Debates of Oct. 26th, 2026

Strengthening Canada's Defence Sector Act

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Mr. Speaker, I thank my colleague from Charlesbourg—Haute-Saint-Charles for his foresight and for urging everyone to open our eyes so that everyone understands what is going on here.

This is no ordinary approach, and he has rightfully denounced a form of collusion or, at the very least, proximity, which is the key factor in securing a “prestigious” position. As a taxpayer, I am concerned. There is a fundamental function in this Parliament: that of the Auditor General. However, we know full well that an agency like this cannot be thoroughly audited by the Auditor General. The AG does not have access to the same information as she would if the agency fell under the responsibility of the department, as it should.

I would like to hear my colleague's thoughts on any other possible ways the government might be able to pull a little stunt like this and avoid being accountable to the public, which will benefit the Prime Minister's friend.

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

Mr. Speaker, as I mentioned a few times in my speech, that is the problem: It is the lack of transparency. When something is opaque, it means we cannot see what is going on. We are left in the dark.

That is the main danger posed by Bill C-40, which would establish a defence procurement Crown corporation headed by someone coming from Goldman Sachs. Everything is closed off. Everything is opaque. We know nothing, and we will know nothing. That is precisely what should not be happening. That also explains why the Liberals have changed the way they have presented this file not once, not twice, but three times. It is also why they cannot answer the simple question of why they have changed course three separate times.

[Alex Ruff, Conservative, Bruce—Grey—Owen Sound, ON]

Mr. Speaker, I want to thank my hon. colleague for his many years of service in the armed forces.

As he knows, the previous Conservative government successfully implemented single-source procurement projects to support our soldiers in Afghanistan, without disregarding parliamentary oversight. Why does he think the Liberals want to avoid transparency and parliamentary oversight?

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

Mr. Speaker, I also want to thank my colleague for his 20 years of service in the Canadian Forces in Afghanistan and Iraq. He experienced first-hand, on the ground, the impact of ministerial decisions regarding urgently needed equipment. At the time, Stephen Harper's Conservative government handled those matters exceptionally well. What we are seeing today is a return to the dark ages of Jean Chrétien's Liberal government. I lived through it myself as a member of the military. It was complete chaos. Once again, we are heading back to an era of opacity and secrecy, instead of transparency for our military personnel, for Parliament and for Canadians.

[Marc Dalton, Conservative, Pitt Meadows—Maple Ridge, BC]

Mr. Speaker, CFB Wainwright is no longer front and centre in the news, but many of our service personnel are still in a critical situation from injuries and burns. We also think of the four who lost their lives at this time. It is a reflection of the dangerous work that our military, the navy, the army and the air force do, whether in combat or during training exercises. Our thoughts and prayers are certainly with the families and friends of these four soldiers and those who knew them, as well as with the numerous personnel.

This strikes close to home because I did my basic training at CFB Wainwright and was involved in other military exercises afterward. That was decades ago. I have lived a full life since then. I want to live longer, but it has been decades. These young men had their lives cut short, and as we approach Remembrance Day, we reflect on the tens of thousands of Canadians who died on the battlefield, who drowned in the North Atlantic after their ships were torpedoed and who suffered unimaginable horrors as prisoners of war in internment camps under the Japanese or as slave labourers. It was terrible.

About a decade ago, my wife and I had the privilege of going to Normandy and visiting Juno Beach, where the first Canadian Army landed, and around town. If members have not had a chance to see it, I would encourage them to the site at some point in their life, and other places in France and throughout Europe, such as Vimy Ridge. There are pictures of Canadians moving throughout the town under the hail of machine gunfire. Hundreds were killed and wounded. Lest we forget.

Canadians are peace-loving. We have a tradition of peacekeeping. My father served in the Royal Canadian Air Force for 36 years and was based across Canada, in Germany and with the United Nations peacekeeping forces in Ismailia, Egypt and the Golan Heights. Growing up in a military home and having served in the military, I can say the Canadian military has always been on my mind and in my heart.

I remember growing up during the years that Pierre Elliott Trudeau was the Liberal prime minister of Canada. I know that those were difficult days for the Canadian military. There were numerous base closures. Our troop strength was slashed and in many ways crippled. We went from having the third- or fourth-largest navy and air force to now being way down on the list, and it is dropping. Our ranking, as far as our military capacity goes, is dropping year by year, it seems. Our overall ranking is now 28th in the world. Our air force is 30th. Our navy is 45th. It has steadily dropped under the Liberals. I am not talking about our personnel. They are excellent. They are dedicated, loyal and professional, and I think they are admired wherever they are. I am talking about how under the Liberals, we have seen an ongoing decline and erosion of our military capacity in spite of the increased dangers we are facing.

