

I had the opportunity recently to listen to a podcast where the interview was with former defence minister Jason Kenney. He was confronted with the statement that spending was substantially lower as a fraction of GDP when he was defence minister than under our current government. He was quite blunt with his answer when confronted with that. He said, “Mea culpa.” He said that they were coming out of the great recession, and his government looked at cuts and austerity, and that meant cuts to CAF, which brought us down to the 1% level back in 2014, when the Ukrainian conflict started, as you referenced.

I would assume from his statement there and his answer that he was following where he and his government thought Canadians were in terms of where the military stood at that point in time. I'm assuming that there was no political will to increase funding as a percentage of GDP, if I just use that key performance indicator for the purposes of this question. I'm assuming he thought the public wasn't there to provide additional support for CAF at that period in time.

In the background, I'm thinking about the efforts of Russia and China as it relates to misinformation and disinformation, and the seeds that they plant with our constituents and the Canadian public as it relates to trying to erode the trust and confidence we have in some of our democratic institutions. One of those is our military.

You caught me with your comment about the failing democracy to the south, in the U.S. I look at the efforts they have, whether it's the culture wars or the whole issue of trust in the Department of Justice or the FBI. Here, north of the border, we went through that as part of the pandemic in terms of people's trust in public health officials, questioning the efficacy of the pandemic response and the vaccines.

All of that said, in terms of political will, there seems to be almost a battle today in terms of trying to convince a portion of the population that our efforts need to be ramped up as it relates to combatting some of the threats that you talked about in your opening statement, as well as those in Mr. Massie's opening statement.

Part of that political will is hard to get at because of the efforts of some of our adversaries to plant that seed of doubt with us, whether it's the former Harper government or the constituencies that are following former president Trump.

Academics and others are talking about civil war in the United States. Had you said a decade ago that there was the possibility that there might be a civil war in the U.S., I would have bet a lot of money that I didn't have against that.

That's a long introduction to my question, but I'm just fascinated by this whole issue of political will and making the link with our constituents and our residents that there is a real, existential threat beyond just climate change. There are people working on a daily basis to undermine all the efforts of our military and otherwise.

Could you comment on that?

Maybe I could ask Mr. Massie, as well.

[Dr. Robert Huebert]

Yes, I'll happily answer. It's a critical point of our time.

You're absolutely right that our enemies are doing everything they can to plant discord amongst us. Please recognize that they are not creating this discord, but they're amplifying it. Where they find existing cracks, they're trying to turn them into crevices.

By the way, I wish I had taken that bet with you back in that time. That would have been nice for at least a bottle of Scotch at this time.

The reality is that we need leadership. We need people such as you and your colleagues, basically, to say to the Canadian public that there is a threat.

I'll give you the one example where we saw it actually work. Canada had always heard from our political elites that we were peacekeepers. We never talked about the 171 peacekeepers who lost their lives in the various exercises. In other words, that was one of Canada's dirty secrets. I tell my students that there were 171 who were killed in some form trying to keep the peace, be it in Cyprus or wherever.

When we had the Tarnak four killed by the American forces in Afghanistan, the government made the decision to be open about their deaths. They weren't going to just bring them home through the back door as they did with the 172. We had a public acknowledgement of their sacrifice.

[Technical difficulty—Editor] what the Canadian response was? Remember the way the Canadians lined the highways. Notice the cities changing the roadways to honour the four who had been lost. We paid attention to the 151 Canadians who were killed in Afghanistan.

You guys can change the dialogue [Technical difficulty—Editor] the political will that you bring and the political issues that you always prioritize. If you also take the time to say to Canada that there is a nuclear war coming, that we need to be paying attention and that our enemies will be trying to tell you differently.... You guys hold that in your hand, not to put too fine of a point on it. We saw that in Afghanistan, and you guys can do it again.

That is really where I come from.

[The Chair, Liberal, John McKay]

Thank you.

Unfortunately, we're at an end. I think this was an important question.

Dr. Massie, do you want to add just a few thoughts before we close out?

[Dr. Justin Massie]

Thank you, Mr. Chair.

I'll keep this brief.

Political science clearly shows that, when elected representatives from two or three political parties agree, public opinion falls in line. They don't need to convince the public if they agree with the investments.

