THE STANDING SENATE COMMITTEE ON NATIONAL FINANCE
EVIDENCE
OTTAWA, Tuesday, June 9, 2026
The Standing Senate Committee on National Finance met with videoconference this day at 9 a.m. [ET] to study the Main Estimates for the fiscal year ending March 31, 2027, with the exception of Library of Parliament Vote 1, and to study Supplementary Estimates (A) for the fiscal year ending March 31, 2027; and to study the Main Estimates for the fiscal year ending March 31, 2027, with the exception of the Library of Parliament Vote 1; and in camera to examine the subject matter of Bill C-30, An Act to implement certain provisions of the spring economic update tabled in Parliament on April 28, 2026.
Senator Claude Carignan (Chair) in the chair.
[Translation]
The Chair: Good morning, senators.
I wish to welcome all senators, as well as the viewers watching us on sencanada.ca.
My name is Claude Carignan, senator from Quebec and chair of the Standing Senate Committee on National Finance.
I would now like to ask my colleagues to introduce themselves.
Senator Forest: Good morning and welcome. Éric Forest from the Gulf division. We met earlier this morning, but all the same, welcome.
[English]
Senator Pupatello: Good morning. Sandra Pupatello, an Ontario senator.
[Translation]
Senator Gignac: Good morning. Clément Gignac from Quebec.
Senator Galvez: Rosa Galvez from Quebec.
Senator Oudar: Manuelle Oudar, also from Quebec.
Senator Cardozo: Good morning. Andrew Cardozo from Ontario.
Senator Dalphond: Good morning. Pierre Dalphond from De Lorimier division, Quebec.
[English]
Senator Ross: Good morning. Krista Ross, New Brunswick.
Senator MacAdam: Jane MacAdam, Prince Edward Island.
[Translation]
Senator Hébert: Good morning and welcome. Martine Hébert from Quebec.
The Chair: Honourable senators, today we are continuing our study of the Main Estimates for the fiscal year ending March 31, 2027 and starting our study of Supplementary Estimates (A) for the fiscal year ending March 31, 2027.
For our first panel today, we are pleased to welcome, from the Department of National Defence and the Canadian Armed Forces, Mr. Jonathan Moor, Chief Financial Officer; Lieutenant-General Stephen R. Kelsey, Chief of the Defence Staff; and Ms. Heather Sheehy, Assistant Deputy Minister, Materiel. We also have Ms. Alia Tayyeb, Acting Chief; and Ms. Julie Chassé, Deputy Chief of Corporate Services and Chief Financial Officer, from Communications Security Establishment.
Welcome and thank you for accepting our invitation to appear today.
We are now going to start with a short introduction from Mr. Moor, and he will be followed by Ms. Tayyeb. Please make a brief introduction because we only have 55 minutes together.
[English]
Jonathan Moor, Chief Financial Officer, Department of National Defence and the Canadian Armed Forces: Good morning, Mr. Chair and members of the committee. Thank you for inviting me to present the 2026-27 Main Estimates and the Supplementary Estimates (A) on behalf of the Department of National Defence, including the Canadian Armed Forces and the Canadian Coast Guard.
Today, I am joined by Vice Chief of the Defence Staff, Lieutenant-General Stephen Kelsey; Assistant Deputy Minister of Materiel Heather Sheehy; Assistant Deputy Minister of Infrastructure and Environment Peter Hammerschmidt; and Deputy Commissioner of Shipbuilding and Materiel of the Canadian Coast Guard Robert Wight.
In 2025-26, Canada not only met but exceeded NATO’s 2% of GDP defence spending target, with total expenditures of $65.9 billion or 2.03%. This marked a significant milestone in Canada’s approach to national defence and collective security, and Canada’s expenditures were $21.6 billion or 49% higher than in 2024-25. However, 2% is not the end point, and it marks the beginning of a sustained effort to rebuild, rearm and reinvest in the Canadian Armed Forces and Canada’s defence capabilities.
The total funding being sought through the 2026-27 Main Estimates for National Defence is $50.7 billion, which signifies a departmental increase of $15 billion or 42% compared to the Main Estimates in 2025-26. This significant increase reflects $81.8 billion of additional funding, announced in Budget 2025, over the next five years. It also reinforces Canada’s commitment to reach 5% of GDP spending on defence and security by 2035.
Operating funding, or vote 1, represents over 52% of these Main Estimates, with a $5-billion increase covering $1.4 billion for compensation resulting from last year’s increase in military pay and collective agreement amendments; $1 billion extra for infrastructure maintenance, repair and sustainment; and $0.9 billion for the integration of the Canadian Coast Guard into the Department of National Defence, or DND.
DND’s largest increase is in capital funding, which represents over 35% of these Main Estimates, with an additional $7.1 billion including $3 billion for the integration of the Canadian Coast Guard; $2.6 billion for capital equipment projects such as the Arctic Over-the-Horizon Radar and the River-class destroyers; $750 million for infrastructure maintenance, repair and sustainment; and $510 million for major capital infrastructure.
Finally, the department is also seeking an increase of $2.3 billion in grants and contributions funding, which represents 6.5% of these Main Estimates. This is largely related to increased funding for Ukraine under the Military Training and Cooperation Program and funding for domestic ammunition production under the Canadian Defence Industry Resilience Program.
In addition to the Main Estimates, the department is requesting approximately $1.2 billion through the Supplementary Estimates (A), which will increase budgetary authorities to $51.9 billion. These additional authorities are focused on military capabilities and operations, including $840 million in funding for Operation REASSURANCE, which supports NATO’s assurance and deterrence measures in Central and Eastern Europe; $180 million to acquire an additional 190 armoured combat support vehicles; and $60 million in funding for Operation AMARNA, which is Canada’s military contribution to help support stability in the Middle East.
The funding requested through the Main Estimates and supplementary estimates is critical to protecting Canadians and supporting our allies and partners in mitigating current and emerging threats. It will also enable Canada to uphold its commitment to meeting NATO’s Defence Investment Pledge and build on our achievements in exceeding the 2% of GDP target last year.