I understand that after the iron curtain came down, there was a peace dividend and people thought there would be no more war, but things have changed. Humanity has not changed, though.

We were not prepared for previous world wars. We were not prepared for the First World War or the Second World War. One cannot just be ready at the call of a bugle. It takes training. It takes equipment. It takes investment. It takes enough personnel, too, and enough training.

As for the Liberals, we are hearing a lot of talk but seeing little concrete action. I did not say “no concrete action”, because they will point to this expenditure or that expenditure, like the building of a new bureaucracy. The Liberals are very crafty. They will say they are on track to meet NATO's defence obligations, but a lot of it is a sleight of hand. For example, they have the Coast Guard now as part of their defence calculations, which was not there beforehand. There are other things that were never part of the defence calculations but now are. The percentage is going up, but actually, in reality, it is going down. As a matter of fact, it is not just staying the same; the investments we are seeing are going down. It is getting worse.

I talk with service personnel. The training budget and operating budget have been slashed year after year. This year it was another 10%. The operating budget is already low. It is tough. The infantry, for example, needs to be able to shoot ammo, but a lot of times, even ammo is at a premium. It is really tough. As recently as 2024-25, 40% of maritime key fleets were not serviceable for training and operations, as well as 50% of key army vehicles and 57% of aircraft. Those figures are actually getting worse.

We then have the retirement of the Snowbirds. They are part of the military. They are a symbol of Canada, a very important symbol. The Liberals said they were going to bring a replacement aircraft, that they were going to close this down and replace these jets in the 2030s, forgetting that they just modernized these aircraft in 2021 for $29 million. Modernizing the aircraft is not the reason.

We are living in a dangerous world, and the Liberals are just traipsing along. Think of what is happening in the battlefields in Ukraine and Russia right now. We have to be much more nimble and ready for hostilities. The Conservatives believe in equipping our forces quickly but also in being sensitive to the Canadian taxpayers, who foot the bill.

Under the Harper Conservatives, we bought 650 new LAVs, light armoured vehicles; 500 tactical armoured vehicles; and 100 Leopard tanks. The previous government, under Chrétien, was actually disposing of them. We bought two main battle tanks, 82 armoured heavy support vehicle systems, 50 Nyala armoured vehicles and 37 M777 howitzers. For the air force, we bought five brand new CC-177 tactical Globemasters so we can move equipment around. We bought 21 Chinook helicopters and 17 new CC-130J Hercules models. We upgraded our CF-188s and made the decision to buy the F-35. We got things done.

We did not need another bureaucracy under the Defence Investment Agency, which has been in operation for 10 years and has not had any purchases, nothing. The Liberals now want to make it a Crown corporation that is at arm's length. Well, that is fine. It is not at arm's length, because under the terms, contrary to all other Crown agencies, it must do what the minister requires it to do. It has much less accountability to Parliament. It can move things around, have contracts and do sole-source contracts that are in its interest, not accountable to Parliament. This is a travesty.

[Kevin Lamoureux, Liberal, Parliamentary Secretary to the Leader of the Government in the House of Commons]

Mr. Speaker, it is truly amazing, the amount of misinformation we get. We had one member who said recruitment is down. The reality is that recruitment, people wanting to join the military, is at a 30-year high. The member said our actual spending is going down. What a ridiculous statement that is. Under Stephen Harper, it was 1% of the GDP. Today, it is at 2% of the GDP. Do some simple math and you will find that it has gone up.

We then listen to the arguments as to why the Conservatives do not support a Crown corporation. My God, you need to do more research. Transparency and accountability will improve under a Crown corporation. I know. I was in opposition for 20 years, and they can improve—

[The Assistant Deputy Speaker, John Nater]

The member knows to address his comments through the Chair.

The hon. member for Pitt Meadows—Maple Ridge has the floor.

[Marc Dalton, Conservative, Pitt Meadows—Maple Ridge, BC]

Mr. Speaker, we hear a lot from this member. He seems to be the only person the Liberals put forward, and he is a fine doctor of spinning.

With recruitment, the number of people who apply does not mean the number of additional personnel who have been accepted and trained. We need to train these people. We are not paying for a training budget. Everything is falling apart, and we can place that on the Liberals.

The Liberals talk about the percentage. As I mentioned, a lot of what they are doing is budgetary hocus-pocus.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

Mr. Speaker, I thank my colleague for his speech and his deep respect for veterans. I sincerely appreciate it.