In Canada, and in many other countries, we've seen that when political leaders agree on investments, public opinion falls in line. The vast majority of Canadians give their support.

I think that much of the work must be done in your committee and in your relations with the government.

[The Chair, Liberal, John McKay]

Thank you, both.

I appreciate your final comment that we need to change the political dialogue, and maybe that change in the political dialogue should start right here.

Thank you for your contribution over the years. It's always been formative to us.

With that, I'm going to suspend for a moment or two and we'll empanel our second panel.

Thank you again.

[The Chair, Liberal, John McKay]

I call the meeting back to order.

We're going to run against the clock. I'm going to ask the witnesses to be pretty precise with their five minutes and the members to be pretty precise with their allotted time for questions. I suspect that when we finish the first round, we're going to have to assess whether we can have a complete second round, but we'll worry about that when we need to.

With that, I want to welcome Mike Mueller, the president and chief executive officer of the Aerospace Industries Association of Canada, Christyn Cianfarani, the president and chief executive officer of the Canadian Association of Defence and Security Industries, and Brian Gallant, the chief executive officer of Space Canada and host of a brilliant event last night.

I'm going to ask each one of you to go in no particular order. We'll probably start with Mr. Mueller for a five-minute opening statement, and then we'll go to our first six-minute round of questions.

Mr. Mueller.

[Mike Mueller, President and Chief Executive Officer, Aerospace Industries Association of Canada]

Thank you, Mr. Chair and members of the committee, for the opportunity to be here today.

Before I begin my remarks, I want to recognize the Royal Canadian Air Force and its 100th anniversary this year. I want to acknowledge and thank all currently serving members and also the veterans of the RCAF. Many veterans are currently employed within the industry, and their experience is so valuable. I often say that while the Canadian aerospace industry is amazing with the products we produce, in reality it's about the people. I think the same can be said about the RCAF.

Speaking of people, our aerospace sector contributes approximately 218,000 jobs and nearly $29 billion in GDP to Canada's economy, with defence accounting for 25% of that.

Turning back to that relationship between industry and the Canadian Armed Forces, to quote the current NATO Secretary General, “Without industry, there is no defence.” This underscores the importance of working closely with our aerospace defence sector as a strategic asset for Canada's defence.

Canada's defence policy update, and its recognition of the need for close collaboration with industry, is a positive step forward and something that our industry has long been advocating. We are seeing this kind of relationship in places such as Australia, where they have not only a policy but also an industrial strategy. This is the next step that is required here in Canada.

The last time I appeared before this committee, I made several recommendations, including building stronger, meaningful and strategic partnerships with industry through ongoing and sustained engagement, and working together early, often and regularly to help develop the requirements that ensure capability relevance for current and future needs. I am pleased to see these recommendations and our language woven into the DPU.

However, while the DPU lays out a high-level framework, it lacks concrete steps as to how the goals and objectives will be operationalized. In my view, the best way to ensure this is through the development and adoption of an aerospace industrial strategy for Canada that includes defence. We're pleased that the government and Minister Champagne have committed to this development. A well-conceived strategy would provide clear direction and timing and institutionalize the objectives outlined in the DPU, giving industry the predictability and clarity it needs to support Canada's defence requirements. I would go so far as to say that it would equally benefit the many other partners in government and other external players in their own planning and support efforts.

By institutionalizing this partnership between government and industry, and this includes the small and medium-sized businesses here in Canada that often feel overlooked by the Department of National Defence, not only can we address current pressing areas with the NORAD modernization and NATO's 2% defence spending, but we can look beyond to foresee, plan and prepare for the new challenges on the horizon. We welcome the additional $8.1 billion in funding over the next five years and the long-term commitment of $73 billion, but, like many, I am concerned about the government's ability for timely procurement and concerned about the significant cuts to the defence spending, to the tune of $1 billion. While the investments and initiatives are critical for Canada's readiness in a rapidly changing global environment, we need a clear road map and industrial strategy.

It's also important to stress that this is not a partisan issue. The future of Canada's aerospace sector and our ability to protect our nation's interests and people are matters of national security and economic prosperity. We need a clear strategy that details how and when investments highlighted in the DPU will be implemented.

NATO's 2% defence spending commitment and the NORAD modernization are front and centre as a measure of commitment by our allies. While the DPU acknowledges this, it lacks the urgency and concrete actions needed to meet these targets. Investment and commitment must start now.

