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)

52 statements

Rhéal Éloi Fortin, Rivière-du-Nord

Bloc Québécois
“This bill sets up a new Crown corporation, but the government will still control its decisions. It changes nothing real. It just gives a friend of the Prime Minister a job leading this corporation with a huge salary. I want to know what my colleague thinks about this.”
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Official Hansard

Madam Speaker, creating this new Crown corporation is all well and good. It allows the government to say that decisions will be made independently. However, when we read the bill, it is clear that the government still retains control over decisions. Even if the decisions are officially being made by a Crown corporation, there will still be government oversight. That seems a bit pointless to me. It strikes me as a bit of a smoke-and-mirrors show that will not really change anything meaningfully on the ground, especially since it is clear that it benefits a former colleague and friend of the Prime Minister who will end up at the head of this Crown corporation with a salary that could be described as astronomical. How does my colleague view these issues in relation to Bill C-40?

Alex Ruff, Bruce—Grey—Owen Sound

Conservative
“We likely do not need this new defence corporation. Past governments were able to buy military equipment quickly while Parliament watched over them.”
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Official Hansard

Madam Speaker, my Bloc colleague’s question is a good one, as it speaks to the issue of whether this corporation is even required. I would argue it likely is not. I agree with the hon. member that it is not actually doing anything, as I demonstrated in my speech, when governments of the past have successfully procured equipment in a timely fashion when required and, at the same time, with parliamentary oversight.

Chris d'Entremont, Acadie—Annapolis

Liberal
“I want the House to pass this bill. Buying military gear takes too long and involves too many departments. This bill sets up a new Crown corporation to make buying, making, and investing in defence equipment faster. It also helps Canadian businesses get the money they need to build things for our military.”
Official Hansard