If the parliamentary secretary is willing to listen, my question is this. My colleague mentioned several times in his speech that creating a Crown corporation could reduce the government's accountability to parliamentarians. That is a very serious concern for us, and it seems to be becoming a very bad habit. We are seeing the same thing with Bill C‑39, where the Canada Industrial Relations Board could call for arbitrations without the minister getting involved. Then the government can stand up in the House of Commons and say that it is an independent body and that it is not its responsibility.

I would like to hear my colleague's thoughts on that.

[Marc Dalton, Conservative, Pitt Meadows—Maple Ridge, BC]

Mr. Speaker, I would like to thank the member for his comments. I agree with him.

I think this is yet another way for the government to shirk its responsibilities.

We do not know what it intends to do about expenditures. Often, when we see other expenditures, such as those related to the green fund or other initiatives in which the Liberals' friends are heavily involved, it becomes a serious problem. That is why we really want all of this to be carried out under the scrutiny and control of parliamentarians.

[Jeff Kibble, Conservative, Cowichan—Malahat—Langford, BC]

Mr. Speaker, I thank my colleague for his excellent speech and for pointing out the accounting issue with the Coast Guard. The member opposite knows full well that the Coast Guard spending clearly does not meet NATO's own definition, which requires it to be trained, deployable and operating as a military.

In committee, I was interviewing three generals who, in my opinion, should be the ones running the Defence Investment Agency, not a banker buddy of the Prime Minister. Bill C-40 would give the newly created associate minister the direction that the DIA must follow his directions, not “may” but “must”, with little written accountability to this House.

Do you agree that this would give, as has been pointed out by many people, unprecedented levels of power to one person? Is that a dangerous thing?

[The Assistant Deputy Speaker, John Nater]

I will just remind the hon. member to direct his questions through the Chair.

The hon. member for Pitt Meadows—Maple Ridge may respond.

[Marc Dalton, Conservative, Pitt Meadows—Maple Ridge, BC]

Mr. Speaker, I want to thank the member from Vancouver Island for his service in the military for many years. He knows the navy file.

It is a challenge. I'm sorry, I have lost track of the question, but I will say that we are very concerned, as far as procurement goes, that it is going into the hands of one minister who is not accountable. Basically, that minister is accountable to the Prime Minister. Again, we are seeing this all over, where the Prime Minister has the control and a budget of billions of dollars, because we do not see a lot of respect from him toward this chamber anyway.

[Tamara Kronis, Conservative, Nanaimo—Ladysmith, BC]

Mr. Speaker, we all support better defence procurement in equipping our military. Today I would like to use my time to suggest a number of protections Parliament should put in place as regards Bill C-40 before we grant sweeping financial and procurement powers to the Defence Investment Agency through this bill. As currently drafted, there are still some important and, as of yet, unanswered questions about governance that I believe we need to address if we are to do the best we can for those who risk their lives on a daily basis for our freedoms.

Bill C-40 is the Liberals' third incarnation of the Defence Investment Agency in just one year. In May, the DIA was to be an agency under direct ministerial management. Five months later, it has been reimagined as an independent Crown corporation. DIA investments will be supported by public capital, also known to Canadians as “our money”. Government purchasing power and regulatory decisions will be used to de-risk private investments. I submit that Canadians providing the money and assuming the risk inherent in de-risking deserve to know that our military, not private investors, is going to reap the rewards.

Let us consider one scenario that could happen under Bill C-40. Let us say the DIA acquires shares in an American manufacturer with the finance minister's approval, because there are no actual “invest Canadian” requirements in this bill. Private equity funds and pension funds may also own shares. The agency then awards that manufacturer a substantial defence contract, perhaps even without a competitive bidding process, where an applicable exception permits it through the bill.

Now suppose a competing Canadian manufacturer develops a better product at a lower price. The DIA will have a choice. It can award the contract to the competitor, potentially reducing the value of its own investment, or it can continue supporting the company in which it has a financial interest. This creates the potential for conflicting incentives within the same institution, and there are no provisions in the bill to ensure that the objective of equipping our military with the most appropriate option at the best possible price would supersede the competing objective of growing the DIA investment portfolio.

That is why Parliament should insist that procurement decisions and investment decisions be made independently, with additional scrutiny when the DIA proposes awarding a contract to a company in which it holds an ownership interest. It should also establish clear financial rules governing those investments. The government should not be able to take on disproportionate financial risk while private investors enjoy most of the upside. Independent valuations, limits on financial exposure and a requirement to demonstrate that ordinary Canadians are receiving a fair return for the support they provide should all be enshrined in this bill.

