Strengthening Canada's Defence Sector Act

Bill C-40, Strengthening Canada's Defence Sector Act · Second reading · now at committee in the House Where it stands

What Bill C-40 would do

The bill would create the Canadian Corporation for Defence Investment to handle production, buying, and investment for the Canadian Armed Forces, the Department of National Defence, and partner governments. It would also expand federal buying and stockpiling powers to cover national security supplies and services. The responsible minister would gain authority to make financial investments in defence and security sectors, and new procurement rules would be set. The bill would also require a future review of these changes.

Official text (opens in a new tab)

32 statements

Stephanie Kusie, Calgary Midnapore

Conservative
“This new bill changes this role into a minister, unlike the last version. The Liberals did this to give themselves more power to act on their own without checks and balances.”
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Official Hansard

Mr. Speaker, I want to recognize the excellent work of our defence team, in addition to our associate defence minister for procurement, who has done a fantastic job in addition to the work of our shadow minister for defence. The answer is clear. I will point out the change between Bill C-31 and Bill C-40. In Bill C-31, this position was not a minister, but was made so in Bill C-40. The reasoning is clear. The Liberals want more power for themselves. They want the ability to do things unilaterally without having the checks and balances in place. It is no surprise to me at all. The good issue that my colleague has raised is a question of control.

James Bezan, Selkirk—Interlake—Eastman

Conservative
“We must protect tax dollars and buy equipment for the military. People do not trust the Liberals because of past scandals. Giving one minister full control of a corporation with access to a billion dollars at a time invites more corruption.”
Official Hansard

Mr. Speaker, my colleague from Calgary Midnapore has a lot of history here in working on Treasury Board, knowing how those guidelines are applied and why they are in place to protect the taxpayers of Canada. We have a fiduciary responsibility to make sure we are protecting those precious dollars that come from Canadian taxpayers and we have a responsibility to procure stuff for the Canadian Armed Forces so they can do the tough work of defending Canada and standing alongside our allies. The member did mention the problem that the Liberals have, which is that nobody trusts them because of scandal. Can she talk about some of the scandals the Liberals have had and how giving them unfettered access to $1 billion at a crack through a corporation that is completely directed by one minister opens the door to more corruption?

Stephanie Kusie, Calgary Midnapore

Conservative
“The government wastes money, gives contracts to its friends, and tries to cover it up. We will keep holding them accountable for these scandals.”
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Official Hansard

Mr. Speaker, frankly, in the nine years I have been here, I do not think I have enough time, but the WE Charity scandal stands out in my mind significantly. There is the green slush fund that I mentioned, McKinsey and my favourite from the last Parliament was ArriveCAN, which I believe really woke Canadians up to not only the ineffectiveness of the government but the ill will in the attempt to cover up the poor expenditures of the government, in addition to giving money to friends and insiders. It is an epidemic with the government and, unfortunately, for the Liberals, we will continue as the official opposition to hold them to account on it.

Jeff Kibble, Cowichan—Malahat—Langford

Conservative
“I want the government to explain why it counts the Coast Guard as defence spending for NATO. NATO rules say coast guard forces must have military training and equipment to count. My committee confirmed that our Coast Guard does not meet those rules.”
Official Hansard

Mr. Speaker, it has been a hot topic today, about NATO GDP spending, which ties directly into what the DIA says. I wonder if the member opposite could explain how the government can justify supporting the Coast Guard budget under GDP spending, when NATO’s own regulations, right from its website, say that coast guard forces are to be “trained in military tactics, are equipped as a military force, can operate under direct military authority in deployed operations, and can, realistically, be deployed outside national territory in support of a military force.” I have confirmed in committee that our Coast Guard cannot meet those requirements. Can the member justify the government’s use of the Coast Guard as part of NATO GDP spending?

Jeff Kibble, Cowichan—Malahat—Langford

Conservative
“I want the member to explain how the government can claim we are meeting NATO's defence spending goal. NATO says a coast guard must be trained and equipped like a military, but our Coast Guard head said ours cannot do that. The government's claim that we meet the spending target is an illusion.”
Official Hansard

Mr. Speaker, the member opposite mentioned NATO spending. I will ask this question again, as I fail continually to get an answer in the House. According to NATO’s own definition, a coast guard must be trained in military tactics, equipped as a military force, able to operate under direct military authority and able to be deployed to operations realistically outside of national territory in support of a military force. At committee, the head of the Coast Guard testified that the Canadian Coast Guard cannot meet this goal, so can the member justify how the Liberals can have a big parade and victory lap over meeting the 2% NATO GDP spending target when it is clearly an illusion? Can the member justify it? I am not interested in any other answer.