As I said before, we need political leadership to lay the foundation for today and for the future of all Canadians. I encourage all parties to make this a priority.

In summary, the DPU is a start, an encouraging start, but we must ensure it is operationalized effectively. An aerospace industrial strategy will be key to achieving this and institutionalizing the goals and objectives.

The AIAC and our members look forward to working with the government and Parliament to ensure that the objectives laid out are met and that Canada's aerospace sector remains a pillar of our national security and economic prosperity.

Thank you, Mr. Chair.

[The Chair, Liberal, John McKay]

Thank you, Mr. Mueller.

Madam Cianfarani.

[Christyn Cianfarani, President and Chief Executive Officer, Canadian Association of Defence and Security Industries]

Thank you for inviting me to speak about the government’s defence policy update. CADSI is the national voice of the Canadian defence industry, with more than 700 members. These companies have a significant stake in Canada’s defence policy.

Today, I'd like to make two points about “Our North, Strong and Free”.

First, we were pleased to see a section entitled “Building an Innovative and Effective Defence Industrial Base” and the commitment to “change our approach to working with industry, innovators, and researchers—moving away from transactional approaches for acquiring capabilities to sustained strategic partnerships founded on transparency and trust.” The policy also acknowledged that “Building up Canada’s defence capabilities must also include building up our defence industrial base.”

The Canadian government has long been an outlier internationally in its unwillingness to work in partnership with its domestic defence industry. “Our North, Strong and Free” suggests a new willingness to fundamentally change the way DND, the CAF and Canada’s defence industry interact.

Moving from words to actions is a challenge that we enthusiastically embrace. Recently we submitted a proposal to the government on how to structure and institutionalize the defence industry-government-CAF relationship to meet both domestic and NATO industrial requirements. We look forward to working with both this government and future ones on this issue.

The government’s change of approach hopefully also reflects NATO’s current agenda, as allies implement the defence production action plan, or DPAP, which is anchored in the recognition that radically increasing defence industrial output across all members is now core to NATO’s strategic concept and to deterring Russia.

A strong, resilient defence industrial base is a new element of NATO burden sharing. The Washington summit further expanded these commitments through the NATO industrial capacity expansion pledge.

On industrial co-operation, the government seems to be headed in the right direction. On defence funding, however, Canada remains a laggard.

As “Our North, Strong and Free” was drafted, we witnessed unrestrained brutality and territorial ambitions from Russia toward Ukraine. Leading experts repeatedly say that if Russia prevails, other European democracies will be next on Putin’s hit list. The NATO 2% of GDP defence spending requirement, agreed at Wales in 2014 and re-confirmed last year at Vilnius, has now become an imperative rather than an option.

However, you wouldn’t know that from the funding the government committed in “Our North, Strong and Free”—$8 billion over the next five years. The Parliamentary Budget Officer estimates that it would take nearly double that amount per year over several years to meet NATO’s 2% target.

The disappointing budgetary commitment also implies that Canada hasn’t accepted that its own Arctic sovereignty is threatened by Russian and Chinese ambitions. It suggests that Ottawa believes our allies will come to our defence when we have no intention of coming to theirs.

Worse, we have a bizarre situation whereby the government is giving money to DND with one hand and taking most of it away with the other. What I'm referring here to the Treasury Board-led professional service cuts, which amount to between $800 million to $900 million annually targeting DND. These cuts will further undermine CAF operational readiness by reducing essential professional services that were contracted out to industry, in part, as a long-term cost-saving measure.

Fixing these financial shortcomings is core to the integrity of “Our North, Strong and Free”, Canada’s standing as a reliable NATO partner, and our relationships with our closest allies and our own national defence.

I’ll close with three suggestions.

First, the government should move this fall to design and implement new mechanisms and arrangements and develop, with industry, a sustained strategic partnership founded on transparency and trust.

Second, cancel the planned cuts to DND’s budget, which amount to $810 million in 2024-25 and $908 million in 2026-27 and beyond.

Third, in budget 2025, start laying out a transparent, year-over-year fiscal track to get Canada to the 2% NATO defence spending requirement. We can't wait four years for the next defence policy to get started on the defence production action plan.

Canada, like its NATO allies, needs to prepare for conflict to prevent it. Our commitments to NATO, including 2%, are fundamentally about global deterrence.