Madam Speaker, it is a privilege to rise today on behalf of the people of Acadie—Annapolis at second reading of Bill C-40, the strengthening Canada’s defence sector act. I will be sharing my time with the awesome member for South Shore—St. Margarets. I want to begin by offering my sincere condolences to family and friends of the Canadian Armed Forces members lost at CFB Wainwright. May those members rest in peace. My thoughts are also with those members who are still in hospital. I wish them a full and speedy recovery. I am part of a family that includes a CAF member, and I know that my brother served many times at CFB Wainwright. I think he said he actually trained there more than seven times and really felt bad about what happened there. We hope, of course, that everyone recovers well. Bill C-40 is personal for our region, because Acadie—Annapolis is proud to be home to 14 Wing Greenwood, the largest air base in Atlantic Canada. Greenwood trains long-range patrol crews, conducts regular surveillance over the Atlantic, supports global strategic airlift, and is the primary air search and rescue unit on Canada’s east coast. Over the past year, the government has backed Greenwood with new hangars for the new P-8A Poseidons, which replaced the aging Aurora aircraft; the new remotely piloted aircraft systems program; and new housing on the base. There is more coming for CFB Greenwood. This investment matters, not just for our safety on the east coast but just as much for the jobs and businesses of the Annapolis Valley and all of Nova Scotia. I will go back to the bill that is before us and what it means for Greenwood, the valley and, of course, Nova Scotia. At its core, the legislation asks a very straightforward question: How do we make sure that Canada’s growing investment in defence translates into real capacity, real security and real economic opportunity for Canadians, including communities such as ours? The security environment is changing rapidly. Our allies are increasing defence spending, and governments everywhere recognize that a strong military depends on a strong and resilient industrial base. For Canada, that means more than committing resources. It means making sure our institutions can put those resources to work. For too long, defence procurement has been marked by complexity, multiple departments, overlapping authorities and lengthy approval times. Each part has an important job, but together those processes can slow decisions, create uncertainty for industry, and delay essential capacities. We have talented people across the system, and we have too often asked them to deliver complex projects and processes that are not built for today’s pace and scale. Bill C-40 proposes a different approach. First, it will establish the Defence Investment Agency as a crown corporation within the national defence portfolio. The agency was created last October as the departmental agency. That was an important first step. This bill would take the next one: a permanent institution with its own board of directors, commercial expertise, and greater authority to negotiate and manage major contracts. Legally, it would be the Canadian corporation for defence investment, carrying on as the DIA. Just as important, it would bring procurement, production and investment together in one organization. Procurement is how we acquire what our armed forces need. Production is how we make sure that capacity exists to build and sustain them. Investment is how we build industrial capabilities Canada will need in the years ahead. That matters because a purchase order does not build a factory, a contract does not create a skilled workforce, and a promising technology does not strengthen our security until it can be produced, tested, delivered and sustained. That is why the bill provides the agency with a broader range of tools, including loans and advance payments, subject to the necessary approvals, to help Canadian businesses, including those in Nova Scotia, overcome financing barriers and scale up production. Consider a company from Nova Scotia. Last Thursday, I spoke with representatives from A.F. Theriault & Son, the oldest and largest privately owned vessel builder in Nova Scotia. Since 1938, it has built more than 1,000 vessels in wood, steel, aluminum, fibreglass and advanced composites. It has delivered over 750 unmanned surface target drones to the Canadian military, to the navy. It can respond to the need, but it needs to modernize and expand. A loan or an advance payment is the kind of tool that could help a company like that get there. It is exactly the kind of Nova Scotia business the DIA is being built to support. This does not mean that government would be replacing private investment. It means using private investment strategically to attract private capital and build on capabilities that our security depends on. The second part of the bill would amend the Defence Production Act and rename it the defence and national security production and procurement act. It would broaden the framework to address modern concerns, including economic security and strategically important industrial capacity. It would provide flexibility for certain procurement decisions, including urgent operational requirements. It would allow the minister, in specified circumstances, to award a contract without a competition, where that is necessary to support a sector of the economy that is important to national defence or national security. Members will no doubt want to examine this provision closely and rightly so. The argument for it is simple. In a crisis, or when critical domestic capacity is under threat, a lengthy competitive process may cause us to lose the very capacity we seek to preserve. It is in committee that these protection mechanisms must be put to the test. Flexibility must come with responsibility. The corporation would have its own board and be subject to governance and financial reporting requirements. It would report through a new associate minister of National Defence for procurement, who would answer to Parliament for the agency and who could direct its work. The Canadian Armed Forces, National Defence and the Canadian Coast Guard would continue to set their own operational priorities, requirements and acceptance criteria. The people who understand operational needs would keep deciding what is needed. The agency’s job would be to turn those requirements into results. The aim is not to choose between speed and accountability. It is to deliver both. This bill is about the link between national security and economic strength. The defence industrial strategy, launched in February, rests on a build, partner, buy framework to build in Canada where we have the capacity to develop it, to partner with trusted allies where co-operation strengthens our capabilities and supply chains, and to buy abroad when it is the most effective way to meet a requirement. Over the next decade, the strategy aims to create up to 125,000 new jobs, increase defence exports by 50%, raise the share of defence acquisitions awarded to Canadian firms to 70% and grow annual defence revenues for small and medium-sized businesses by more than $5 billion. These are ambitious goals, and they are an opportunity. That opportunity must reach smaller companies in Nova Scotia, such as Theriault, not only the biggest firms in the biggest centres. Nova Scotia has extraordinary researchers and entrepreneurs, and we need to make it easier for innovations to move from prototype to production; give businesses the predictability to invest in equipment, facilities and workers; and help those businesses compete in allied markets around the world. A stronger defence industrial base is about more than jobs. It is about the capacity to act when our security demands it. In a crisis, countries compete for the same equipment, materials and components. A country that cannot maintain its equipment, replenish its supplies or raise production when demand surges is more vulnerable. Our crews at Greenwood that patrol the Atlantic and answer the search and rescue calls 24-7 depend on equipment that is maintained, supplied and sustained without interruption. That is why sovereign capability and secure supply chains matter. Every critical component we can produce here strengthens our resilience. Every critical system we can maintain here strengthens our independence. Every Canadian innovation we can develop and master strengthens our sovereignty. Building a stronger defence sector is not only about preparing for the challenges we face today. It is also about giving Canada the capacity, confidence and independence to meet the challenges of tomorrow. It is also about making sure that when those investments come, they are felt here at home in Nova Scotia and across Canada, from the hangars in Greenwood to the businesses across the Annapolis Valley, and of course to all of Nova Scotia. I am thankful for the opportunity to speak on behalf of the people of Acadie—Annapolis.

