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)

79 statements

Jeff Kibble, Cowichan—Malahat—Langford

Conservative
“The government talks about choosing preferred providers, but not about signed contracts or delivered equipment. How will the member make sure the government reports the reasons for all no-bid defence contracts to the House?”
Official Hansard

Madam Speaker, the member opposite mentioned numerous announcements that are only about preferred providers, not signed contracts or delivered equipment. The member stated, “remain accountable for the results.” Will the member ensure that the reasons for all sole-source contracts signed under Bill C-40 are reported to the House, and how will he ensure that is done?

Claude DeBellefeuille, Vallée-du-Haut-Saint-Laurent

Bloc Québécois
“The government keeps making independent agencies that ministers claim they cannot control. How will this new defence corporation stay accountable to Parliament?”
Official Hansard

Madam Speaker, since the Trudeau government was elected in 2015, all sorts of independent agencies and organizations have been created to deal with all sorts of things. I often hear the Minister of Public Safety say that he cannot intervene politically because the Canada Border Services Agency is an independent agency and so is the RCMP. When it comes to the new entity provided for under Bill C-40, how can we be sure that accountability to parliamentarians and government accountability will be upheld and not delegated to another body that does not have the same accountability requirements?

Gord Johns, Courtenay—Alberni

NDP

Linked statement

“We want our military to have the right gear, but defence spending must help Canadian workers and veterans. A Canadian group that employs veterans just lost a $12-million government contract to a foreign company. Will the government add strict rules to this defence bill to protect Canadian jobs, human rights, and oversight?”
Official Hansard

Madam Speaker, I have a ton of respect for my colleague, and New Democrats want our military to have the right equipment and in a timely fashion, but Bill C-40 must ensure that public dollars support Canadian workers and veterans. Canadians were horrified yesterday to learn that the Canadian Corps of Commissionaires lost a nearly $12-million CRA security contract to a foreign-owned company, Allied Universal, for roughly over $80,000, less than 1% of the bid. Its subsidiary reportedly holds contracts with ICE, the agency carrying out Trump’s mass deportations. Canadians want to know how awarding this contract to a foreign-owned corporation with those ties, instead of to a Canadian-owned institution supporting veterans, squares with the Liberals’ Canadian promises. Will the Liberals, seeking broader powers through Bill C-40, support binding safeguards on Canadian ownership and supporting veterans’ employment, labour, human rights and parliamentary oversight?

James Bezan, Selkirk—Interlake—Eastman

Conservative
“I oppose this bill. The government changed its plan for the defence agency to create a corporation with too much power. It lets the minister completely control the agency and give those powers to the CEO.”
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Official Hansard

Madam Speaker, as we know, we were here just months ago talking about Bill C-31, division 16, which was going to create the Defence Investment Agency under an omnibus budget bill. The secretary of state got up and made a big speech. He was actually hoping to be, fingers crossed, the minister of defence procurement, a full minister. Of course, in Bill C-40, that has been downgraded to associate minister of national defence for procurement. What has changed? We originally set up the Defence Investment Agency as part of PSPC, and we brought it around to where it is today. We went through Bill C-31. We are now on Bill C-40. There are rumours that Doug Guzman, the Prime Minister’s BFF, his Goldman Sachs investment banker buddy, has threatened to quit. Is that the reason why we now have to set up an authoritarian corporation with powers that we have not seen before in any Crown corporation: that a minister can direct the agency, that it must do what the minister wants and that he can also pass those powers down to and share them with the CEO? Is that the very reason we are doing this? I hear that Chairman Mao is actually blushing on this one.

Lori Idlout, Nunavut

Liberal
“I want to know how this bill will help set up defence sites in the North. Doing business in the North is hard. I want to know how this bill protects Arctic security.”
Official Hansard

Uqaqtittiji, I really appreciate our government’s focus on Arctic sovereignty and Arctic security. I think that we all know that doing business in the north is a lot more challenging. I wonder if the member could respond to the question of how the bill would be impactful for the establishment of NOSH sites or NORAD sites and the importance of the bill to keeping Arctic sovereignty and Arctic security.

James Bezan, Selkirk—Interlake—Eastman

Conservative
“The government has neglected our military for years, leaving our troops with broken vehicles and missing equipment. This bill gives ministers too much power to hand out contracts to their friends without proper oversight. We need time in committee to study it.”
Official Hansard