Jeff Kibble, Cowichan—Malahat—Langford

Conservative
“I do not want this bill to pass as it is. It gives one minister too much power to spend billions of dollars on military equipment without a fair bidding process or oversight. I want the bill changed to make the government publish its reasons for handing out contracts without competition, report regularly to Parliament, and follow strict conflict of interest rules.”
Official Hansard

Mr. Speaker, I will be splitting my time with the member for Vernon—Lake Country—Monashee. I rise today with a heavy heart. On Saturday afternoon, a tragic fire swept through a training area at CFB Wainwright and four members of our Canadian Armed Forces were reported killed, and 39 more were injured, many of them critically. I say to their families, their comrades and the injured still fighting to recover, they are in our thoughts and Canada grieves with them. The Leader of the Opposition spoke yesterday to the House of soldiers and firefighters who ran toward the danger. I wore a uniform for decades. I served as a captain of a ship. I oversaw the security and surveillance of Canada’s west coast, and I served on multiple deployments. I know the courage of our men and women in uniform, and I know what it costs their families. In Cowichan—Malahat—Langford, many of those families are our neighbours. This is non-partisan. We, as Canadians, stand together in sorrow and with respect. We owe those soldiers that same standard of respect in our work here today. Before us is Bill C-40, the third version of the Defence Investment Agency in less than a year. In clause 9 of the bill, it says the Defence Investment Agency “must do” as the associate minister directs. It does not say “may”, it says “must”. More than 2,000 years ago, Aristotle wrote that an oligarchy is ruled by the few for the benefit of the few. This, I offer as a test for this bill. Who decides for what reasons and to whom they are accountable? Who decides under Bill C-40? It is just one person. The new associate minister position would be created and it would have even less Treasury Board oversight with less accountability to Canadians. The member expected to take a seat in that role has served this country as a fighter pilot, and I deeply respect his service. The head of the DIA has no military experience and was reportedly threatening to quit, though he is an experienced business and banking leader. However, it does not matter what someone’s experience or service is, as no one person should hold this amount of power over this amount of public money. For example, a family replacing its roof gets three quotes. A company signing a billion-dollar contract needs its board to approve it and its auditors to check it, and then the company reports back to its shareholders. In national defence, Canadians are the shareholders. This year, we will spend about $75 billion in defence, and by 2035 it will be $163.6 billion per year. Our allies do not do it this way. In the United Kingdom, an independent regulator oversees the pricing of single-source defence contracts. In the United States, the sole-source contract must be justified in writing and made public, but Bill C-40 asks Canadians to accept less. Let us look at the GlobalEye surveillance aircraft announced by the Prime Minister at CANSEC in May. There was no competition and no reasons given. The vice-president of L3Harris Canada, also hoping to bid on that project, himself a former deputy commander of the RCAF, said that he was quite surprised by the announcement. With gaps in radar coverage, no air-to-air refuelling and critical NORAD compatibility issues, the GlobalEye does not even meet the Air Force’s own operational requirements. I oversaw the surveillance of the west coast while I was in uniform, and I know what a gap in radar coverage means for those standing watch for Canada. Why would we sole-source, and by what authority? What were the reasons? Worse now, Bill C-40 gives 13 reasons to skip the competitive bidding process. The last reason lets the newly minted associate minister add more reasons without reporting them back to the House. There is no disclosure for individual projects. There is only one annual report for billions and billions of dollars of procurement. That is not accountability. Bill C-40 would go so far as to remove the fines and prison sentence an associate minister would otherwise face for failing to run a competitive process. The Defence Investment Agency would be approved to draw up to $1 billion from the consolidated revenue fund, with nothing in that bill on how often, by whom and under what conditions. Between 2020 and 2023, approximately $5.4 billion in approved defence procurement spending went unspent. Money is tight in this country, and Canadian families feel it every day. That is exactly why every defence dollar demands accountability. Take the F-35, now 18 months into a six-month long special review. If the F-35 decision moves under the Defence Investment Agency, the associate minister, by himself, could completely change the course of the fighter jet program without giving Parliament a single written reason. The member designated to hold that new associate minister position has publicly opposed the F-35 project for over a decade, a position that has drawn mockery from his own fellow fighter pilots. This decision belongs to a fair and open competition, not one man. For the record, the F-35 has already won such a competition twice. Faster procurement does not require less accountability. Here is how we do that: keep sole-sourcing for genuine operational needs, but require written, published reasons; report regularly to Parliament on every ministerial direction; and put conflict of interest rules directly into the bill itself. Everyone who advises or votes on these decisions, including the Prime Minister and cabinet, must disclose any interest in the companies being considered, and anyone with a conflict must recuse themselves. The Prime Minister relies on an ethics screen covering more than 100 companies. If that safeguard is needed at the top, it also belongs with the sole position making these multi-billion-dollar decisions. Lastly, we need to set real-time procurement timelines and measure against them. Let me bring this back to the people this bill is meant to serve, the men and women of the Canadian Armed Forces who selflessly defend the sovereignty of Canada. They ask me regularly, “Where are the tanks and the ships and the submarines? Why are the clawbacks almost as big as their pay raises? Where is the ammunition and equipment the government keeps announcing? Why are soldiers on patrol in Latvia without ammunition in their guns, wondering why the artillery supporting them does not have enough shells?” None of this equipment matters without the people trained to use it. The government will say that recruiting and enrolment is up, but enrolment is not recruitment and a recruit is not a trained soldier. The Auditor General found that only one in 13 applicants made it to basic training and that there are not enough instructors, equipment or facilities to train the people that do enrol. Failure rates have climbed from 15% to 23%, and some reports are now putting it as high as 45%. However, we are still thousands of members short in the specialized trades we need filled right now. Enrolment numbers make good headlines, but only trained, qualified members can defend our country, and we keep them by giving the equipment they need to defend Canada. I am not asking the government to scrap the Defence Investment Agency, other countries use this model, but before we debate the vehicle, we must fix the philosophy driving it. These are not partisan questions. They are the least Canadians should expect of any government spending their money to defend our country. I ask every member of the House to measure Bill C-40 against that standard and to heed Aristotle’s warning that the path we choose today will shape our country that our children will inherit and the safety of those who defend it.