Sherry Romanado, Parliamentary Secretary to the Minister of National Defence

Liberal
“Our past ways of buying military equipment have not worked. I want the member to explain why this new corporation is needed to get Canadian-bought equipment to our troops faster.”
Official Hansard

Madam Speaker, my colleague’s speech was incredible. I know he has continuously supported the members of the Canadian Armed Forces. Atlantic Canada plays a really important role for the Department of National Defence. The member spoke a bit about some of the opportunities that this provides for companies in the defence sector in his riding. Could he elaborate on why doing the same thing we have been doing in the past has not been working, and why it is so important that we put in place a Crown corporation that would allow the men and women in uniform to get the equipment they need faster and, more appropriately, Canada-purchased equipment?

Chris d'Entremont, Acadie—Annapolis

Liberal
“We need to help Canadian businesses build more equipment for our military. Past shipbuilding projects show that investing in our own companies works. We should do the same thing with other local businesses to give our armed forces what they need.”
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Official Hansard

Madam Speaker, this is the crux of what we are trying to do. As I said in the beginning of my speech, the question we are really trying to answer is, how do we build capacity within Canada? Let us go back a number of years to when we talked about the navy’s requirement for new frigates. In order to build those, we had to create a whole new system. The Irving shipyard, or the “ships here now” process we went through, created a $1 billion system. I thank the previous government for doing that and thank this government for its continuation of that, but we need to build true capacity within our system. It is no different from working with A.F. Theriault, the airport in Yarmouth or other companies in South Shore—St. Margarets that can build the capacity and equipment that our armed forces so dearly need.

Martin Champoux, Drummond

Bloc Québécois
“We do not need a new agency to buy military equipment. The government has bought planes and ships for decades without one. This new agency lets the government take credit for successes while blaming the agency for mistakes. Public servants could do this work instead of paying a friend of the Prime Minister $700,000 a year.”
Official Hansard

Madam Speaker, at the time the Defence Investment Agency was created, another mechanism had been in place for decades. The need to procure military equipment is nothing new for Canada. It has always existed. The government has purchased aircraft and had ships built in the past. None of that is anything new. What forces the government to create a new agency now, one that is going to release the government from some of its responsibilities? We can all agree that the agency will bear the blame for any major errors or mistakes, whereas the government will take credit for any success. We already know how that works. What has happened in recent years that makes another agency better qualified than the Department of National Defence to handle this kind of procurement? That is the message being sent to public servants and the Department of National Defence. Furthermore, why does it take a friend of the Prime Minister, a former Goldman Sachs colleague earning a salary of $700,000 a year or more, to do work that public servants and the existing department could very well have done themselves?

Chris d'Entremont, Acadie—Annapolis

Liberal
“It takes too long for our military to buy equipment, from ships to socks. We need a better system that invests in Canadian businesses to make what our soldiers need here at home.”
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Official Hansard

Madam Speaker, I am asking myself the same question as my Bloc colleague: Is everything working the way it should right now? It takes years and years to acquire new equipment, whether ships, aircraft or even something as basic as the socks soldiers put on before lacing up their boots. We need a new approach that takes into account the potential within supply chains across Canada as well as the opportunities available in Quebec and the Atlantic provinces so we can manufacture more equipment here at home. The current system is not necessarily the best one. We must invest in a procurement process that meets the needs of the Canadian military.

Tim Watchorn, Les Pays-d'en-Haut

Liberal
“Our current defence agency has done a good job buying vehicles, submarines, and rifles quickly. How will creating a new Crown corporation get our military the gear it needs any faster?”
Official Hansard

Madam Speaker, I believe that the Defence Investment Agency has truly demonstrated over the past year that a dedicated organization is needed to manage military procurement. I am thinking in particular of the 190 armoured vehicles we purchased over the past year, the accelerated submarine procurement process and the assault rifles purchased this year. Could my colleague explain how this new Crown corporation would be better positioned than the Defence Investment Agency, operating under the Department of Public Services and Procurement, to deliver the equipment our military personnel need more quickly?