Madam Speaker, this being a solemn day, as we think about the tragedy and disaster that happened at CFB Wainwright, I just want to extend my heartfelt and sincere condolences to families and Canadian Armed Forces members, especially those who were on site. They are in our thoughts and prayers during this very difficult time. I would like to acknowledge Private Aidan Goulding, Private Shaun Farrell and Private Hayden Lykkemark, all part of the 3rd Battalion Princess Patricia’s Canadian Light Infantry, as well as Sergeant Morgan Wong, a reservist with the Loyal Edmonton Regiment. After their passing during this tragedy, we want to rally behind their families and their comrades at this time. We also want the 39 injured members of the Canadian Armed Force to know that we will be there. We will work across party lines. All of us are going to stand with them 100% to ensure that they get the supports they need to heal and recover, and ensure that if they are unable to return to work, supports are there through Veterans Affairs Canada. I have been to CFB Wainwright on a number of occasions, to be out there, to witness training and to participate in some of the training exercises, including with the PPCLI. I see why the young men and women who put on the uniform are the best of the best that Canada has to offer. They are so excited to be serving our great nation. We realize that they have to do things like live-fire training so they are always ready to defend us. Again, we send out all our support, our prayers and our love to the entire Canadian Armed Forces military family. Conservatives always support our armed forces, and we have a record of getting equipment bought and delivered in a very timely and quick manner. After the Liberal decade of darkness under Chrétien and Paul Martin, the Canadian Armed Forces was in dire need of reinvestment. We witnessed that its members were sent into Afghanistan wearing things like green uniforms. They did not have proper boots. They did not have kevlar body armour and tactical vests. We quickly went out there and bought for them the stuff they needed to work in theatre. During our time in government, we bought 650 brand new LAVs so they had light armoured vehicles to do the work they did, and 500 tactical armoured patrol vehicles. We bought 100 Leopard tanks. The Liberals, during the Chrétien era, were decommissioning all of our Leopard tanks, and what we needed in Afghanistan were Leopard tanks, so we bought 100 Leopard 2 main battle tanks. We bought 82 armoured heavy support vehicle systems and 50 Nyala armoured vehicles so they could move around more carefully, and we bought IED vehicles to clear away all of the mines and IEDs that were causing harm. Many of the fatalities and casualties experienced in Afghanistan were caused by them. We bought 16 of those vehicles and bought 37 M777 howitzers. We made sure that our army had what it needed when it went into theatre. In terms of our air force, we were at a point when we took over as government that we were begging the Americans to help us move our troops into Afghanistan. We were hitching rides with the Russians, of all people, having to get them to come with their heavy-lift Antonovs to move us. We invested in buying five brand new C-17 tactical Globemasters. We bought 21 Chinook helicopters to move our troops around in Afghanistan safely and get them away from IEDs. We bought 17 new Hercules CC-130J models, and we bought a number of UAVs. During that time, we also upgraded our CF-18s and extended the life of our Auroras, which are now past their end of life. This is going back to over 15 years ago when we made those investments. We also made the decision to buy the F-35 as our future fighter jet. On the navy side, we made sure that we stood up the national shipbuilding program. We ordered the very first six AOPSs, the Harry DeWolf-class Arctic offshore patrol ships. We ordered two joint supply ships, the protecteur class. We not only ordered but delivered on time the Asterix auxiliary offshore replenishment vessel to support our navy until the JSS’s were delivered. We also did a mid-life extension to our Halifax-class frigates. We stood up and bought what we needed. We know that sometimes we have to sole-source, so we used national security exemptions and the urgent operational requirements required by the CAF to sole-source where we had to. Some things we have to buy off the shelf to get them into play quickly, ensuring they are interoperable with our allies. We proved that we were able to get stuff done because of political leadership. We made sure that this started right at the top, with the the prime minister at that time, Stephen Harper, directing the PCO and cabinet to set up a secretariat of ministers and deputy ministers to provide leadership back down to the bureaucracies to get things done and buy the kit and equipment we needed to support the Canadian Armed Forces, especially during a time of war. Here we are, 11 years in with the Liberal government, and I can say that our fighter jets and most of the aircraft we have within the military right now are worn out. We know the army has been hollowed out and the navy is rusting out right before our eyes. To prove the point, all we have to do is look at the serviceability, readiness and operational demands of the vehicle fleets we have within the Canadian Armed Forces. This is right out of the performance reports from National Defence. In 2023-24, only 49% of land vehicles for the army were serviceable and deployable. That increased slightly to 51% in 2024-25, the last year for which we have this data. It is so bad that the guys deployed right now to Latvia are not able to train properly alongside our allies because a number of their vehicles are broken down. There is not enough in the budget to maintain and repair them and put them back into service. Often, a couple hundred of our guys who are deployed do not get certified for working as a brigade alongside our allies. In 2023, only 48.9% of our air fleet was available for operational deployments. That dropped down to 42.3% last year under the Liberals. In 2023-24, only 45% of the maritime fleet was deployable. That increased in 2024-25 to 59.6%, almost 60%. How did the Liberals make that gain? They were able to do that because they retired an entire class of patrol vessels, our Kingston-class coastal patrol vessels. They mothballed them. They are sitting in furlough now and being scrapped instead of being out there protecting our sovereignty and patrolling our maritime coastline. After 11 years, all we have gotten from the Liberals is talk and no action. The proof is in the numbers, and the sorry state of the Canadian Armed Forces today is due to 11 years of neglect by the Liberals. We are looking at a system where the Canadian Armed Forces know what they need but the Liberals are not going to give it to them. As a case in point, since the minister is talking about all the things they bought, one thing they are supposed to buy is new assault and sniper rifles, the C25s and C26s. However, we are waiting for them because the Liberals failed to sign a contract to get them delivered before all the orders were booked with the manufacturer. The Denmark and United Kingdom militaries are getting these assault rifles before we do. Our guys have to wait in the queue because we allowed other countries to jump ahead of us and buy up these new assault rifles. With respect to the SkyGuardian, the Liberals announced three years ago that we were going to have a new drone patrol aircraft or reconnaissance vessel that could fly all over Canada and up into the Arctic, but the first one has still not been delivered. Where is it? We are still looking for it. The government bought the Kingfishers, the CC-295s. This is a procurement that continues to lag behind, as it is not fit for operations. We know that the air force is struggling to use this jet to do fixed-wing search and rescue and contour flying in the Canadian Rockies. The plane has not been able to pass operational requirements, as set out by the Royal Canadian Air Force, and is still not certified, and not all the planes have been delivered at this point in time. I will note one of the greatest examples of the failure of the Liberal