Dear Minister Champagne, Canada needs all the help we can get

TORONTO—We clearly need new and better jobs. This means we need Canadian companies with growth potential, their own technology and new export possibilities. Innovation-led growth is our most important priority. This is how we will build a more optimistic confidence in our future, a need that is even greater with a threatening Trump administration. We just have to seize opportunities. One of the most immediate comes from Canada’s promise to invest tens of billions of dollars in much higher defence spending. We can make defence spending a key part of our industrial strategy—creating new chances to scale up and sustain Canadian companies in new technologies that may often have dual-use capabilities, meaning that they can serve both defence and civilian markets. But will we seize the opportunity? Or will this simply be another missed opportunity? A recent report from the auditor general of Canada is not encouraging. The report reviewed Industry Canada’s implementation of Canada’s Industrial and Technological Benefits Policy—the policy in place since 2014 to ensure that major defence procurement contracts deliver economic benefits—and it was not impressed. As the report found, Industry Canada was “unable to demonstrate that the policy met its objectives, which included supporting the long-term viability and growth of the defence industry." The response from Industry Minister François-Philippe Champagne earlier this month sounded promising. The industrial benefits policy, Champagne said, reflected “the importance of fostering homegrown innovation and developing our industrial capacity, given industry’s critical role in supporting Canada’s national security. Overdependence on international suppliers creates significant risk when there are competing global demands.” He pledged to do better and to improve results. But the problem is successive Canadian governments have a reputation for making big promises, then failing to deliver. So we need strong, visionary leadership if we are to create a new, Canadian-based defence industrial base, one which gives priority to supporting ambitious Canadian entrepreneurs in developing and commercializing new technologies. Champagne’s pledge will not mean much unless there is leadership with—a champion—who has both the vision on what needs to be done and the perseverance to make sure we get the benefits. Under Canada’s industrial benefits policy, for all defence contracts of $100-million-plus, as well as selected contracts between $20-million and $100-million, the winning company must spend the same amount in Canada. Between 2014 and 2023, some 99 contracts with a value of $39-billion were awarded, with a potential industrial benefits obligation of more than $36-billion to be spent in Canada. As part of the bidding process for eligible defence contracts, competing bidders are required to provide an economic project to show how the bidding company planned to strengthen Canada’s economy through research and development, job creation and economic growth. Companies had to demonstrate that their proposals would contribute to one or more objectives. These included support for the long-term growth and sustainability of Canada’s defence industry; support for the growth of contractors and suppliers in Canada, including small and midsize companies; boosting innovation through research and development in Canada; increasing the export potential of Canadian-based firms; and leveraging opportunities in skills development and creating new employment opportunities in Caada. The challenge for Industry Caada was to assess these proposed benefits, since this contributed to the final decision on which companies would be awarded contracts. Its task was to assess which woud contribute best to the strategic interests of Canada. Its other task was to monitor implementation. These key industrial capabilities considered strategic for Canada, the auditor’s report said, were areas of emerging technology. They included advanced materials, artificial intelligence, clean technology, cyber resilience, remotely piloted systems and autonomous technologies, and space systems. The leading applications were in aerospace systems and technologies, armour, defence systems integration, electro-optical/infrared systems, ground vehicle solutions, in-service support, marine ship-borne mission and platform systems, munitions, shipbuilding, design and engineering services, sonar and acoustic systems, and training and simulation. Canada’s proposed investments in the Arctic, its growing activities in space, and its commitment to cybersecurity are all areas where these emerging technologies will be critical, but also where Canada has much potential through the development of new technologies, their commercialization and scaling up into viable businesses with scale and scope for the future. But much will depend on public policy. It is one thing for government to publish lists of critical technologies. But if the capacity is lacking to detect actual opportunities and needs, to work closely with the ambitious entrepreneurs in science and technology, and to be perpetually engaged with both defence and dual-use needs and with the entrepreneurial community, Canada will fall short of its potential. This audit is important, the report said, because the opportunity from the industrial benefits policy “can result in billions of dollars of business activities." This is even truer as defence spending escalates over the next six to eight years so that we progress to our stated NATO pledge of defence spending equivalent to two per cent of GDP, with 20 per cent to be spent on technology and equipment. It's especially important to have a much more proactive public entity to push opportunity and accountability on industrial benefits, with special focus on working with entrepreneurial Canada-controlled companies. It would be a place for dialogue, public-private interaction, technology forecasting, and identifying the needs of Canadian entrepreneurs. At the same time, a Canadian version of the successful U.S. Small Business Innovation Research Program (SBIR) could assist ambitious entrepreneurs new technologies based on meeting identified defence and other technology needs by providing upfront cash to test out new ideas. Our economy needs all of the help it can get if we are to regain our confidence and belief in a better future. Building a new defence industrial base, with a core of advanced Canadian companies with global prospects for their technologies, is an opportunity we cannot afford to miss. So we must be sure we don’t. David Crane can be reached at crane@interlog.com. The Hill Times

Dear Minister Champagne, Canada needs all the help we can get

Building a new defence industrial base, with a core of advanced Canadian companies with global prospects for their technologies, is an opportunity we cannot afford to miss. So we must be sure we don’t.

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Dear Minister Champagne, Canada needs all the help we can get

Building a new defence industrial base, with a core of advanced Canadian companies with global prospects for their technologies, is an opportunity we cannot afford to miss. So we must be sure we don’t.

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