Thank you.

[The Chair, Liberal, John McKay]

Mr. Gallant, you have five minutes, please.

[Brian Gallant, Chief Executive Officer, Space Canada]

Mr. Chair, I'm pleased to be here. I want to thank the committee for inviting me.

Space technologies and solutions are an essential part of Canada's defence strategy, contributing directly or indirectly to virtually all defence operations.

Space Canada represents over 90 Canadian space innovators who collectively play a vital role in preserving the environment, fighting climate change, bridging the digital divide, helping humanity explore far beyond our planet and, of course, protecting Canada's security and sovereignty.

Last week the Public Policy Forum released a report entitled “Matter More: A Canadian strategy for a changing United States”. PPF makes several recommendations that reference space or space capabilities, as well as industrial capabilities and the need for government-industry partnerships, including the following, entitled “Deepen and Integrate all Aspects of Canada's Commitment to Space”:

Space-based surveillance is a key element of future Arctic defence. Canada, with its huge geography and need for communications, has a long history of investment in space research and participation in space exploration. But those activities have too often been split into separate civilian and military compartments.

It goes on:

Canada should commit more resources to military space surveillance systems, making procurement decisions in conjunction with the United States to ensure inter-operability. Decisions on future space investments also should be made on an integrated basis that brings together government and industry. Canada has leading-edge private sector companies that can be partners on space-related investments and activities.

Indeed, for a nation to compete in the race for the new space economy, an economy that is emerging and projected to be $1 trillion if not $2 trillion globally on an annual basis by 2040, governments play a pivotal role, and their support is necessary. They help foster the space sectors as regulators, operational partners, capital providers, investors, funders, anchor customers, early customers or even owners. It is with this principle in mind that Space Canada submits that the federal government should accelerate the delivery of identified space defence programs, engage directly with Canada's space innovators, expand defence research and development programs, establish a national space council to coordinate space priorities across the Government of Canada and develop a dedicated commercial space strategy for Canada.

To elaborate on the latter point, I will quote a brief Space Canada wrote and submitted to the federal government earlier this year. Canada's closest allies have all integrated commercial capabilities into their national strategic vision. Australia has integrated commercial components into both their civil and defence strategies. The U.K. has an overarching national strategy that includes civil, commercial and defence components. The U.S. has a national space policy that connects civil, commercial and defence components as well. For its national defence, the U.S. Department of Defense released a defence commercial integration strategy, and the United States Space Force recently released a commercial space strategy for integrating more commercial capabilities into the Space Force enterprise. Canada should clearly articulate a commercial space strategy to take maximum advantage of the capabilities at home. This would enable Canada to keep pace with allies and partners and to get the most out of the Canadian space industrial base. At the heart of this commercial space strategy should be the principle of building only what you cannot buy, as established by the U.S. DOD and the U.K.

Moreover, NATO is also working on a space commercialization strategy, announced this summer and to come out over the next few weeks or months. Even further, just to give you a sense of some of our allies' work in commercialization, NASA and the U.S. Space Force are playing major roles in supporting the commercial space sector in their country. To give you an example that I think puts all of this in context, consider this passage from a Harvard Business Review article, which says, “Roughly 90% of the first $1 billion invested in SpaceX came from NASA's contracting arrangements, bringing some predictability to an inherently risky venture.”

I look forward to discussing this pivotal topic and the role of space in securing Canada's defence and security with you today.

I'll finish my opening remarks with this quote. The importance of the role of space and defence was summed up by The New York Times just a few weeks ago, as follows:

Almost as soon as the next U.S. president is sworn in, questions about countering China's military buildup — in space and cyberspace, on the seas and in the nuclear missile silos that have suddenly appeared in the Chinese desert—will sweep through those Situation Room meetings.

This topic is incredibly important. Thank you again for giving me the opportunity to discuss it.

[The Chair, Liberal, John McKay]

We'll open our six-minute round with Mr. Bezan.

[James Bezan, Conservative, Selkirk—Interlake—Eastman, MB]

Thank you, Mr. Chair. I'd like to thank our witnesses for appearing today.

Ms. Cianfarani, yesterday CADSI posted on LinkedIn, saying, “In the United States defence and security inform every aspect of a bilateral relationship. To be taken seriously in Washington, Canada must begin laying out a transparent, year-over-year fiscal track to meet its NATO commitments.”