In conclusion, Mr. Chair, the Department of National Defence, the Canadian Armed Forces and the Canadian Coast Guard continue to deliver on their core mandates while ensuring strong financial accountability and effective resource management.
My colleagues and I would be very pleased to answer any questions you may have. Thank you.
[Translation]
The Chair: Thank you very much, Mr. Moor.
You have the floor, Ms. Tayyeb.
[English]
Alia Tayyeb, Acting Chief, Communications Security Establishment Canada: Good morning, Mr. Chair and honourable members of the committee. Thank you for the opportunity to appear today to discuss the 2026-27 Main Estimates for the Communications Security Establishment Canada, or CSE.
My name is Alia Tayyeb. I am CSE’s Deputy Chief of Signals Intelligence, and I am appearing today as acting chief. I am joined by Julie Chassé, Deputy Chief of Corporate Services and Chief Financial Officer.
While much has evolved since CSE’s last appearance before this committee, our role within Canada’s security and intelligence community remains essential.
[Translation]
The Communications Security Establishment, or CSE, delivers foreign signals intelligence, protects Canada’s most sensitive information and systems, and conducts cyber operations in accordance with the law to defend Canada and advance national interests.
Through its foreign intelligence mandate, CSE also provides decision-makers with a strategic advantage — delivering timely insights on global developments, emerging threats and opportunities that support informed national security and policy decisions.
[English]
Through the Canadian Centre for Cyber Security, or Cyber Centre, CSE also serves as Canada’s national authority for cybersecurity. The Cyber Centre provides trusted advice, guidance and services to help protect government systems, critical infrastructure, businesses and Canadians from cyber-threats.
We work closely with partners across government, with industry and with international allies to anticipate, prepare for, respond to and recover from cyber incidents.
CSE’s unique information advantage — which draws on foreign intelligence, cyberdefence operations and strong partnerships — provides a comprehensive view of the evolving cyber-threat landscape.
Through public reporting, including our National Cyber Threat Assessment, or NCTA, we share practical, actionable insights to help Canadians understand and mitigate cyber risks.
Our latest assessment confirms that Canada faces a complex and rapidly evolving threat environment. State and non-state actors are targeting Canadian institutions and critical infrastructure, increasingly leveraging emerging technologies, including artificial intelligence, to increase the scale and impact of their activities.
[Translation]
State adversaries are becoming more assertive, with cyber activities that extend beyond espionage to include disruptive and potentially destructive operations.
At the same time, cyber crime remains the most pervasive threat to Canadians — enabled by a global ecosystem that lowers barriers to entry and expands the scale of attacks.
[English]
These threats have real-world consequences. They can disrupt public services, affect economic security and impact the systems that Canadians rely on every day. That is why sustained investment in cyberdefence and intelligence capabilities is essential.
For 2026-27, CSE’s Main Estimates total just over $2 billion, representing a net increase of $786.6 million over the previous year’s Main Estimates.
Additional funds requested by CSE in the Supplementary Estimates (A) total just under $6.8 million.
These investments contribute to Canada’s NATO spending commitments and reflect the growing importance of cyber and intelligence capabilities.
This funding will enable CSE to modernize core capabilities, sustain critical operations, including support to military operations, and respond with greater agility to an evolving threat environment.
These investments will allow CSE to expand its capabilities for timely access to mission-critical information, leveraging emerging capabilities, such as artificial intelligence, to support decision makers at the most classified level.
Beyond immediate operational needs, these investments support longer-term transformation: strengthening Canada’s cyber ecosystem, anchoring key domestic supply chains and reinforcing strategic sectors such as advanced manufacturing, aerospace and artificial intelligence.
Overall, these investments ensure that CSE remains resilient, continues to deliver trusted services and is well positioned to anticipate and counter emerging threats to protect Canada’s national security interests in the digital age.
[Translation]
Mr. Chair, CSE and its Cyber Centre remain steadfast in our commitment to protecting Canada’s digital ecosystem and supporting national security.
Working with domestic and international partners, we will continue to safeguard Government of Canada systems, strengthen the resilience of critical infrastructure and ensure Canadians can rely on secure and trusted digital services.
[English]
We will continue advancing our capabilities and responsibly leverage emerging technologies to stay ahead of evolving threats and deliver on our mandate to keep Canada safe and secure.
Thank you once again for the opportunity to appear before the committee today. We would be pleased to answer your questions.
[Translation]
The Chair: Thank you very much.
Senator Forest: One of the key elements of the new Defence Industrial Strategy is to increase the share of acquisitions of Canadian products to 70% in the next 10 years. A look at what has happened on the marine side shows that currently, 75% of our procurement is from the United States. The recent announcement regarding Bombardier and ELIE SAAB is a significant step in that direction.
Could you tell us about the concrete actions that have been taken to reduce our dependence and to ensure our industrial structure can provide these procurements, which will increase from approximately 25% to 70%, which is a big challenge?
Mr. Moor: Thank you very much.
For greater clarity, I would like to answer in English, if I may.
[English]
In these Main Estimates, as you said, we can see an additional $700-million investment in Bombardier with the acquisition of their aircraft for multi-flight services. I will pass this to my assistant deputy minister, who will explain a bit more around the strategy.
Heather Sheehy, Assistant Deputy Minister (Materiel), Department of National Defence and the Canadian Armed Forces: Good morning and thank you. It is a formidable goal, but one that is very much part of the approach we are taking. Let me mention three things in particular. First, you’ll be familiar with the fact that the government has introduced the Buy Canadian Policy, which explicitly puts in place a number of mechanisms that encourage the government and actually incentivize the government to purchase from Canadian producers. Second, we are investing in Canadian industry. I’ll give an example there. Through grants and contributions, we have invested $1.4 billion in the ammunition infrastructure in Canada.
This is actually to build the infrastructure, which will allow us to purchase more ammunition from a Canadian source into the future. So it’s building that defence industry.
