National Defence Committee on May 6th, 2026

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot—Acton, QC]

We know about reports of staff shortages, data issues and inefficient project management. I'm not making this up. This was demonstrated at the time.

You said that the strategy is there to make improvements. However, what do you think is the main reason for the current rate of equipment availability? Is it a matter of money, bureaucracy, lack of skilled workers or dependence on foreign suppliers? What's the reason? What's the strategy's priority?

If you tell me that it's more or less “all the above”, let me know which one takes priority.

[Christiane Fox]

It should be noted that underinvestment over a long period led to the current situation.

Here we have the investments, and now we need to make sure that we have enough workforce capacity. In some circumstances, there may be a transition period to develop the Canadian workforce while we rebuild our industry.

I would say that the workforce and procurement are key to our success.

[The Chair, Liberal, Charles Sousa]

Thank you, Deputy Minister.

Ms. Gallant, you have five minutes.

[Cheryl Gallant, Conservative, Algonquin—Renfrew—Pembroke, ON]

Thank you.

I want the answer to the question I asked with respect to the April 1 Treasury Board ruling that a CSOR-type special operator's support allowance is not protected. If you're injured while training for a higher level, your entitlement reverts to whatever category you still qualify for or stops entirely, rather than being frozen at level one.

[Lieutenant-General Erick Simoneau, Chief of Military Personnel, Commander Military Personnel Command, Department of National Defence]

Mr. Chair, I will take this one.

This allowance in particular is called an environmental allowance, and the pitfall of having a monthly allowance is that, when members are not operating in said environment.... We have the same for the navy with the sea duty allowance and the land duty allowance.

This is the CSOR allowance. If they get injured and are not called to go on operation for more than 30 days, that is when they lose this allowance. It is problematic, and it's something that we've solved with the sea duty allowance and the land duty allowance, by making it per day. When you go on operation, you get it. If you don't go on operation, you don't get it, so it's fair. It's based on a concrete action that needs to be compensated.

Now, specifically for the special forces and search and rescue, we are looking at embedding these allowances inside their salary just like we've done for pilots. For example, pilots in the Canadian Armed Forces don't get an air crew allowance because it's embedded in their salary. Whether they get injured or not, they still retain it. This, to me, is to ensure that they get compensated in the way that they should, as well as getting them on par with the industry. We're trying to achieve the same, working closely with Treasury Board Secretariat, on the accrual both for special forces and for the search and rescue communities.

[Cheryl Gallant, Conservative, Algonquin—Renfrew—Pembroke, ON]

That's fantastic, and it's pensionable then too.

[LGen Erick Simoneau]

It would be, yes, ma'am.

[Cheryl Gallant, Conservative, Algonquin—Renfrew—Pembroke, ON]

On the supply chain nexus with Canadian drones, Canadian companies can't get on the DOD blue UAS cleared list, so they can't get vetted as producers of cyber-secure drones. It makes it hard to break into the U.S. defence market and access Canadian DND contracts.

Will they have a Canadian version of cleared drone companies, a Canadian regiment cleared for CSE?

[Wendy Hadwen, Assistant Deputy Minister, Policy-Industry, Department of National Defence]

Thank you.

That is the objective. We are mindful—and certainly, this came up in our preparation of the DIS—that security clearances and the contract security program require us to be more proactive in clearing companies and operators, enabling them to access the international market.

[Cheryl Gallant, Conservative, Algonquin—Renfrew—Pembroke, ON]

I have some SMEs in my riding that want to sell outside the country. They have told me that in order to sell to Europe, they have to provide at least one sample, often two, one being for destruction purposes. For an SME, this would amount to at least tens of thousands, more probably hundreds of thousands and even millions of dollars. They just can't handle that.

Is there a special exemption for Canadian military or defence-related products so that these SMEs can get their products into Europe as well?

[Christiane Fox]

Thank you for raising that question. I wasn't aware that this was a requirement for them to get into the European market. We can absolutely look into it. We're now a member of the SAFE agreement, the only non-European country that's part of that, which is to access procurement. Perhaps through that vehicle or others, we can take a look at how we can facilitate.

I think part of it is also having the Government of Canada be a purchaser of these drones, these domestically manufactured drones, because there's confidence built into the system when the Canadian government or the military purchases. I think you've raised a very good point. I'll take a look at that and come back to committee.

[Cheryl Gallant, Conservative, Algonquin—Renfrew—Pembroke, ON]

We're told that the SMEs will be included in the major defence contracts, but we have some major defence contracts under way already. What the SMEs tell me is that if they're working under a prime, the prime will demand a kickback in some way. What measures are you taking to prevent that from happening?

How can we get these SMEs dealing directly with the DIS and procurement as opposed to having to go through a prime, which will exact this demand?

[Christiane Fox]

I would say that it's twofold. Perhaps there are opportunities where we can have, you know, a major capability, and then a number of contracts to achieve what we're trying to achieve from the major capability. That is kind of an option. The second option is for the Government of Canada to be clear, as they sit down with primes, that the expectation is that there's no kickback, and then we actually see this through.

There are two mechanisms for doing it, and I think we have a responsibility to keep engaging with the SMEs so that we hear this directly and so that they're a part of the conversations and the capability.