government. Since the war in Ukraine started, which we are four and a half years into now, we have seen how important artillery shells are in the war. Ukraine goes through between 5,000 and 6,000 shells a day. Russia has used over 30,000 shells against Ukrainians on Ukrainian territory. Putin’s war machine is getting shells from his allies: North Korea and Iran, which are not our friends. Meanwhile, we should be supplying Ukraine. We could produce, when this war started, about 3,000 shells a month. That would not last a day in Ukraine. We have been able to up it slowly, but there is no contract signed. It is up to 5,000 shells per month. The artillery shell factories and manufacturers in Canada have more than doubled their production, but the United States Army signed contracts and is getting them built there faster than we are building for ourselves. That is a failure of the government to get things done. The government likes to hang its hat on the new GlobalEye that it announced at CANSEC back in May. It is an asset that we need desperately in the Royal Canadian Air Force, especially with what is happening today, but sadly, the Defence Investment Agency and the Secretary of State for Defence Procurement failed to consult with the Royal Canadian Air Force. The media reported that the RCAF was as surprised as anyone else, since it had not even drafted the final version of the statement of requirement. The argument is used that the platforms out there did not have all the standards that we require. However, one, how do they know this when they did not talk to the air force about what it needs? Two, there were at least three competitors out there, two of them using the Bombardier Global 6500 as their basis, and for whatever reason, the government announced that it was partnering with Saab and that it was going to be a preferred supplier on this procurement, without talking to Boeing, without talking to Saab, without talking to Bombardier and without talking to L3Harris, which employs over 1,000 people in Montreal alone. If we want to talk about a symbiotic relationship, Bombardier-L3Harris is an interesting one. Boeing has the proven E-7, and instead we are going with an aircraft that has some operational shortfalls and cannot even do 360 radar, never mind having the proper connectivity. As such, there are major concerns with that procurement. If we are going to give unprecedented powers under Bill C-40 to the minister, would that not open it up so they could do more sole-sourcing based upon who they know and give Liberal insiders, friends and well-connected manufacturers the contracts, rather than talking to the user to ensure we are buying the kit and equipment we need to protect Canada in the best way possible? The replacement of the CF-18s has also been a disaster. The secretary of state is a former fighter pilot, and I respect his service to Canada, but he knows that the CF-18s are well past their due date, despite the life extension that we did as Conservatives. He was the chair of the defence committee back in the day when the government invented the capability gap nonsense and said that we had to increase the number of fighter jets we had. Of course, right away, the government announced it was going to go with a super Hornet, a brand new F-18, to make up the capability gap that we required. That, of course, would open the door to buying all F-18s. However, Boeing and Bombardier got into a mess, and the decision was made by Trudeau to do no more business with Boeing, so there were no more super Hornets. What did the government do? It went out and bought a bunch of used, vintage F-18s from Australia that were as old and worn out as our own fleet of F-18s. It cost us millions and millions of dollars to buy them and refurbish them, and we have nothing to show for it at the end of the day, other than using them as parts for the current fleet we have. The government continues with its F-35 review. That review has been sitting on the Prime Minister’s desk for over a year now. The Department of National Defence has reported back. It is well known what plane the Canadian Armed Forces wants, which is the F-35. Because of political games and grandstanding, the Prime Minister will not announce that we need the F-35, which, I must say, has been said before. Trudeau said that he would never buy the F-35. He put it out to competition, did a complete review and guess what. It was won fair and square and hands down as the best fighter jet, on all four major measurements, as what we need in Canada. We are already in the process of purchasing the first 16 jets and there will be another 14 after that. Our F-18s are old and worn out. We cannot wait for the Prime Minister to keep playing his political games and grandstanding with the United States on this when we need a fighter jet in service today so we can train up the next generation of pilots and air crew to support that fleet. It has been so bad here that we are already hearing rumours that members of the Canadian Armed Forces are being asked to turn in their rucksacks and sleeping bags. The Liberals bought a bunch of sleeping bags that do not even work at below -20°C. There are no sleeping bags. There is a shortage of tactical vests. Everybody has been asked to hand them back in. Guys are going through basic training saying that there are not enough uniforms. They are all getting worn out and we have not bought any new ones, so they have to turn their uniforms back in through basic training. It is so sad to hear that our guys who are deployed are begging, borrowing and stealing from our allies to get proper kits when they are serving in places like Latvia and on Operation Reassurance across Europe. There are things that we need to buy right away, but we are not hearing from the government. We need new tanks. Where are they? We need ground-based air defence systems after witnessing what is happening. There have been no requests for information of any of the companies out there. We have heard over and over again that we are short on military housing in this country. We are 6,700 residential housing units short in supplying the current demand, and that is not happening at any speed. To make up 6,700, even over 10 years, we would have to build over 600 a year, and we are not doing this. Three years ago, I think 32 homes were built for the armed forces. This is not of high importance to the Liberals. The Liberals have done some things. They bought the Global 6500 as an executive jet to fly ministers of the Crown around, so everybody flies around in comfort. The Prime Minister did not like the Polaris aircraft we had as the executive jet for international travel, so the Liberals had to go out and buy some new Airbus CC-330 Husky aircraft just so he could be in a luxurious aircraft. The Liberals are good at making announcements and reannouncements about preferred suppliers. They have done some of these things two times, three times and four times now, but as I just pointed out, they are bad at signing contracts. A case in point is the 155 artillery shells. The Liberals are great at creative accounting. That is how they got up over 2%. It was not actual investment in the Canadian Armed Forces. They gave pay raises, low-hanging fruit and well overdue, but they turned around and started clawing them back, and increasing rent hikes and changing the living differential for those who are posted off base. We are witnessing right now another cut coming to our armed forces. They are looking for 10% savings right now. We already went through this under Trudeau, where the Liberals cut $2.7 billion over three years. This year alone, the cut to the main estimates would amount to $2.9 billion in one year in the Prime Minister’s efforts to find savings. There is a lot more I could say on this, but I will just say that we are going to take time at committee to study this. This is the third iteration of it, but Bill C-40 would increase the opportunity for political interference and decrease accountability, transparency and protection to our taxpayers. We also know that the Liberal government has a history of corruption. By giving it this type of unvetted access to $1 billion at a time, we are worried this would turn into a major scandal.