Chris d'Entremont, Acadie—Annapolis

Liberal
“Buying military equipment is too complicated because too many departments are involved. We need to make the process simpler. Canada needed new submarines for decades, and the Defence Investment Agency helped us buy them quickly.”
Official Hansard

Madam Speaker, we need to look at the complexity of the entire system we have right now. We are working with three or four different departments. We need to find a way to streamline the system. The purchasing of submarines is the largest military procurement project in Canadian history, and it was done fairly quickly. Although we do not have the full picture yet, this purchase will allow Canada to acquire the best underwater capability possible. It is something we need. Canada has been needing new submarines for 25 years, even 40 years. Thanks to the Defence Investment Agency, we finally have a system that makes their procurement possible.

Jessica Fancy, South Shore—St. Margarets

Liberal
“I want the House to pass this bill. It speeds up how Canada buys military equipment and cuts down on delays. This helps keep Canada safe, gives our military what it needs faster, and creates good jobs in communities like mine.”
  • A repeated line

    “Rearm and reinvest in the Canadian Armed Forces.”

    Said 5 times by 5 members since June 1.

    Every time it was said
Official Hansard

Madam Speaker, it is very fitting that today, October 24, on the launch of the Royal Canadian Legion’s national poppy campaign, I rise here to support veterans and to speak to Bill C-40, the strengthening Canada’s defence sector act. Today we are here to discuss some important legislation that would accelerate defence procurement, strengthen Canadian identity and reinforce Canadian sovereignty. This bill represents a major step in modernizing how Canada would equip its military. Above all, this legislation is about building a stronger, more capable Canada, a Canada that continues to defend itself across emerging threats, protecting its interests and keeping Canadians safe. This bill comes at a very defining moment in our country. Our government is making a generational investment to help rebuild, rearm and reinvest in the Canadian Armed Forces. However, our investments are only part of that equation, as we must also ensure that they translate into effective military capabilities delivered to the Canadian Armed Forces quickly and efficiently and that they deliver real economic benefits for Canadians from coast to coast to coast. To meet these important commitments, we established the Defence Investment Agency, or the DIA, as we are calling it here today, as a special operating agency within Public Services and Procurement Canada back in October 2025. In just one year, the DIA has helped accelerate and advance a number of major defence projects. The legislation we are proposing would build on this momentum. It would give the DIA the additional tools and authorities it needs to keep doing this work even more quickly and efficiently. It is important to know that we are also not starting from zero. With that in mind, I would like to take a couple of minutes to highlight some of the important projects this DIA has been able to advance over the past year to strengthen our armed forces, as well as discuss how Bill C-40 would ensure we keep delivering at the pace that our military needs and that Canadians expect. I would be remiss if I did not speak about what some of these investments with the DIA mean for my home riding of South Shore—St. Margarets and for rural communities across Atlantic Canada. When we talk about procurement, shipbuilding and marine capability, we are talking about more than just ships. We are talking about good-paying jobs. We are talking about advanced manufacturing. We are talking about skilled trades. We are also talking about the future of our rural coastal communities, which have been building and servicing vessels for generations. In South Shore—St. Margarets, we understand the marine sector because we live it. We are Bluenosers, by the way. Many of us were raised on the water, many of us live on the water and many of us have spent generations building, maintaining and innovating in Canada’s marine economy. We know how to build marine. What is remarkable is that Atlantic Canadians only represent about 6% of Canada’s total population, yet our region is home to over 20% of Canada’s full defence infrastructure and capabilities. That expertise did not appear overnight. It was built by generations of tradespeople, engineers, fabricators, welders, machinists, shipbuilders and marine workers, who continue to contribute to Canada’s security and prosperity every single day. That is why defence procurement is so important for ridings like mine. When our government announced the historic $11-billion program for new icebreakers at Davie, the largest shipbuilding contract in Quebec’s history, it was more than just an investment in ships. It was an investment in Canadian workers, an investment in Canadian capacity and an investment in the more than 1,500 Canadian suppliers that support our shipbuilding sector from coast to coast to coast. I am proud to say that many of those suppliers are located in rural Nova Scotia. When major contracts are awarded to companies like Davie or Irving, the benefits do not stop at the gates of those shipyards. Those benefits ripple outward through an entire network of Canadian suppliers and manufacturers. In my riding, one of the best examples is Hawboldt Industries in Chester. Hawboldt recently secured almost $40 million in contracts with Davie for its cranes, winches and specialized marine equipment. That contract represents more than one company’s success. It supports jobs through Atlantic Canada’s manufacturing supply chain. It creates work for fabricators, engineers, steel suppliers, machine shops, transportation companies and tradespeople. I could go on. It strengthens the industrial capacity that Canada needs not only to build vessels, but to sustain and service them for decades to come. My riding is also home to companies like ABCO industries, a recognized leader in advanced manufacturing and metal fabrication. We are home to the Lunenburg foundry, Lunenburg Shipyard Alliance and East River Shipyard, all of which are contributing to Canada’s marine industrial base through vessel reconstruction, fabrication, repairs, refits and maintenance. These companies might not make the big national headlines, but they are absolutely essential to Canada’s defence readiness. While our shipyards may build the next generation of vessels, companies in my riding along the south shore help maintain and service the fleets that Canada relies on every day. That work supports highly skilled jobs. It supports critical industrial expertise, and it ensures that Canada retains the ability to maintain and repair key assets here at home. The DIA’s goal is not simply to acquire equipment faster. It is about fundamentally transforming how we approach defence procurement. Historically, major acquisitions have involved several federal departments, each with its own level of different important responsibilities. National Defence identified military requirements, Public Services and Procurement managed procurement and contracts, and Innovation, Science and Economic Development Canada oversaw industrial and economic considerations. While this arrangement brings valuable expertise across government, it creates duplication. It delays. It creates uncertainty as projects are moved along these different organizations. The DIA is helping to change that, and we are seeing the results of that in my riding of South Shore—St. Margarets, in little rural Nova Scotia. By bringing together military, technical, commercial and procurement specialists from across government, the agency is building integrated teams that can work collaboratively from the earliest stages of a project. Instead of relying on the same sequence of hand-offs between organizations, the right experts can work together earlier to assess options, resolve problems and keep these projects moving along. The DIA is also introducing a more flexible approach to procurement that includes engaging with industry earlier, streamlining decision-making capabilities and considering existing commercial and military solutions where appropriate. This work is closely connected to Canada’s defence industrial strategy, the DIS, which is helping to ensure that our defence investments also build the industrial capacity, skilled workforce and secure supply chains needed to produce and sustain critical capabilities here at home. At the heart of this approach is to build, partner and buy, baby, buy. Building in Canada where we have that capacity, or where we are developing capacity, is strategically important. We are partnering with our trusted allies, with collaboration, and that is providing access to better capabilities, technologies and production opportunities. The “buy” part means buying existing capabilities from trusted partners when building or partnering is not the right solution. This approach is helping us consider military requirements and industrial opportunities together from the onset. It is a more streamlined approach. It helps Canadian businesses, including small and medium-sized enterprises, compete for defence contracts to develop new technologies and grow their operations. It also strengthens our ability to maintain and sustain essential military equipment in Canada.