The third thing is we’re working very closely with the Defence Investment Agency. Part of the approach that the government is taking is actually very much negotiating the economic benefits associated with procurements at the front end of those deals. You’ll have noted that the Prime Minister indicated that we will be entering into negotiations with respect to the GlobalEye, and those negotiations will include what economic benefits can be brought to Canada as part of future procurements.
That very deliberate investment and economic negotiations at the front end are part of the strategy and will move us toward having greater Canadian content in the future.
[Translation]
Senator Forest: I am thinking about the excellent news regarding Bombardier and ELIE SAAB reconnaissance aircraft. The government procured a different type of aircraft through a no-bid contract. Has that contract been maintained? What is happening with the aircraft under the no-bid contract awarded to Boeing?
[English]
Mr. Moor: This is a question around the GlobalEye, which is a plane being built by Sweden and by Saab, and it is on the base of the Bombardier aircraft but also using the training and simulation systems of CAE, both of which are very significant Canadian content.
[Translation]
Senator Forest: A no-bid contract for another type of reconnaissance aircraft was awarded last year. What is happening with that order? Has it been filled? Has that contract been terminated?
[English]
Mr. Moor: My understanding is for the alternative aircraft, which would be the Boeing E-7, no contract had been secured for that. In fact, no work had been done on defining exactly what was required at that stage. I’m not sure if Ms. Sheehy could add more to that?
Ms. Sheehy: I would say we haven’t entered into a contract at this point in time with respect to the GlobalEye. What the Prime Minister announced is we will be entering into negotiations, which will include, as I mentioned, the identification of economic benefits associated with this.
Senator Cardozo: Thank you for being here, witnesses. I would like to continue the discussion you just started with Senator Forest, and from an industrial perspective, I see this large spending that we have been doing in the last year and will be doing in the next few years as being a major opportunity. I think it’s important that we build the Canadian defence industry here and that we make and keep IP in Canada and create jobs, especially youth jobs. So, it’s industry, IP, jobs. Can you say a little bit more about that? You talked a bit about the industry. Assistant deputy minister, the question I would have is in terms of increasing Canadian content: Do you have a target of how much would be Canadian content? I get that we have to buy some of it abroad.
Lastly, given that we had to get that spending done in the previous fiscal year, and now it’s done, can we take a breath and think more deeply about how we get a more Canadian approach from here on?
Mr. Moor: Maybe I can start to answer the question and then hand it over to Ms. Sheehy. The two biggest capital projects we have in these Main Estimates are the River-class destroyers, which is $2.2 billion and being manufactured by the Irving shipyard in Halifax, and the second biggest are the joint support ships, which is $1 billion and being manufactured in Vancouver by Seaspan Shipyards. When you look at our capital expenditures, a very large proportion of the funding is being directed toward Canadian industry, which leads to jobs. As Ms. Sheehy said earlier, the grant we allocated to General Dynamics Ordnance and Tactical Systems Canada and also to IMT Precision are all about Canadian jobs because the $1.4‑billion grant is to build a manufacturing and ammunition facility in Canada. I’ll hand it over to Ms. Sheehy, who will talk a bit more about the way forward on that.
Senator Cardozo: I had a chance to visit the Irving shipyards, and one of the things that I found impressive about them is they had been working on building the workforce for the past decade, and that is an example that other parts of the defence industry need to take, but please go ahead.
Ms. Sheehy: The National Shipbuilding Strategy is an excellent example of where the government invested in Canadian industry. That actually goes back over a decade now. It has built capacity, from which we are now seeing the dividends here in Canada. All six of our Arctic and offshore patrol ships are now in the water, and we are working on ships seven and eight for the Canadian Coast Guard. That is coming out, and we’re seeing what the industry calls the “drumbeat.” We are seeing an increasing drumbeat, ship over ship, from our Canadian shipyards.
That is the result of a very deliberate approach from the government in terms of investing in Canadian industry. Frankly, it takes time to get that kind of capacity available for us, but we’re seeing that now.
We are now doing that in other industries; I mentioned ammunition in particular.
I would also just say that I was at CANSEC the week prior — and maybe some of you were there as well — which was the biggest Canadian defence show we have had. I think there were over 20,000 participants. At that show, I felt the momentum of Canadian industry and the desire to be part of the defence industrial scene here in Canada.
The excitement and the interest are there, and we now need to turn those into the goals that Canada’s Defence Industrial Strategy states, which are to increase that share of acquisitions to 70% and to increase Canadian defence industry revenues by more than 240%. We are doing that on a contract-by-contract basis, deliberately negotiating those economic benefits.
Senator Ross: Good morning, and thank you for being here today.
In June 2025, I participated in the Women, Peace and Security Forum in Kosovo. I had a chance to visit the Kosovo Force, or KFOR, which is the NATO-led peacekeeping mission that has been in place since 1999. Canada was there until 2000 and then left and came back in 2008.
Given the need and desire to meet NATO targets, and given that KFOR remains a critical shield guaranteeing freedom of movement and security for Kosovo and the region, it really seemed to be a small but mighty installation. There were only five people, but the leadership and the experience that were gained there over the years seem to be tremendous.
I was surprised to hear that our participation in KFOR is winding down. I wonder if that is a financial decision, but given the talk about meeting NATO numbers and given that it’s only five Canadian Armed Forces members, is it due to additional resources needed for Operation REASSURANCE in Latvia, or is it for northern and Arctic sovereignty projects? What would be the rationale behind a decision like this? Thank you.
Lieutenant-General Stephen R. Kelsey, Vice Chief of the Defence Staff, Department of National Defence and the Canadian Armed Forces: Thank you for visiting those soldiers. There are five, and they are in the Joint Logistics Support Group as part of the mission. They don’t get a lot of attention, so it is important when they see opportunities — such as the Women, Peace and Security Forum — that Canadians get recognized.
The opportunity of many of our small missions, whether in Kosovo or the United Nations missions in Africa where we have one or two people, is that we see the flag and get to represent our ideals. Each individual mission has the same level of support in our joint command. As we make choices about where we want to have a strong showing, it has to come at the expense of smaller missions.