Stephen Fuhr, Secretary of State (Defence Procurement)

Liberal
“The Conservatives cut defence spending to less than 1% of our economy. The Liberals doubled military spending, and NATO confirmed that Canada met its target. We need this bill because the government needs a better system to spend defence money properly. I am asking for one more minute to speak.”
Official Hansard

Madam Speaker, as my colleague was building an alternate universe, I ran out of paper, so let me just try to respond. It was very high level. For years, the Conservatives have crowed about supporting the military and spending and all this stuff. They did buy a few things, there is no question about it. There is the list of things the member pointed out, and I think there was even a compliment in there somewhere for me, so I thank him for that. I appreciate it. At the end of the day, they spent less than 1% on defence spending. If we add up everything he said, when it got the keys to the car, the government was spending 1.13%. When it was done, it was under 1%. If we add all the pluses and minuses, we end up with a pretty big deficit. I had mentioned in my comments earlier that the previous Liberal government doubled defence spending and got it from under 1% to about 1.43%, but we did not get to 2%. Part of the reason we did not get to 2%, although we doubled the defence spending, is that we did not have a process that could dispatch the funds and a machine that could do it in a way it needs to be done, hence we are standing here talking about a new way of doing business that will meet the moment. I will say that we did get to 2% in about eight months from 1.5%. I know my critic over there is shaking his head because he found some conspiracy theory place that disagrees, but does he know who audits those numbers and actually says whether we make the number or we do not? It is NATO. NATO has decreed that Canada has met the bar. Everybody else can have an opinion, but the one that matters is NATO. It has confirmed that Canada did indeed meet the target. Can I have another minute? He had about 10 minutes. I am just getting warmed up.

James Bezan, Selkirk—Interlake—Eastman

Conservative
“The Liberals changed the math in 2017 to make defence spending look higher than it really is. They count things like the Coast Guard, which does not fight in wars. The public records show that real defence spending was only 1.05% last year.”
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Official Hansard

Madam Speaker, he took two minutes, so I hope I get two minutes to reply. First of all, let us talk about how the Liberals got to 2% through creative accounting. They changed the formula in 2017 when they started adding other departmental spending into national defence. Today we have the Canadian Coast Guard, which has been entirely absorbed by the Canadian Armed Forces budget, not operations. It is not a security organization. It does not have any lethality. They told us at committee, when we had the Coast Guard before them, that if there is any conflict breakout, the Coast Guard’s job is to leave the scene of the assault. It would not be in the fight. It does fisheries monitoring, navigation and ice-breaking operations to ensure the St. Lawrence Seaway stays open. This is what it actually does and it does a great job. We love the Coast Guard. If we want to compare apples to apples, as we did when we were government, compared to the numbers these guys like to throw around at us, where we just look at actual national defence spending based upon the public accounts that are filed right here in the House of Commons, in 2023-24, under the last year of Justin Trudeau, who the Secretary of State loves so much, their actual spending in that year, not using creative accounting, but actually comparing apples to apples, was 1.05%. Hon. Kevin Lamoureux: That is not true. James Bezan: Madam Speaker, that is true. All the member for Winnipeg North has to do is look at the numbers. This is more important than anything. At the end of the day, this comes down to political leadership, making sure we get the job done. As Conservatives, we will always fight for those who fight for us to keep Canada, the true north, strong and free.

Fraser Tolmie, Moose Jaw—Lake Centre—Lanigan

Conservative
“I want my colleague to talk about how past military purchases were necessary, while this bill gives too much power to one person and hides what the government is doing.”
Official Hansard

Madam Speaker, I would like my colleague to maybe expand a bit on the difference between when the Conservatives purchased the Chinook helicopters, the C-17s and the Hercules when we were in Afghanistan on deployment, and Bill C-40, which has powers we are very concerned about just being handed over to one person. I wonder if he could expand on the differences between, as I said, the necessity to buy the equipment and expedite it, and then the lack of transparency we are seeing in this bill.

James Bezan, Selkirk—Interlake—Eastman

Conservative
“Our previous government bought the aircraft the air force needed and supported our Snowbirds air show team. The current government shut down the Snowbirds and is buying small planes that do not make a strong impression at international air shows.”
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Official Hansard

Madam Speaker, I know that my colleague, as a veteran of the Royal Canadian Air Force himself, got to witness us buying the C-17s, the Chinooks and the new Hercules. We continued to buy the aircraft the air force needed, and we supported the life extension done to our Snowbirds. Of course, what these Liberals did was actually shut down our Snowbirds. Instead of buying a replacement aircraft, a jet that would really thrill the audiences and really sell Canada internationally, they are buying a cute little PC-21. It sounds a lot like somebody who is out there crop dusting. I enjoy watching crop dusting, but after a couple of hours, it is time to move on. When we are going to international air shows and we are going to be flying the PC-21 up against things like the Blue Angels, we should actually make a bigger impression out there. We could have actually extended the life of the Snowbirds once again.