That was linked to a news story that's headlined, “The U.S. needs a few good allies. Does it still need Canada?”

Can you answer that question? Does the U.S. still need Canada?

[Christyn Cianfarani]

I think it does need Canada, of course.

We are the northern flank, if you want to call it that. We have a responsibility under NORAD to defend the Arctic territories. We know the proximity to Russia, and China's interventions in the north are our responsibility. Yes, the United States very much does need Canada to be an active, engaged and funding partner in particular of NORAD.

[James Bezan, Conservative, Selkirk—Interlake—Eastman, MB]

In the decision and announcement by Minister Joly that Canada was going to no longer export any materiel that's used in defence weapons that might end up in Israel's hands, does that again undermine the relationship between us and the United States?

Can you tell us how your contacts in the U.S. are viewing that decision? They might be exporting to some of our other allies that they can't get.... They might have a client in Israel, in the IDF, and they might not be able to get into the supply chain parts from Canada.

[Christyn Cianfarani]

The concern that industry has is we never question a decision that is made, because the government is our regulator, so we'll comply with whatever the Canadian government decides with respect to what goods can go to what particular countries.

However, we do take two exceptions in the case of the way in which the decision was made to—let's call it perhaps “ban” extraterritorial...perhaps “exports” to Israel through the United States.

One is in the way in which it was transmitted to industry, which is, again, us learning about something of this magnitude in an ad hoc media conversation. What is worse is that the department at this point in time is unable to clarify for us, for the sector, the extent of this decision, meaning, does it extend to parts and components within platforms like F-35, for example? Then, because the department cannot give us clarity on that, there is a concern coming out of industry that this will harm 50% of our market share, which is our export market with the United States, largely serviced under the Defence Production Sharing Agreement.

Yes, there is much nervousness, as we are one of the biggest supply chain partners for United States platform manufacturers.

[James Bezan, Conservative, Selkirk—Interlake—Eastman, MB]

You mentioned the F-35. That also goes to the striker, right?

[Christyn Cianfarani]

There are many platforms that Canadians have parts and components on; it's not uniquely some of the major platforms.

[James Bezan, Conservative, Selkirk—Interlake—Eastman, MB]

Okay.

Were you or any of the three of you consulted by the government in the development of the DPU? Was industry talked to about it? Yes—all three? That's good, because we didn't have that with academics.

I know that at a CADSI conference going back a couple of years ago, not that long ago, after the full-scale invasion of Ukraine started with Russia, Minister Anand and General Wayne Eyre said that Canada and the defence industry must be moved to a war footing.

Do you feel confident that the government has given you the proper direction and contracts to move Canada onto a war footing?

[Christyn Cianfarani]

No, we are not on a war footing whatsoever. The urgency and the, let's call it the paperwork, if you want to call it that, the firmness of the relationship that would allow industry to go to a war footing is not there for certain aspects that are required, particularly in the war in Ukraine, whether that be ammunition, which is still missing contracting vehicles right now, or other goods and services. We are just not in a state of high alert, and we are not operating with the sense of urgency that we see other partners operating with.

[James Bezan, Conservative, Selkirk—Interlake—Eastman, MB]

Mr. Mueller and Ms. Cianfarani, you mentioned the billion-dollar cuts that are coming in the defence budget. We talk about giving more money to National Defence but then about cutting it back under Treasury Board guidelines, and that has impacted industry more than anything else. Is that having an impact on the maintenance of some of our legacy systems?

[Mike Mueller]

Regarding concerns about the cuts, I'm not aware of any on the actual maintenance side of things; it's more on the operational side that we see some impacts happening.

Going back to the earlier comments on the DPU, it's a very aspirational document, but it's lacking in concrete actions for how you're going to operationalize it, and that's really what we're looking for. How do you get the operationalization of the document? It just doesn't make sense from an industry perspective to have money but then also have cuts.

[James Bezan, Conservative, Selkirk—Interlake—Eastman, MB]

Just to interject here, it doesn't operationalize it. We know that the DPU was created in a vacuum and doesn't have a foreign policy to go along with it. There isn't the defence industrial strategy to go along with it, and there isn't a national security strategy to support it either.

Without those policies, how do you operationalize it?