Difficult choices are made, and that’s the rationale. It is not about money.
As it happens, the Supreme Allied Commander Europe has already instigated change with the Kosovo mission where greater responsibility will be handed off to either the European Union military forces or a baseline where the nations of Kosovo, Serbia and the surrounding Western Balkan nations take on responsibility.
The mission is contracting, and we’re making difficult but smart choices about where we put our resources. Even five individuals would have a significant team here in Ottawa looking after them. It is the same for Africa and others. We’re trying to consolidate and have a greater impact in other areas.
I’m certain they appreciated that you had a chance to see them and see the great work they do.
Senator Ross: We have kept in touch since we returned. We have kept in touch with their careers and the positive trajectory the mission has had on the careers of those who went there.
My understanding is that Canada played a very strong role in leadership in terms of the expertise they brought that, perhaps, other countries did not have and do not have. It just surprised me, given our contributions to NATO and our need to increase our contributions to NATO, that this would be an area we would step away from.
I hear what you’re saying about the Supreme Allied Commander Europe’s decision to shrink, but my understanding is that Canada House is a pretty hot commodity now. A number of countries are interested in taking over our spot there, and other forces are not decreasing at this time. So it’s surprising that Canada is leaving.
LGen. Kelsey: Canada has accepted NATO capability targets, and that includes logistics growth for our Forward Land Forces in Latvia.
It is unfortunate. I think you have heard other testimony here that our core capability — the mission — is people. Canadians are so well trained that they are valued wherever they go.
As it happens, they are needed in Latvia for the same roles that you saw: augmenting the logistics support to the brigade that is in Latvia.
It is a difficult choice, and I know from talking to them that individuals who go on small missions and represent Canada outweigh their contributions, just because of the training they have received, the outlook they have and their values.
That all won’t be lost; we’re just refocusing them to the commitments we made to Latvia.
Senator Ross: Thank you.
[Translation]
Senator Hébert: I would like to get back to the Buy Canadian policy. What concrete actions have you put in motion to encourage Canadian procurement?
I had some conversations with a few businesses. They raised the issue that in the call for tender process, the description of products does not necessarily take into consideration equipment made in Canada because in the past, these characteristics were not taken into account.
I would like to know the concrete action you have taken to address this selection bias — if I may use those terms — in your procurement processes to meet the Buy Canadian policy targets.
[English]
Mr. Moor: I will start with Canada’s Defence Industrial Strategy and then hand things over to Ms. Sheehy on the calls for tenders.
Last year, we received funding of just over a billion dollars a year for Canada’s Defence Industrial Strategy to promote Canadian businesses and invest in Canada. Also last year, we actually received $2.2 billion to set up the defence fund in the Business Development Bank of Canada. The Business Development Bank of Canada is aimed at promoting small- and medium-sized enterprises.
Over the last year, we have invested very heavily in creating industrial mobilization for Canadian businesses.
Now I will hand it over to Ms. Sheehy to answer your question about procurement.
Ms. Sheehy: One of the main things that we’re going to be doing and that we are starting to do is working earlier with industry in terms of understanding both the requirements of the Canadian Armed Forces and understanding the perspective of industry in terms of what they can bring to procurement. Concretely, I will mention one thing.
We have what are called CAF Outlooks. It is essentially a conference whereby the Canadian Armed Forces outlines what they will be purchasing over the next year or two, and it has a dialogue with industry. This year, it was the biggest one we have ever had, and we’re starting to have more transparency in terms of what we need to buy.
Regarding the new defence forum that has been announced, which we’ll be setting up with industry, the purpose of that is also to have an earlier dialogue with industry in terms of understanding what they can bring to the table.
I will just mention one other thing. In the new Buy Canadian Policy, for strategic federal procurements over $25 million, we will now be applying evaluation criteria favouring Canadian suppliers. That is significant. That amount is going to be shifting down to procurements over $5 million in the middle of this month, so there will actually be specific procurement advantages for Canadian suppliers.
[Translation]
Senator Hébert: I understand, and I think you are right, Ms. Sheehy. It is very important to work upstream to ensure this strategy works for businesses.
Earlier, you told us about munitions, and we spoke about aircraft, and so forth. There is also an entire ecosystem, including Quebec-based businesses that manufacture military equipment — military boots come to mind — that are well regarded and sold around the world, but the Canadian Army does not necessarily purchase the equipment.
Does the strategy apply to the entire supply chain, or does it only cover heavy equipment, such as aircraft and munitions? I think it’s important to have an end-to-end supply chain.
[English]
Ms. Sheehy: I am happy to report it applies to all. In materiel, we look at — I would say — bullets to subs. We are working on procurement across the entire Canadian Armed Forces requirements, which include some very high-tech elements and some less high-tech elements. No, the approach we are taking is across the entirety of materiel.
I will say — and you have probably taken a look at it — we do have 10 areas of specific sovereign capabilities in Canada’s Defence Industrial Strategy, which are specific areas we will be focusing on particularly for developing that sovereign capability. That does include things such as digital systems and ammunition. There are 10 different areas there and, importantly, there’s in-service support. In-service support for our capital investments is where a lot of our expenditure actually is. Yes, we purchase and that’s expensive, but then we service, often for decades afterwards. So having that as a domestic capability is a really important investment in Canadian industry.
Senator Galvez: Thank you for being here. The Department of National Defence is seeking a substantial increase in its budget, reaching approximately $50 billion. I had the privilege of visiting a military base in Alaska with parliamentarians for the Arctic and for NATO. We heard a lot of climate change-disturbing activities in the Arctic, damage to military infrastructure, the Arctic security and sovereignty cause, new shipping routes and increased activity by foreign states. So that impacts Arctic surveillance systems, aircraft, maritime patrols, et cetera.
To what extent are climate-related risks being considered in these new budgets that you are requesting?