Xavier Barsalou-Duval, Pierre-Boucher—Les Patriotes—Verchères

Bloc Québécois
“This bill stops the procurement ombud from reviewing buying decisions made by a Crown corporation. Small businesses already struggle with the military's buying rules and with unfair decisions. If they cannot go to the ombud for help anymore, who will make sure the process is fair to them?”
Official Hansard

Madam Speaker, we recently learned from an article in The Hill Times that under Bill C‑40, the procurement ombud’s authority would not apply to procurement decisions made by a Crown corporation. I find that rather concerning. Small SMEs often contact us and say that they have a hard time getting into the Department of Defence and understanding how the process works because of how rigid it is. Unfortunately, decisions are also sometimes made in a cavalier way and to the detriment of businesses. At that point, there can be recourse to the procurement ombud. Under Bill C‑40, there would be no more recourse. Who is going to ensure that procurement is done properly and that businesses are not adversely affected during the process?

James Bezan, Selkirk—Interlake—Eastman

Conservative
“The government is making it too hard for small businesses to get military contracts. When the government gives big projects to giant corporations, those big companies can steal ideas and technology from smaller creators. We need to support smaller innovators who are building new defense tools.”
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Official Hansard

Madam Speaker, my colleague serves with us on the national defence committee. One of the shortfalls and criticisms that we are hearing about right now is that the Defence Investment Agency and the Liberal government, in particular, is making it very difficult for small and medium-sized enterprises. People are coming forward with some new technologies and new ideas, including in the world of cyber, quantum computing and drones, things that we need to do that they cannot get through the front door. A case in point is that when the Liberals announced the new drone program, they put it under the control of a major prime, Bombardier, rather than letting everybody have a chance to come forward as opposed to taking their technology to another company that could potentially be a competitor, that will then take away their IP and use it to their advantage instead of using it to the advantage of the creator. We need to make sure that we support the entrepreneurs, those who are out there leading on creating new equipment. As we have witnessed in the war in Ukraine, things are changing day to day. We have to be able to keep up with that, and the big primes are not always the ones that have all the answers.

Mark Gerretsen, Kingston and the Islands

Liberal
“We did not use creative accounting for our defence spending. We started counting the Coast Guard so our numbers would match how other countries, like the United States, count theirs. I want the member to rephrase what he said.”
Official Hansard

Madam Speaker, I was sitting upstairs in my office watching this debate and heard the member’s account of creative accounting as it relates to the percentage of GDP spent on defence, and I could not help but come here to challenge him on that point. He is saying that we came up with a new creative accounting measure that basically started including things like the Coast Guard, but that is not true. The reason we include the Coast Guard now is that other countries like the United States have always been including the Coast Guard. We decided that, rather than let the formula be different for each country, we should have a formula that is consistent among other countries. How do I know this? I learned it at the same time the member learned it when we both sat on the national defence committee together back in 2017. Would the member like to rephrase the way he made that intervention earlier by suggesting it was creative accounting when all we were doing was matching our accounting with the way that other countries were doing it?

James Bezan, Selkirk—Interlake—Eastman

Conservative
“The Liberals are inflating their defence spending numbers. They count spending on the Coast Guard, pensions, police, and border services as defence. A fair comparison shows they spend only 1.05% of our GDP on defence.”
Official Hansard

Madam Speaker, the member for Kingston and the Islands is much like the member for Winnipeg North. They think that if they say it loud enough, they must be right. The fact remains that the Harper government never did that. Conservatives made the investments in the Canadian Armed Forces. The Coast Guard was not considered part of that calculation, nor were pensions, which are now in there, nor some spending from Global Affairs Canada, the RCMP and the CBSA that are all thrown in there. The Liberals have thrown everything in there except the kitchen sink. No, wait, that is in there, too. If we do an apples-to-apples comparison of 2023-24, the Liberals are at 1.05%. That is really embarrassing, knowing the dangerous world that we live in today.

Xavier Barsalou-Duval, Pierre-Boucher—Les Patriotes—Verchères

Bloc Québécois
“Our military equipment is old and broken from years of neglect. The government wants to spend billions more on defense, but it has no clear plan and is using accounting tricks to hit spending targets. They also put the Prime Minister's banker friend in charge of buying equipment instead of someone qualified. Parliament must hold the government accountable so this money is spent on real needs instead of being wasted.”
Official Hansard