Jeff Kibble, Cowichan—Malahat—Langford

Conservative
“I do not support this bill as it is written. Government companies can work well, but this bill lets one person make huge choices without reporting to Parliament. When Conservatives made quick deals for military gear, we had to write down our reasons. This bill does not hold anyone accountable.”
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Official Hansard

Mr. Speaker, I indeed said that Crown corporations have proven successful in other countries, but these unaccountable regulations, which would allow one person to make these powerful decisions, are the problem. That is the failure. Conservatives have used single-source contracts to much success to arm our troops quickly when there was a need, but there were written reasons. The bill is focused around 13 expandable reasons that do not require accountability and do not require reporting back to the House. That is the problem, not the Crown corporation.

Jeff Kibble, Cowichan—Malahat—Langford

Conservative
“This bill needs to be changed. The government spent billions of dollars on planes the air force cannot use, and there was no proper oversight. The bill is written in a way that allows corruption and outside interference.”
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Official Hansard

Mr. Speaker, let us look at the track record. The GlobalEye is an aircraft that does not meet the air force’s operational needs, and there could be an ability for billion-dollar draws without oversight and accountability. Clearly, the way the bill is written would allow for corruption and outside interference. It needs to be changed. Although the structure of a crown Corporation could be good, the bill certainly fails to meet the need.

James Bezan, Selkirk—Interlake—Eastman

Conservative
“This bill gives the minister total control over the new defence agency. It also gives the minister 13 ways to skip normal bidding rules. I am asking my colleague if this bill will lead to political meddling and corruption with a billion dollars of public money.”
Official Hansard

Mr. Speaker, my colleague, as the shadow minister for defence procurement, has reviewed Bill C-40 very closely. He mentioned that paragraph 9(2) of the bill would give the associate minister for defence procurement absolute power over the Defence Investment Agency. We have never seen a Crown corporation be under the thumb of the government like this, where it “must do as the Minister directs”. Not even the CBC has that type of government influence over it as a Crown corporation. As the member said, there are 13 exceptions added in here as reasons the government, or the minister, may not want to run a competition, and in that, the minister would also be given a get-out-of-jail-free card. When we are talking about having a billion dollars at the disposal of the minister and the Defence Investment Agency, does my colleague believe that there is open opportunity here for increased political interference and corruption?