From a governance perspective, the DIA can have a board of as few as three directors, including the executive chairperson, the CEO and the deputy minister. There is no guarantee of any independent directors, let alone an independent majority. While ordinary audit requirements apply, there is no mandatory audit, investment or risk committee. More remarkably, the transition provisions allow the first executive chairperson to exercise all the powers of the board alone until such time as additional directors may be appointed. Especially in light of the competing investment objectives I identified earlier, Parliament should amend this bill to provide for independent directors, mandatory financial risk oversight and a prohibition on major investment decisions until that governance structure is in place.

Executive compensation is another area that should also be examined closely. Cabinet determines base remuneration, but the bill does not establish how executive performance will be assessed. Compensation incentives can produce very different decisions. Will bonuses reward the amount of capital investment, the financial performance of the portfolio or the delivery of equipment to our military? Parliament should be able to ensure that the DIA is primarily focused on serving our military and protecting Canadians.

That brings me back to the Prime Minister's initial decision to appoint an investment banker rather than someone with a defence procurement background to lead this corporation, because it tells us something about the government's ambitions for this institution. The government would not simply be creating an organization to buy military equipment. It would be creating an institution that could also finance the businesses and industrial capacity behind that equipment. The inherent competition between those objectives makes conflict of interest rules especially important here.

The DIA would interact with banks, investment funds and companies whose executives may have long-standing professional relationships with its leadership. Enforceable and transparent disclosure and recusal procedures, including rules for transactions involving former employees, clients and business associates, should apply to everyone making investment and procurement decisions.

We have already seen what can happen when government financing organizations operate without effective conflict of interest controls. In 2024, the Auditor General identified 90 cases at Sustainable Development Technology Canada in which conflict of interest policies were not followed, involving decisions on nearly $76 million of funding. Parliament should have learned something from that experience.

Bill C-40 contains very broad exceptions to competitive procurement, including contracts intended to support strategically important Canadian industries and products previously supported by government research funding. There is no question that some exceptions are necessary in defence procurement where national security or urgent operational requirements can impact the calculus. However, Parliament should ensure that the normal governance safeguards are put in place: requiring written justification, offering the possibility of independent review and appropriate reporting when competition is bypassed.

We also need to address ministerial directions. Section 9 would allow the minister, or the assistant minister and associate minister in this case, to direct the corporation's activities and require the corporation to comply, yet there would be no equivalent express requirement to table those directions in Parliament. That would create an uncomfortable arrangement where the corporation is supposed to have commercial independence but ministers retain substantial influence without the transparency normally associated with formal directions to Crown corporations. All material ministerial directions should be documented and disclosed, subject to legitimate national security restrictions.

The same principle applies to the corporation's finances. Bill C-40 would provide a revolving $1-billion payment authority for the corporation, a separate $1-billion authority for ministerial activities, and the possibility of loans from the Minister of Finance. Those provisions would not establish a single overall limit on the corporation's financial exposure.

The bill should provide for a complete accounting of the available funding mechanisms, the limits on borrowing and guarantees, and the source of funding for equity acquisitions. Parliament should receive regular reports showing how much money has been invested, who has received it, the value of outstanding guarantees, the losses incurred and the returns earned. Canadians should be able to understand what has happened to their money.

Bill C-31 provided for a legislative review within three years. Bill C-40 would extend that period to five years. With that, the government would be creating a more complicated financial institution, while waiting longer to see whether it is working. That should be corrected.

Canada needs a more effective defence procurement system. We need our military to be properly equipped, and we should be developing Canadian industrial capacity wherever it makes strategic and economic sense, but the priority must remain the defence of Canada and the interests of Canadian taxpayers. Governance matters. Many of the provisions I have spoken about today may be quite dry, but they are very important. It is not just conflicts of interest that matter. It is also the appearance of those conflicts.

When government acts as investor, lender, guarantor and customer, the opportunities for private profit can be substantial, and so can the opportunities for financial losses, poor procurement decisions and preferential treatment. The government has decided it wants to use these powers. The responsibility of Parliament now is to ensure that they are exercised under rules that protect the public interest. The Defence Investment Agency should not become a place where private investors get the financial rewards of government decisions while ordinary Canadians are left paying the bills.

I submit that we have opportunities to improve the governance provisions in these bills and that we ought to do exactly that.