Madam Speaker, we are here today to discuss Bill C-40, which was introduced by the Liberal government on the other side of the House. Essentially, Bill C-40 creates a new, ostensibly independent structure. I will come back to this independence issue later. Known as the Canadian corporation for defence investment, this entity would be a Crown corporation responsible for running its own operations, a bit like other Crown corporations such as the Canadian Broadcasting Corporation, for instance. As far as Bill C‑40 is concerned, no discussion of military procurement can ignore the broader problem facing Canada’s military equipment. A lot of people are aware of the state of Canada’s aging, underperforming and often non-operational equipment, which has made headlines after all. This equipment includes certain Canadian warships that are more than 40 years old, and four submarines, only one of which is operational while the others remain dockside undergoing endless repairs. Things are reaching a point where maintaining this broken equipment is so difficult that some people wonder whether it will ever return to service. We can even think of the old jets, the famous F‑18s from the 1980s. I was born in the 1980s, and these jets are older than I am. We see that there is a problem of underinvestment in defence, which means that the armed forces’ equipment is in a sorry state. I would go even further and say that a while ago, we got our hands on an internal Canadian Armed Forces report stating that no less than 50% of their equipment is allegedly unusable. It may be on the inventory, but the reality is that this equipment is gathering dust and rusting away because it is too old and no longer functional. There have been so many budget cuts in this area that, according to some reports, soldiers had to buy their own boots and get reimbursed for them afterward. There were even some reports last year indicating that the Canadian Armed Forces could not even intercept the Chinese weather balloons flying over Canada. The armed forces could not even do that because they had so many problems related to efficiency. I think Canada’s army looks like a bit player on the world stage. I would even say it is in bad shape. This is the result of many years of complacency, unfortunately, so now it has some catching up to do. There has been a lot of talk over the past few years about Mr. Trump wagging his finger at us and saying that Canada needed to do its part and invest in its military. That said, we do need to take this issue seriously, but not only because of the U.S. President. As everyone knows, Russia is becoming increasingly aggressive, as its invasion of Ukraine demonstrates. China is also posing an increasing threat to Taiwan. Major powers are challenging the U.S.-led order. That was once the dominant world order, but that seems to be less and less true these days. Given the U.S. withdrawal, there is a need—or at least, a sense of urgency—to reinvest in our military capabilities and ensure that we can defend ourselves adequately, especially considering that virtually all of the equipment we have is operationally dysfunctional. Looking at the figures, it cannot be said that nothing has been done. In budget 2022, the defence budget stood at roughly $30 billion. By 2025, it had risen to $60 billion, effectively doubling. That said, this is what appears on paper. As was mentioned earlier in the House, the government has also engaged in a degree of creative accounting by including in defence spending costs that do not necessarily relate directly to defence. This includes, among other things, moving the Coast Guard into that spending category, as well as substantial increases to military salaries and pensions. As a result, there are no more soldiers and no more equipment, but on paper more money has been spent and Canada appears to be moving closer to the prescribed targets and ratios. All of this has contributed to Canada finally reaching the much-touted benchmark of spending 2% of GDP on defence, which is NATO’s baseline target. As long as anyone can remember, that has always been the target, yet Canada has almost never met it. However, Canada appears to have reached that target over the past year through creative accounting. To give the average person an idea, $60 billion is the equivalent of Quebec’s health care budget. People generally have no idea what that amount represents; clearly, it is a lot of money. It goes to things like hospitals, doctors and nurses. The federal government is now engaging in some creative accounting to put the equivalent of all of that into its military budget. That represents 2% of the gross domestic product. That is quite a lot of money. The government is now promising to go up to 5%. The actual commitment is 3.5%, not 5%. All that to say that the budget would increase from $60 billion to $160 billion in 2035. As we can see, a great deal of money would go to defence. As for me, a light bulb has turned on, and it seems to me that there may be a danger or risk associated with this sudden, radical and drastic increase to the budget of the Department of National Defence. Members may agree that we need to invest more in the armed forces, but this does not mean that there are no risks. I identified the same risks as those outlined by the Parliamentary Budget Officer, who was invited to appear before the committee. Those are risks that I thought were an issue. In her opinion, a budget that increases so quickly might cause a problem because, if a government normally allocates x amount of money and doubles it the next day, there could be some waste. That may be the case, particularly since the government seems to want to reach the long-standing 2% target, or even 3.5% or 5%. In the end, the goal seems to be to spend as much as possible to reach the quotas. In fact, the goal should be to make the right investments in the right places. I think that is what we should prioritize. That is why parliamentary accountability will be key. It is about ensuring that money is not being spent just for the sake of spending, and that it is being invested where there are real needs. During her appearance before the committee, the Parliamentary Budget Officer even told us that the government had no plans. I am not making this up. She asked to see the defence investment plans for the coming years, but there are none. The government is committing to spending 5%, yet it does not know how much will be spent next year, or the year after that, or in the years to come. Worse still, the government cannot tell us what the money will be spent on. The only thing we know for certain is that the government will meet its target. Understandably, that is worrying. I am getting the impression that the government is winging it. I, for one, do not think the government should be winging it when billions of dollars are at stake. We are talking about a lot of money, and it cannot be spent haphazardly or without a clear plan. There also appear to be serious problems within the defence procurement system. We have already touched on the major challenges. Incompetence also seems to be an issue. There seems to be a deeper problem, at least when it comes to efficiency and the internal management of defence procurement. To fix the problem, the Liberals announced a solution last year. They wanted to create an agency to manage defence procurement. Going forward, responsibility would rest not with Public Services and Procurement Canada, but with an independent agency. That meant finding someone to run the agency. Who did the Prime Minister put in charge of the agency? Obviously, given the size of the agency and the amount of money involved, a top-tier manager was needed. What skills and qualifications did the government look for in the future defence procurement superhero? Did it look for someone with expertise in procurement? The answer is no. Did it look for someone with expertise in defence matters? The answer is no. Did it look for someone with expertise in emerging technologies, perhaps a former member of the military? The answer to all of those questions is no. Instead, the government brought in a banker, a guy from the upper echelons of international finance. That is what happened. He was chosen by the Prime Minister. What made him the most qualified candidate? Well, he is a personal friend of the Prime Minister. They met back when they both worked at Goldman Sachs. A friend is a friend. There was a lot of money to spend, and a friend was going to be the one spending it. When the Prime Minister called him, he probably said something like, “Hey, buddy, I have hundreds of billions of dollars to spend on defence. I know you have zero qualifications in that area, no military background and no expertise in procurement or new technologies, but you are a banker and you know numbers. I thought maybe you would like to spend all this money for me, so I am going to hire you.” There was the WE Charity scandal, where a billion dollars supposedly went to friends of the Liberals. There was the ArriveCAN scandal, with costs ballooning from $80,000 to $54 million for an app. There was also the Phoenix pay system, which was supposed to save the government $78 million a year but instead, ended up costing $2 billion. After all that, the Liberals found a new gravy train for their Liberal friends. Now this, this really worries me. A guy like that, a top gun, a friend of Carney, an international investment banker—