I was quite encouraged, when we had our military outlook days. There were a lot of SMEs that were there that would not have been there a few years before. I think it's about investing in the relationship, and it's those two examples of mechanisms that we could use.

[The Chair, Liberal, Charles Sousa]

Mr. Danko, we'll go over to you for five minutes.

[John-Paul Danko, Liberal, Hamilton West—Ancaster—Dundas, ON]

Thank you, Chair.

Thank you for joining us this afternoon.

It's not lost on me that we're talking about the defence industrial strategy within the context of a trade war that was launched against Canada by the Trump administration. We're talking about our sovereignty in terms of defence capabilities but also economically.

I'm a representative from Hamilton. I represent an area that has been the heart of Canada's industrial capability, whether you're talking about steel-making, shipbuilding, advanced manufacturing or all the associated industries. There are significant industrial capabilities in Canada, but they're not necessarily in the defence industry. There are all kinds of things that are extremely specialized for defence that we could do. Right now, we're not necessarily making things specialized for defence.

How do we leverage the industrial expertise and capacity we have in Canada to secure those supply chains, make sure we're buying Canadian and build up those industries so we can take advantage of global export markets?

[Christiane Fox]

Thank you very much for the question.

As part of the defence industrial strategy and the investment going into defence, it really is about shifting the economic activity happening across the country.

The steel sector and auto sector have felt, as you know very well, the impacts of the tariffs and on the relationship we've had with our traditional partners. We have identified our top capabilities. We've taken into account the industrial strengths of our country—like the steel industry or the biotech industry—to try to match them with some of the capabilities we need. If you're Algoma Steel, making a particular type of steel for a vehicle versus a River-class destroyer is very different. We need to match these investments we're making as part of national shipbuilding to the capabilities we have.

It's not going to be done overnight, but I think it's absolutely the track we're on—trying to reconnect the work being done across our country with the defence investments the government is making at this time.

[John-Paul Danko, Liberal, Hamilton West—Ancaster—Dundas, ON]

Thank you. I think that's great news for Canada and Canadians, especially for those in industrial centres.

I want to talk about labour if I have a chance, and the skilled trades, but I want to expand, first, on the answer you gave about that industrial capability. A lot of things required for defence are technologically advanced. That means intellectual property. We're building up those industrial capabilities. These are very specialized ways of producing things, very specialized equipment and very specialized materials.

How important is it that we maintain intellectual property domestically in this increasingly sophisticated world?

[Christiane Fox]

Thank you for the question.

I'll turn to Heather, who may want to add to this, but first I will say that it's going to be a really important balance. Some IP—intellectual property—will be enormously important for our sovereignty and our capabilities on the military side. We also have to be conscious of this: If a business wants to export, it needs to export to different customers. In doing so, it may need to retain some of its IP in order to sell the product abroad.

It's going to be a balance. It'll be a consideration as we work through various contracts and procurements. It's important, in certain areas, that it remains with Canada.

[John-Paul Danko, Liberal, Hamilton West—Ancaster—Dundas, ON]

My last question is on the skilled trades.

Our government just launched a $6-billion investment in hiring and training the next generation of workers in the skilled trades. If we're investing in defence at the size and scale we're talking about, we're going to need tens of thousands of workers specifically in those industries.

Per the defence industrial strategy, how are we going to train that next generation of workers to do the work required to deliver on what we're talking about here?

[Christiane Fox]

There are two ways that I would answer that question.

First, there is the actual infrastructure and the building that's happening, particularly in the north. We're going to need a skilled workforce to do that. Right now, we are mapping out all of the infrastructure builds that we have across the country, particularly in the north, and identifying the types of skills we need to complete these projects, such as welders, etc.

Second, there are the specialized skills in developing satellite capability and quantum research. As we look at the totality of our efforts, we will need, as you noted, a skilled workforce, whether for the infrastructure build or military housing and other types of expertise.

We will have to work in partnership with others. I don't think we can do this alone. We will have to work with indigenous organizations, unions and provincial and territorial governments, and we'll have to fast-track and think about creative ways to do that. The investments matter. Apprenticeship programs and developing the talent we have matter. It's not going to be an easy solution, but we have to put our minds to all of it.

Thank you.

[The Chair, Liberal, Charles Sousa]

Thank you, Deputy Minister.

Monsieur Savard-Tremblay, it's back to you, sir, for two and a half minutes.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot—Acton, QC]

Thank you.

Ms. Fox, another one of the strategy's objectives is to “boost government investment in defence‑related research and development by 85%.” We know that Quebec is a leader in a number of fields, including aerospace and artificial intelligence.

Can we receive assurance that companies, especially Quebec's small and medium‑sized businesses, will get their fair share in this new phase of defence expansion?

[Christiane Fox]

Yes. Investments have already been made in certain companies, in particular Héroux Devtek, through programs. We must continue to do this.

Yes, the government announced investments in the National Research Council of Canada and in our institutes. I think that we'll need to look at how we can partner with the Université de Sherbrooke and other institutions to achieve the necessary goals.

However, we already have a list of Quebec companies and institutions covered by the initial investments.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot—Acton, QC]

Are university partnerships part of the plan? You said that you thought that you should do this.

[Christiane Fox]

Partnerships are already moving forward. However, we're in talks with institutions across the country to do more.