Mr. Moor: Thank you so much for the question. We are investing heavily in the Arctic and in our North. Every time we do invest, we make sure that the infrastructure we construct is climate resilient. We also have to be aware that the world is changing because of climate change. For example, in these estimates, we are spending $1.1 billion for the Arctic Over-the-Horizon Radar, which is a new project to improve detection for northern areas and the Arctic.
Maybe I can hand it over to the Vice Chief of the Defence Staff as well because he might tell you a bit more around what we are doing in the Arctic.
LGen. Kelsey: Thank you for the question. I would offer that it is absolutely true that the climate and climate change are impacting our direct investment as well as all of our indirect investment. The centre of the investment is the people of the North, then the geography and then the conceptual underpinnings of how we defend and how we deter.
It is not that we have infrastructure in the North or that we have a great advantage through the Canadian Rangers in all of the communities. It is that what we have is changing and we need to continue the investment. It is for this reason that we want to be thoughtful in our approach to investment. Mr. Hammerschmidt, who is here, has invested enormous energy travelling to the North to listen and to understand what the communities need and what the possibilities are, but it’s very true that because it is changing so rapidly, it is changing completely the underpinnings of how we defend and where our investment is. Indeed, the central foundation of the defence of Canada plan is around the Arctic and understanding the environment, monitoring it and enabling the people who live there.
Senator Galvez: How will you go about expending this money and these funds in Canadian expertise and Canadian products?
LGen. Kelsey: There is a lot within that question. The first principle will be not to do things in the South and move them to the North. Let’s actually start in the North, use the folks who are there and develop industry and economic benefits. There are huge possibilities for not only military requirements or the Canadian Coast Guard but also dual use. That’s an exciting possibility where a significant investment goes beyond just infrastructure but rather to specific trades and expertise to look after the systems that we will have arrayed across the North.
[Translation]
Senator Gignac: Thank you for the work you are doing. Like Senator Galvez, I had the opportunity to go to the Arctic three years ago with the Standing Senate Committee on National Security, Defence and Veterans Affairs. One of the things that struck me, and which we are not very familiar with in Southern Canada, is the role of rangers.
Can you tell us more about the rangers and explain how they are integrated into the Canadian Armed Forces?
LGen. Kelsey: Our rangers are a component of the Canadian Armed Forces, but their reality is somewhat different from that of the soldiers we are familiar with in Quebec. Their tasks include surveillance, research, rescue operations and training alongside the Canadian Armed Forces.
There are approximately 5,000 rangers in total, but only 2,000 in the Far North, where we have patrols comprising of Indigenous members and local members. It is a well-known fact that the core identity of rangers is clearly associated with the Far North.
Perhaps the greatest potential for investing in the rangers is not just in equipment but also their expertise and their understanding of the Far North environment. They are a valuable resource for Canada and the Canadian Coast Guard. In fact, the Canadian Coast Guard and the Canadian Armed Forces share this same personnel, to their collective benefit.
I think they are an auxiliary force. Their primary mandate is operational expertise in the Far North and not defence, in the sense of a combat soldier.
Senator Gignac: Turning to NATO, we are very pleased that Canada will now meet the Alliance’s targets. Can you tell us about coordination?
We probably don’t have the same priorities in Canada. For example, I don’t think investing in tanks serves any purpose along our southern border, but on the other hand, we really need submarines and drones.
Is there any coordination among NATO member countries? Some European countries may not need submarines, but they do need tanks. How are the decisions made within NATO to identify Canada’s procurement needs?
Is it a complementary approach with the other countries? Is it a joint decision that is made in Brussels?
[English]
Mr. Moor: Maybe I can start and then maybe the Vice Chief of the Defence Staff and Ms. Sheehy can take over. Absolutely, NATO has a requirements list for Canada for us to make sure that we deliver those requirements on behalf of NATO. When you look at our total expenditures, we spent $65.9 billion last year.
When you look at how much we spend and where, around about 20% of it is on capacity capabilities, and about 30% is on people. So when you look at our total spend across Canada, we’re spending about 80% in Canada, and about 20% is potentially being spent outside of Canada. We hear a lot about how 75% of our equipment is from America or from other NATO nations. That’s what we’re trying to address with our Buy Canadian Policy, but the majority of our money is already being spent in Canada.
What we are now planning to do across each of our major acquisitions — and you are perfectly aware that the most major acquisition at the moment is submarines, which will be announced shortly, and that is looking at two different partnerships: One partnership is in NATO, which is between Germany and Norway, and the other partnership is Korea.
Maybe I will hand it over to the Vice Chief of the Defence Staff first and then Ms. Sheehy to talk a bit more around how we actually acquire these things.
[Translation]
The Chair: Could we have a table that can help us follow this file on a year-to-year basis? You are talking about $65 billion. It is $51 billion in Supplementary Estimates (A). There is a shortfall of $14 billion. I understand that a total of $8 billion will go to Veterans Affairs Canada. Different amounts have been distributed all over, including some contributions to Ukraine and NATO and some in the estimates for Global Affairs Canada. I also saw a small amount of $6 million or $8 million for the Communications Security Establishment.
If we could have a table showing the authorities that are included in the 2% calculation for contributions to NATO, we can track that for each year — and I can assure you that we will do so, to ensure it tracks with what we have before us.
The 2% represents $62 billion, whereas 5% represents $140 billion. We need to look at that, because it does not make sense.
[English]
Mr. Moor: Absolutely. We would be very happy to provide that table. If I look to last year, of our $65.9 billion, $49.4 billion was the Department of National Defence, which was the Canadian Armed Forces and the Canadian Coast Guard. We then had $14.4 billion, which was other government departments. By far, the biggest other government department was Veterans Affairs Canada, at $7.9 billion. The next one after that was actually the Communications Security Establishment Canada, which was $1.8 billion.
Last year, we also had the Business Development Bank of Canada, or BDC, which was $2.2 billion, and that was a one-off contribution to BDC to help them establish the defence fund. We are very happy to produce that. We have about 33 other government departments which were included in the 2% or the 3.5%.