Xavier Barsalou-Duval, Pierre-Boucher—Les Patriotes—Verchères

Bloc Québécois
“I do not support this bill. It creates a new Crown corporation to buy military equipment, but it gives this group too much power and too little oversight. The minister will pick the board members and tell them what to do. The procurement watchdog will not be able to review its choices. Billions of tax dollars will be spent behind closed doors with less accountability to Parliament.”
Official Hansard

Madam Speaker, thank you for the reminder. A high-level banker needs to get paid his worth. People like that do not dine on chicken nuggets at McDonald’s. They eat what ordinary people cannot afford. Do my colleagues know how much he makes? He makes twice as much as the Minister of Finance and National Revenue. He makes more than the Prime Minister. He makes more than the Governor General and that is no mean feat. It is quite something. In fact, our current Prime Minister’s financial-sector friend, or colleague at least, earns $700,000 a year. Even that was not enough for him. Within six months, he was threatening to resign. It was too little for him. In fact, he found out there were public servants in government. That was the last straw. Since he was allergic to public servants, he started blackmailing the government. In the end, he did not resign. He is still around. Apparently, he is still in his office in Toronto. I do not know if he has ever been seen in the agency’s offices, but he is still there. The funny thing is that an agency was created just for him. This is the agency that was supposed to be created under Bill C-31. I did say that it is a bill. It is not even a law yet, and now the government is introducing Bill C-40 to scrap what was in Bill C-31 and create a new crown corporation. Maybe it will become the “House of Guzman”. Essentially, this will eliminate what was already tailor-made for the Prime Minister’s buddy and make his life even easier. That is my take on all of this. We are essentially creating a new entity with a new board of directors and a new corporate headquarters, the location of which is still unknown. We know that the current CEO is very fond of his offices in Toronto. We do not know if that is where it will end up, but I hope not. However, it seems that it will be up to the corporation to decide that later on. Interestingly enough, when we go through a Crown corporation to make purchases worth billions of dollars, as is currently planned, that Crown corporation will not need all the usual government approvals to proceed and move forward with its decisions. Sometimes, the Treasury Board may not have a say. The much-vaunted new Crown corporation will have all sorts of powers, such as the power to make advance payments, provide loan guarantees, lend money and even buy company shares. What would the limits be? It is not 100% clear. Apparently, for less than $1 billion, it will not even need to ask the government for permission unless explicitly requested by the government. The bill says that it will create a defence agency that will be at arm’s length from the government. I always find it interesting when people say that it will be at arm’s length from the government. When we look at who sits on the board of directors, we see that the deputy minister will be there. The members of the board of directors—it is not an army, it is five people—are all going to be appointed by the government. This can be found in subclause 9(2) of Bill C‑40. We cannot make this stuff up. The Corporation must do as the Minister directs, and doing so is deemed to be in the best interests of the Corporation. This obviously means that the corporation is not at all at arm’s length from the minister. The minister can direct the corporation to do anything. There is no real independence. It is kind of a smokescreen to say that it is at arm’s length. It will be able to be blamed when poor decisions are made, but ultimately, all decisions will still go through the minister’s office. The only difference is that there will be less transparency and less accountability. We are concerned about that. Here is a legitimate question: Do we really want what will probably be hundreds of billions of dollars of procurement to be completely out of the government’s hands and be completely apolitical? That seems like a lot of money to me. I think that it is reasonable to be able to raise questions and that there should be some political oversight when such huge amounts are involved. Calling for politics to be taken out of something is often a way to claim the moral high ground. Defence already has the ability to identify its own requirements. When it comes to procurement, there are often strategic, geopolitical and industrial implications. I think that political considerations have been overly demonized. I am not suggesting that it should be driven by patronage or handed out to Liberal Party cronies. That is what is likely going to happen: the Prime Minister appoints one of his friends and wants as little accountability as possible. Hundreds of billions of dollars will end up there, and they will spend it however they want. I am not sure that is the best solution. We are told it will move faster, but we were also told that we were going to build more housing. I call that slogan-based governance. Every time there is a problem, the government makes grand promises and comes up with catchy slogans. Ultimately, it does not produce tangible results. That is the case, for example, with Build Canada Homes. We were told that 500,000 homes would be built. The report we saw recently stated that we were quite far off and not even half the target had been reached. We keep creating new structures: the financial crimes agency, Build Canada Homes, a defence bank, the Major Projects Office and the Canada strong fund—the much-vaunted sovereign wealth fund. Normally, a sovereign wealth fund consists of money that has been saved. In this case, however, it is being financed through borrowing. We are constantly seeing slogan-based governance, with too little attention paid to solving the real problems. According to an internal report from the Canadian Armed Forces, it takes anywhere from four to 24 years to deliver a simple procurement project in Canada and from 10 to 28 years to deliver a complex one. That is a serious problem. However, I am not convinced that it is a structural problem. It may well be a cultural one. How do we explain the fact that, among all NATO countries and all Five Eyes countries, none has needed a Crown corporation to manage military procurement? Apparently, Canada is the only one that would require one. I have a hard time making sense of what the government is presenting to us today. It strikes me as just another arrangement under which decisions will be made behind closed doors and well-connected individuals will be free to do as they please. I find that deeply troubling, particularly since we have learned that the procurement ombud will not even have a say in the decisions that will be made by this new entity. For example, a company that believes it has been treated unfairly during the process will have no recourse because the Crown corporation will be the one that makes the decisions, period. No one will have the authority to review the decisions made by this agency, which will no longer even be an agency but rather a Crown corporation. What we are also seeing with the creation of these new structures, as I said, is a tendency on the part of this government to want to create new structures by saying that they represent a blank slate, that the government needs to be given a chance and that a blank slate is beyond reproach. We are told that we need to act in good faith and give the government a chance. However, what we have seen is that all these blank slates and new structures are generally designed to reduce accountability to Parliament, resulting in decisions being made increasingly behind closed doors. I find that rather troubling, because we should expect greater transparency and accountability, not less, especially when even more money is being invested in defence and other priorities.