Sherry Romanado, Parliamentary Secretary to the Minister of National Defence

Liberal
“Nova Scotia has a large military community and defence industry. Our armed forces and their families need good support and the right equipment on time. I want the member to explain how we can make sure our soldiers get the gear they need when they need it, so they can focus on their jobs.”
Official Hansard

Madam Speaker, Nova Scotia has over 14,000 members of the Canadian Armed Forces and defence families. It is the number three province in terms of the population of our defence community. Nova Scotia has been punching above its weight in terms of the defence industry. The hon. member talked a lot about what we are going to be procuring, but she also talked a little about how it is important to have not only equipment but also supports for the members of the Canadian Armed Forces and their families. Could she elaborate a little about making sure that we get them the equipment they need when they need it, to make sure that they can focus on the task at hand and not be worrying about whether they have the tools necessary?

Jessica Fancy, South Shore—St. Margarets

Liberal

Linked statement

“We need to support Canadian Armed Forces members. That means giving them the tools, housing, base hospitals, and infrastructure they need. We have neglected our military buildings for too long. Our buying strategy helps fix this while supporting our troops and small businesses.”
Official Hansard

Madam Speaker, of course, our members of CAF are some of the hardest-working people that we have here in Canada, and we need to support them. How do we support them? It is by giving them the tools they need, by giving them the housing and infrastructure they need and by giving them the hospitals they need within base. We have let our infrastructure go for a little too long, and things like our DIS and our procurement strategy help streamline that process so that we are better able to help support our CAF members, as well as our SMEs.

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