[Translation]
Senator Gignac: Can you give the Lieutenant-General 30 seconds to answer that question?
The Chair: Briefly. I will give you some of my time.
LGen. Kelsey: The cornerstone of the Defence Industrial Strategy is the change in acquisition and the acknowledgement of our advantage.
Some of our allies are interested in our capabilities, including rifles and uniforms. We have the framework and the opportunity to invite our allies to buy our equipment. This is a collaborative exercise. The industrial strategy team spent a lot of time in Europe promoting our industrial advantages.
Senator Dalphond: I think I will continue with the same line of questions.
I understand that the estimates for Communications Security Establishment Canada are included in the 2% allocated to defence, even though a small proportion goes to intelligence to the government and to protect our facilities.
What kind of arrangement was made in relation to the contribution of $2 billion that the Department of National Defence and the Canadian Armed Forces made to the Business Development Bank of Canada? Was it a contribution or a loan? Will the bank use the money to give business loans? I am assuming that is the case, because the general mandate of a bank is to lend money, and not to give gifts. Will that money be counted as a liability and a future asset, since the money will come back?
[English]
Mr. Moor: Maybe I will just start off. Under the NATO 2% definition, there is a category called industrial mobilization, and the purpose of industrial mobilization is to help establish new businesses in the defence realm. Therefore, the Business Development Bank of Canada established a defence fund to seed core money to new businesses. That could be in the case of loans; it could also be in the case of equity investments and other investments. That is entirely up to BDC, and I’m sure BDC would be happy to answer your questions about that.
Once it was spent and once it was handed over to them, it came under the NATO definition of industrial mobilization, and that was counted. I went to NATO last week to explain that to them. What I did say to them is there is no additional funding this year. It was a one-off year in order to establish the fund. Going forward, all of Canada’s Defence Industrial Strategy funding is for other activities, mainly delivered through other government departments rather than through the Department of National Defence, or DND.
Ms. Sheehy may have more.
Senator Dalphond: Is it possible that eventually part of that money, which is part of the 2% target for this year, will be returned to the treasury or public chest, because it is a loan or equity which would be sold at one point?
Mr. Moor: It is entirely possible that sometime in the future, probably longer in the future, some of that money may come back into BDC, but given my understanding of how Finance has established this, it is a revolving fund. They would then use that money to reinvest in other new businesses. It will never come back to DND. It has been spent by DND and is now within the financial framework of BDC.
Senator Dalphond: Do we see real progress? I think I read something in one of the papers — not in the paper but on the screen — that there was great interest for suppliers. People realize there is a lot of potential there, and they are starting to have divisions or foreign companies that are coming to Canada to be able to respond. Do you feel that is slowly generating interest in investment so far?
Mr. Moor: Well, what I can say is I was watching the Grand Prix on Sunday and there was an advert for BDC around getting people to actually seek loans or equity investments. I think Ms. Sheehy has something to add as well.
Ms. Sheehy: I would just say in the conversations I have had with industry that we are starting to see that shift in terms of the willingness of investors to invest in the defence space. Here I’m not just talking about BDC; I’m also talking about private investment. Certainly, the Minister of National Defence has been very active in terms of encouraging private investment and, as recently as a couple of weeks ago, spoke to investors in this space.
This is a welcome shift and is linked to the very clear communications that the Government of Canada has given that we are investing in defence and that we want to build our defence sector, but I would say it is relatively new.
Senator MacAdam: The department requested $48.4 billion in voted budgetary expenditures in the Main Estimates. As you mentioned, that was a 42.7% increase over the 2025-26 Main Estimates, and there are additional expenditures to be voted on in the Supplementary Estimates (A). I’m wondering how National Defence will ensure that the new expenditures will meet needs and that procurement will follow best practices, even though the spending will take place over a very short period of time.
Do you believe that you will spend nearly the full amount authorized for 2026-27, including for the capital expenditures category, which has reached $18 billion, including the supplementary estimates? Were the funds fully spent in 2025-26? We don’t have the public accounts yet for 2025-26, so I was wondering if you have any information on that.
Mr. Moor: Thank you for the questions. Yes, all the money was spent last year. In fact, actually, we overspent last year, but that was okay because the Treasury Board allocated us $970 million in vote 50 to allow us some flexibility to ensure that we hit the 2%, and we spent that additional money. That is the reason why we spent more money last year than we had anticipated.
What I would say is it is a big increase compared with the Main Estimates last year, but it is a relatively smaller increase compared to what we spent last year. When you look at the Main Estimates, they are about 5% more than we actually spent in 2025-26, and that means we have already established all of the protocols and approaches to spending this money. What I would say about the procurements is most of the procurements relate to contracts that have been in place for some time. When you look across our major expenditures, last year was on the P-8 Poseidon and the Canadian Multi-Mission Aircraft project, but this year, it’s not there. It’s on the River-class destroyers. That contract has been around for some time. As we are starting to see more procurements coming in, we’re starting to see this money coming into the estimates. And I would say we will have a lot more money than the $50.7 billion in the Main Estimates. And as you said, the Supplementary Estimates (A) brought in another $1.2 billion, but we’ll have the Supplementary Estimates (B) and the Supplementary Estimates (C) this year, and we have a large number of projects and initiatives and programs in place where we will be seeking further funding. We have definitely ramped up our ability to spend money — a pleasant surprise — but it was a bit of a surprise to see how much we did manage to spend last year. Certainly, the Department of National Defence, the Canadian Armed Forces and the Canadian Coast Guard are very much focused on spending all of that money. When you look at the lapse, traditionally we have lapsed about $1 billion to $1.2 billion. Our number for vote 5 capital will be zero in the financial accounts. In vote 1, maybe it’s around $100 million, simply because every year-end, some things don’t get paid, but it will be very significantly lower than it has been previously.