Jeff Kibble, Cowichan—Malahat—Langford

Conservative
“I oppose this bill. It gives the government too much power without enough oversight or accountability.”
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Official Hansard

Mr. Speaker, that is an excellent question from my colleague, who is the shadow minister for national defence. It is my privilege to work so closely with him on a committee. Absolutely, we have seen a long list of Liberal government corruption scandals, and this, with the lack of accountability and the lack of oversight, would only open it up. It would give unprecedented powers and a lack of accountability. I will not accept it. Conservatives will not accept it, and I challenge Canadians to not accept this complete lack of accountability.

Scott Anderson, Vernon—Lake Country—Monashee

Conservative
“I oppose this bill. Our military badly needs new equipment, but creating a new Crown corporation will not fix the government's broken buying system. This bill also risks taking money away from Arctic defence and NORAD to buy equipment from Europe instead.”
Official Hansard

Mr. Speaker, the thoughts of this House are with the brave soldiers who were killed and badly injured at Wainwright. The fact that these young men knew and accepted the risks beforehand is what makes them the Canadian heroes we will remember. The soldiers wearing our Canadian uniforms are well renowned for peacekeeping and asymmetrical warfare even with outdated equipment. They serve aboard aging ships, fly in old airplanes and train with equipment that was new over half a century ago. I know this because I was in that equipment only 15 years ago, in simpler times when war was far away from our shores. That was at a time when grey-zone warfare was just a concept for novels. After more than a decade of the Liberals sidelining Arctic sovereignty and continental defence, the need for rebuilding our armed forces is obvious to everyone. Our geostrategic reality has shifted over the past decade while the Liberals have slept, and we can no longer ignore the attacks against the west by foreign powers. This is not the bogeyman to the south, who the Liberals blame for everything, but our real enemies, the ones actively engaged in grey-zone warfare against us: Russia and China. In Afghanistan, we could afford to use older equipment because our outdated tanks and borrowed logistics were still generations ahead of anything the Taliban could send. They were good enough. Today, we live in a different world. Cyber-attacks and other grey-zone warfare is on the rise. If we are going to protect our northern sovereignty, we must rearm with first-class modern hard power. The government’s own figures show the urgency to update and fill our forces. In 2024-25, serviceability across key fleets stood at 59% for maritime equipment, 51% for land equipment and 42% for aerospace equipment. These describe serious constraints on what our military could do even if our equipment was modern. Today, we ask our soldiers to be ready to fight against battle-hardened enemy soldiers in a three-dimensional, high-tech, 21st-century battle space, and we ask them to do it using weapons that were old even 20 years ago in Afghanistan. Ukraine has shown us that the next war will be fought with weaponry never imagined before 2022. Only the very best is good enough for our troops in today’s threat environment. Our soldiers, airmen and sailors have no voice. They depend on us here in this chamber to speak for them. They are entitled to know when their equipment will arrive, and they must know, in an era of symmetrical warfare, that they have the best equipment possible. Conservatives support getting equipment to our armed forces faster. We support a strong Canadian defence industry, clear responsibility for procurement, and the removal of unnecessary red tape. However, Bill C-40 asks Parliament to accept that giving a new Crown corporation greater flexibility, while placing substantial authority in the minister’s hands, will finally solve problems the government has repeatedly promised to fix. The Defence Investment Agency began in October 2025 as a special operating agency within Public Services and Procurement Canada. Then the Liberals proposed a stand-alone agency. Now they have proposed a Crown corporation with dedicated ministerial leadership. Each iteration has promised to bring greater speed and clarity. Each iteration is built atop the failed promise of the last one. Each iteration takes procurement farther away from the military and toward civilians, some of whom do not know the difference between an RPG and an RPAL. Perhaps that is why 18 months after taking office, the Liberal government has plastered this House and the media with announcements, but the only thing it has managed to produce is a signature on the yellowed papers that will eventually get new rifles to our troops. Eighteen months is the time it took to build the Empire State Building and the Alaska Highway from planning to completion. If the government had been in charge of the Alaska Highway, we would still be laying logs in muskeg 85 years later. Why is that? Why is the government shouting announcements from the rooftop while doing as little as humanly possible? After 18 months, the Liberal government cannot even decide to buy what must be the most over-vetted aircraft in the history of North American military flight. The F-35 is an airplane that our air force generals need, an aircraft we Canadians helped develop and a transitional aircraft on the cusp of an age of autonomous warplanes. It is the only aircraft with continental deterrence value today and into the next decade, and the Liberal government can do nothing but dither. Why? What has changed in the military requirement? Has NORAD suddenly become less important? Has the threat to the Canadian Arctic diminished, or is it because of the Prime Minister’s ambitions toward European integration? Let us step back down to earth for a minute. We are a North American nation whose security depends on NORAD, and NORAD depends on our military integration with the United States and the defence of our Arctic, yet this legislation would grant sweeping powers to a new Crown corporation just as the Prime Minister redirects defence procurement toward Europe through SAFE and Readiness 2030. The Liberals try to pass this redirection off as diversification, knowing full well that it is nothing of the sort. It is an expensive security arrangement that almost certainly benefits European bankers more than Canadians. The European Union cannot replace NORAD, and European equipment may cost a fortune to integrate into continental defence systems. Will scarce defence dollars be diverted from Arctic surveillance, air defence and NORAD modernization to satisfy the security demands of the Prime Minister’s pet project? Europe is an important ally, but geography is not a political preference. Canada’s defence procurement must serve our security requirements, not the Prime Minister’s European geopolitical ambitions. This is precisely the issue I raised with the Parliamentary Budget Officer when I questioned the competing financial demands of European and continental defence ambitions. She acknowledged the tension between the two and identified aircraft procurement as one of the major expenditures potentially affected. We therefore have a government advancing multi-billion-dollar European procurement initiatives without Parliament having any clear financial picture, or the additional costs of maintaining interoperability with our American partners. The Carney government is simultaneously pursuing European defence procurement arrangements—