[Kevin Lamoureux, Liberal, Parliamentary Secretary to the Leader of the Government in the House of Commons]

Mr. Speaker, I agree wholeheartedly with the member when she says that governance matters. I am an advocate for a Crown corporation because in my years both in opposition and government, I have seen the benefits of a well-run Crown corporation, both at the provincial level and at the federal level. It can provide a high sense of transparency and accountability. When we take a look at the potential mandate for this particular one for military procurement, we see that it is it good not only for Canada's defence but also for our industry as a whole, if done properly.

I would agree with the member's comments that governance is important. Are there changes the member would like to see that could enhance a Crown corporation?

[Tamara Kronis, Conservative, Nanaimo—Ladysmith, BC]

Mr. Speaker, I would submit that if the hon. member had listened to my speech, he would know that I have just proposed a number of very specific measures that I believe would enhance the governance of this particular Crown corporation.

I do agree with him that there are some Crown corporations that have excellent governance mechanisms. At the moment, on the surface of the bill before us, I think there is much room for improvement.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Mr. Speaker, I would like to thank my colleague for her speech, which was, I must say, forceful and very firm.

We know that transforming the Defence Investment Agency into a Crown corporation means that certain watchdogs, such as the procurement ombud, will not be able to scrutinize its activities.

Is that a concern of my colleague's?

[Tamara Kronis, Conservative, Nanaimo—Ladysmith, BC]

Mr. Speaker, I would like to thank the member for his question, and I am continuing to work on being able to answer questions in French.

I do agree that there are some significant transparency issues. I am encouraged in some ways by the fact that this is really the third iteration of the organization. However, there have been many concerns around transparency and accountability raised in the chamber thus far, and I would urge the government to pay close attention to them. I think there is substantial and significant work to be done on the bill.

[Jonathan Rowe, Conservative, The Eastern Peninsulas, NL]

Mr. Speaker, it was not very long ago that BC Ferries awarded a contract to China. That was not in the interests of the Canadian people, and most people we talked to on the street thought it was absolutely ridiculous. Meanwhile, the federal government gave billions of dollars to BC Ferries, but the Liberals just shrugged their shoulders with no regard.

Would allowing this Crown corporation open the door for the Crown corporation to be sucked into the American military complex? We would then have a situation such as BC Ferries, where it would be awarding contracts that the Canadian people may not appreciate.

[Tamara Kronis, Conservative, Nanaimo—Ladysmith, BC]

Mr. Speaker, I thank the hon. member for the concern he shows for people in my community, who, like the people in his community, are dependent upon ferry services for most of their daily existence. This is one of the reasons I wanted to highlight the importance of the fact that there are currently no invest Canadian provisions in the bill.

Many members have raised issues, and I think a number of them are legitimate. I hope the government is paying attention to these debates and remarks, and that the Liberals will go back to the drawing board and make some improvements to the bill that would enhance the impact of these very important decisions on Canadians.

[Elizabeth May, Green, Saanich—Gulf Islands, BC]

Mr. Speaker, my hon. colleague reads bills carefully. I am wondering if she noted that it is not the Minister of Defence or even the associate minister for defence procurement who is actually named in the bill, but the Liberals will fill in the blanks later from cabinet.

[Tamara Kronis, Conservative, Nanaimo—Ladysmith, BC]

Mr. Speaker, again, it goes to the fact that the bill feels like one that is half-baked.

There are so many possibilities. I go back again to the fact that it would not just be an actual legal conflict of interest that we need to be concerned with. We need to also be concerned about appearances. Right now, I think that the government is actually leaving itself vulnerable to all kinds of unintended consequences if Parliament is not given a chance to have a substantially amended and improved bill.

Business of the House

[Kevin Lamoureux, Liberal, Parliamentary Secretary to the Leader of the Government in the House of Commons]

Mr. Speaker, there have been discussions among the parties, and if you seek it, I think you will find unanimous consent for the following motion:

That, notwithstanding any standing order or usual practice of the House, during the debate pursuant to Standing Order 66 on Motion No. 10 to concur in the tenth report of the Standing Committee on Human Resources, Skills and Social Development and the Status of Persons with Disabilities, no quorum calls, dilatory motions or requests for unanimous consent shall be received by the Chair and at the conclusion of the time provided for debate or when no member rises to speak, whichever is earlier, all questions necessary to dispose of the motion be deemed put and a recorded division deemed requested and deferred pursuant to Standing Order 66.

[The Deputy Speaker, Tom Kmiec]

Is it agreed?

[Some hon. members]

Agreed.