Senator MacAdam: The Main Estimates include over $7 billion for sustainable bases, information technology systems and infrastructure. I’m wondering if you can provide more detail on the specific goals related to sustainability and energy needs, including how National Defence plans to improve energy resilience across its bases and how the department will ensure these investments support operational readiness, especially in the Arctic and remote regions. You may have touched on a bit of this before, but if there’s anything additional you could provide, that would be appreciated.
Mr. Moor: Maybe I can ask my colleague Peter Hammerschmidt to join us at the table. What I would say is when you look at the total expenditures, we have about $600 million on the acquisition of land and buildings coming this year, but we also have $300 million or $400 million in utilities and supplies. So we are not just investing in new buildings, but we’re also actually investing in our current buildings, ensuring they are completely updated and ensuring our infrastructure and environment have a very long program of investments over the next 5 to 10 years.
[Translation]
The Chair: Can you send us the details in writing? We are a bit pressed for time, and we would have a comprehensive answer if we got the details in writing.
Mr. Moor: I’m sorry, I did not quite understand the question.
[English]
The Chair: Is it possible to send it via a written answer with all the details so that we will have a complete answer?
[Translation]
Peter Hammerschmidt, Assistant Deputy Minister, Infrastructure and Environment, Department of National Defence and the Canadian Armed Forces: Absolutely, yes.
[English]
The Chair: We are a bit tight on timing. Is that okay, Senator MacAdam?
Senator MacAdam: Yes.
[Translation]
Senator Oudar: Welcome, ladies and gentlemen.
I have some questions on the cyber security of government networks and systems. My question is for Communications Security Establishment Canada.
As I was reading the Auditor General’s report dated October 2025, I was surprised to see that 119 federal organizations are not required to use the cyber security services of Communications Security Establishment Canada. That came as a huge surprise to me. Indeed, the Auditor General found that:
This finding matters because gaps in the cyber security of government networks and systems as well as delays in responding to cyber attacks increase the likelihood that these cyber attacks may succeed, resulting in the theft of personal or sensitive information and in damage to IT systems. In turn, this can affect the delivery of programs and services to Canadians. The key to strong cyber security is having the appropriate tools and supporting procedures for monitoring suspicious cyber security events and incidents. . . .
I read that as part of your functions, you are the single, unified source of advice, guidance and services for the whole government. How do you account for the fact that 119 organizations do not follow your guidance?
Ms. Tayyeb: Thank you for the question.
As you know, and as you have rightly stated, we serve as the Government of Canada’s technical authority for cyber security. We work very closely with all departments to help protect them with our cyber defence technologies.
That includes strictly the departments that fall within the network of Shared Services Canada, or SSC. All the departments under SSC receive immediate, automatic protection with the defensive systems we offer.
That said, indeed, many organizations are not automatically covered by these services. We work with them on a day-to-day basis to change that. We work very closely with the Treasury Board to improve the Government of Canada’s cyber security policies.
I hope the number of organizations will be higher the next time I appear before your committee. We are expanding our offer of service steadily to each of these organizations. We talk with them and explain potential threats and risks. We have seen some clear improvements.
Senator Oudar: Can you tell how many of the 119 organizations —
Ms. Tayyeb: I don’t have the exact number with me, but I can provide it.
Senator Oudar: Can it be provided to the committee?
Ms. Tayyeb: Yes.
Senator Oudar: The Auditor General also recommended you set up a cyber security collaboration platform and incident case management tool. Can you tell the committee how far you have gone with setting up this platform?
Ms. Tayyeb: This is an ongoing effort, in partnership with other government departments. It is a continuous improvement activity. I will give you an accurate status of that specific recommendation when we get back to you with the number of organizations.
Senator Oudar: If we could have the stages and the deliverables, that would be appreciated.
Ms. Tayyeb: Absolutely. I understand.
Senator Oudar: Actually, the timeline for setting up the platform.
Thank you for your answers.
The Chair: I also have a question for Communications Security Establishment Canada.
Can you tell us how far you have gone with the digital transformation of information analysis? I know you have an extremely important role in the entire digital transformation, which involves intelligence security and analysis. Can you tell us where you are with the development and the costs?
Additionally, with respect to quantum cryptography, Minister Solomon spoke about cyber security and investment in Canada’s National Artificial Intelligence Strategy. Is this already connected to your global leadership on quantum cryptography or is it an addition to your future infrastructure?
Ms. Tayyeb: I am going to answer the second question first.
I fully agree with your suggestion. We have been working on that for a long time, and it has been covered in a number of reports, which we have posted on our website.
When it comes to the post-quantum environment, we have been working on the resilience of our information technology systems for quite some time in preparation for quantum computing. We determined that there would be some major developments in the 2020s and 2030s. We have been preparing for that for a long time.
The investments we are discussing today will also contribute to this resilience and our ongoing work. This is nothing new. We have been working on this for years to prepare the government for these developments.
The Chair: You have said that you have made significant investments in artificial intelligence for your intelligence analysis capabilities. How are these investments going, on the public-facing side?
Ms. Tayyeb: There is a great deal of discussion about that now, but for us, this is not new. We have invested in these technologies for many years to improve how we deliver on our mandate, gather foreign intelligence and for Canada’s cyber defence. We are making use of these new tools to boost efficiency and deliver better outcomes for Canadians, and we have been doing that for a long time.
Obviously, the latest technologies are more powerful and more dynamic. We noted that our estimates represent a small share of the National Defence family, but it is nevertheless important for us. A significant part of this investment will go towards modernizing the entire infrastructure, including investing in emerging artificial intelligence technologies.
The Chair: What amount have you allocated to aspects related to technological changes and preparations for the quantum era?
Julie Chassé, Deputy Chief of Corporate Services and Chief Financial Officer, Communications Security Establishment Canada: In 2025-2026, we received $370 million from Budget 2025 and we invested in top secret digital infrastructure. This year, $675 million has been allocated to top secret infrastructure in the Main Estimates.
As my colleague noted, the investment will be spread over several years. I would say that the next five years at least will see significant investments in infrastructure, cryptography and artificial intelligence. However, we cannot get into the details.