Tim Watchorn, Les Pays-d'en-Haut

Liberal
“Members of the armed forces and Coast Guard told our committee that they appreciate our new defence spending and their pay raises. This is not creative accounting. NATO decides who meets the 2% defence target, and Canada has reached it. I want to know if the member supports these pay raises. I also want to know if he supports moving the Coast Guard into the Department of National Defence.”
Official Hansard

Madam Speaker, my colleague is a new member of the Standing Committee on National Defence, and we thank him for his work on that committee. I listened carefully to his speech, and I think he should offer his talents to screenwriter Fabienne Larouche to write fictional scripts for phone calls. I think that is very interesting. On a more serious note, my colleague talked about creative accounting. We had the opportunity to welcome members of the Coast Guard and armed forces to the Standing Committee on National Defence. They told us how much they appreciated the new investments in defence and the pay raises. First, I would like to know if my colleague agrees with the pay raises. Second, I would like to know if he agrees that it would be beneficial to integrate the Coast Guard into the Department of National Defence itself. I think it is important to mention that this is not creative accounting. It is NATO that determines who reaches the 2% target and who does not, and Canada has clearly reached 2%.

Xavier Barsalou-Duval, Pierre-Boucher—Les Patriotes—Verchères

Bloc Québécois
“The government's defence spending is confusing, even to the Parliamentary Budget Officer. The government seems to be spending money quickly just to hit targets, instead of spending it for the right reasons.”
Official Hansard

Madam Speaker, in connection with what my colleague just said, the committee also heard from the Parliamentary Budget Officer, who admitted that she herself is having a hard time keeping track of government spending on what is included in NATO, what is not included in NATO and what is included in National Defence spending. It is very difficult to find out what is really going on. If the Parliamentary Budget Officer is confused, I think that quite a few people would have reason to be confused. As for including the Coast Guard in the management of National Defence and raising salaries, I am not saying that those were bad decisions. I think that these are decisions that can be justified. What matters, however, is that they not be made on the fly and that they not be decided on the back of a napkin simply to meet targets. That is what it seems like right now. These decisions are not being made for the right reasons. The government is making these decisions just to meet targets, to show that it is spending as much as possible. I think the goal should not be to spend as much as possible. That is more or less my message. The goal should be to spend on the right things for the right reasons, and on that front, I am not sure the government is on the right track.

James Bezan, Selkirk—Interlake—Eastman

Conservative
“The Liberals have a history of scandals. This bill gives one minister too much control over a new Crown corporation. I worry this will lead to political interference and give public money to government insiders.”
Official Hansard

Mr. Speaker, I want to thank my colleague from the Bloc Québécois for his intervention. I really appreciate that he raised the spectre of the culture of the Liberals and that they have a long track record of scandal after scandal. We have had SNC-Lavalin, ArriveCAN and the WE Foundation. We could also go back to adscam. There is just so much. We would now be setting up, as my colleague pointed out, unprecedented powers of a single minister over a Crown corporation, which we have never seen before in Canadian history, a Crown corporation that must do as demanded by a minister. Earlier, the Secretary of State was saying that this is about ensuring political oversight. Does my colleague have the same concern that I do, that this is going to increase political interference and open up an opportunity for the government to use the DIA Crown corporation as a way to have another scandal and make sure that it is shovelling money out the door to Liberal insiders and well-connected friends?

Xavier Barsalou-Duval, Pierre-Boucher—Les Patriotes—Verchères

Bloc Québécois
“Politicians already interfere with military purchases. This bill moves those decisions even further from Parliament, making them harder to watch. We need more transparency, especially when the Prime Minister can appoint his personal friends.”
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Official Hansard

Mr. Speaker, I would say yes in response to my colleague. In fact, the reality is that when it comes to decisions that are sometimes made in a vacuum, with political influence and interference and all that, I get the impression that there already were some. There were probably already some at National Defence. There were probably already some when it came to procurement as well. What we are going to experience is a situation that will be even further removed from Parliament. That means it will be even harder to ensure accountability and transparency. That is where the issue lies, and I think it is important to seek as much transparency as possible. What is more, the Prime Minister appointing one of his personal friends can only lead to suspicion on our part.

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