Scott Anderson, Vernon—Lake Country—Monashee

Conservative
“The government is buying European military planes to build political ties instead of listening to what Canada's military needs. These European planes will cost taxpayers more money because they need expensive changes to work with North American defence systems. I want the government to tell Parliament if any promised jobs or benefits are actually worth these extra costs.”
Official Hansard

Mr. Speaker, the present Liberal government is simultaneously pursuing European defence procurement arrangements through SAFE and Readiness 2030, negotiating with Saab over GlobalEye and creating a new Crown corporation with sweeping powers to direct defence investment. These developments raise the serious concern that procurement decisions could be influenced by the Prime Minister’s preferred geopolitical relationship rather than the operational requirements identified by Canada’s military leadership. Take Saab’s GlobalEye airborne warning aircraft, for example. This is a project being advanced by the Defence Investment Agency itself, the very organization that Bill C-40 proposes to transform into a powerful Crown corporation. Concerns have been raised about radar coverage, aerial refuelling, and compatibility with NORAD’s secure communications networks. Will Canada be paying for additional engineering, modifications, training, infrastructure and long-term maintenance to make a European-designed surveillance platform compatible with the North American defence architecture? How does that compare with alternative surveillance aircraft already designed to operate within existing NORAD architecture? The Prime Minister frequently invokes strategic autonomy to justify his European ambitions, but autonomy is measured by whether Canada can independently operate, maintain and sustain the equipment it purchases. A European aircraft that requires expensive modifications to integrate with NORAD does not make Canada more sovereign. It just makes continental defence more expensive. If Canadian industrial participation is being used to justify a preferred supplier, Parliament and the people of Canada deserve to know whether those promised industrial benefits outweigh the additional costs. Conservatives are not opposed to European defence co-operation. We are opposed to allowing geopolitical preferences to substitute for military judgment and financial accountability. The Prime Minister is entitled to pursue closer relations with Europe, but he is not entitled to make Canadian taxpayers finance that ambition to our detriment.

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