The Chair: I understand, and that is why I asked a general question.
Ms. Chassé: There is a substantial increase in the estimates for that.
The Chair: Thank you to all our witnesses. This is an interesting topic. We look forward to seeing your table on the NATO figures and contributions to various banks. Thank you very much and keep up with your good work.
We will now turn to Supplementary Estimates (A), 2026-27.
For our second panel today, we are pleased to welcome, from Agriculture and Agri-Food Canada, Ms. Liz Foster, Deputy Minister, Programs Branch; and Mr. Alain Lagacé, Assistant Deputy Minister, Corporate Management Branch. We also have, from Fisheries and Oceans Canada, Mr. Carl Boisvert, Director General, Financial Management; Ms. Joanne Garrah, Assistant Deputy Minister, Ecosystems and Oceans Science; and Mr. Adam Burns, Assistant Deputy Minister, Fisheries and Harbour Management.
Welcome and thank you for accepting our invitation to appear today.
We will now hear opening remarks from Mr. Lagacé.
Alain Lagacé, Assistant Deputy Minister, Corporate Management Branch, Agriculture and Agri-Food Canada: Mr. Chair and honourable senators, thank you for inviting me to discuss Agriculture and Agri-Food Canada’s Main Estimates for 2026-27.
I would like to begin by acknowledging that we are meeting on the traditional unceded territory of the Algonquin Anishinaabe Nation, recognize the Algonquin people as the traditional stewards of this land and pay respect to their elders, past and present.
I am appearing before you today in my role as the Chief Financial Officer and Assistant Deputy Minister, Corporate Management Branch. I am pleased to be joined by my colleagues Liz Foster, Assistant Deputy Minister, Programs Branch, and Ms. Arran McPherson, Assistant Deputy Minister, Science and Technology Branch, who is in the room with us today.
[English]
Mr. Chair, we are pleased to appear before the committee today to provide an overview of the 2026-27 Main Estimates and answer your questions.
The department’s 2026-27 Main Estimates total approximately $3.7 billion in total planned spending. For this fiscal year, these funds will support the department’s strategic actions to ensure that Canada’s agriculture and agri-food sector maintains and expands market access; uses science and innovation to strengthen the sector; and anticipates, mitigates and responds to risks to support the viability of farmers’ operations.
In the 2026-27 Main Estimates, we expect a net decrease of $258 million or 7% compared with the 2025-26 Main Estimates. This decrease can be mainly attributed to the winding down of programs, including the Dairy Direct Payment Program and the Agricultural Clean Technology Program. It also reflects budget reductions under refocusing government spending and the Comprehensive Expenditure Review.
The 2026-27 Main Estimates also include more than $2.9 billion in grants and contributions. These investments will be used primarily to provide farmers with tools to weather the financial impact of risks beyond their control, fund the department’s emissions reduction plan, build resilience to climate change and support dairy, poultry and egg producers and processors, as well as Canadian wineries.
[Translation]
As the committee is aware, the Main Estimates are the first step of the fiscal cycle. They reflect funding, such as Advance Payment Program enhancements and the spending reduction measures announced in September 2025.
Funding for the more recent announcements, such as the top up funding for the Local Food Infrastructure Fund, will be requested through upcoming supplementary estimates. The 2026-27 Main Estimates allocate more than $2 billion to sector risks, including $1.9 billion to support our business risk management programs. These programs help producers facing income losses due to lower yields, severe market instability, and extreme weather events and other disasters.
The Main Estimates also provide more than $780 million for science and innovation to support innovative and scientific research supported by Agriculture and Agri-Food Canada and will also help to improve the sector’s capacity to turn ideas into new products, processes and practices.
Approximately $132 million will support the Emissions Reduction Plan under the Agricultural Climate Solutions program and the Agricultural Clean Technology Program.
[English]
In addition, Mr. Chair, we will allocate more than $702 million to domestic and international markets. This funding will help to strengthen the sector’s competitiveness at home and abroad and increase the sector’s access to international markets by resolving or mitigating market barriers. In addition, this funding includes more than $605 million to support the dairy, poultry and egg sectors, the wine sector, local food infrastructure, the Youth Employment and Skills Strategy and the expansion of our AgriMarketing Program. We will also allocate nearly $167 million to internal services.
[Translation]
Mr. Chair, I hope this summary has given senators an overview of the 2026-2027 Main Estimates for Agriculture and Agri-Food Canada.
[English]
Thank you for the invitation.
[Translation]
We would be happy to answer your questions.
The Chair: Thank you very much.
You have the floor, Mr. Burns.
Adam Burns, Assistant Deputy Minister, Fisheries and Harbour Management, Fisheries and Oceans Canada: Good morning, everyone.
[English]
I would like to thank the committee for the invitation, and I’m pleased to be here today on the traditional and unceded territory of the Algonquin Anishinaabe people.
Today, I’m joined by several officials from the department: Joanne Garrah, Assistant Deputy Minister, Ecosystems and Oceans Science; Jennifer Saxe, Assistant Deputy Minister, Aquatic Ecosystems; Carl Boisvert, Deputy Chief Financial Officer; Anna Classen, Regional Director General, Pacific Region; and Geneviève Cauffopé, Director, Performance, Programming and Operational Readiness, Conservation and Protection.
Today, I’m appearing before the committee to discuss the 2026-27 Main Estimates on behalf of Fisheries and Oceans Canada.
With the government charting a path to transform the economy, strengthen prosperity, unify our nation and safeguard Canada’s sovereignty, these estimates aim to ensure we can continue to support the fisheries sector and drive economic growth in coastal, rural and Indigenous communities.
Following these opening remarks, we would be happy to answer any questions you have.
The 2026-27 Main Estimates present $1.9 billion in planned spending. This represents a net decrease of $4.2 billion compared to the 2025-26 Main Estimates. The total decreases, which equate to $4.2 billion, are mostly related to the transfer of appropriations related to the transfer of the Canadian Coast Guard to the Department of National Defence, planned funding profile changes for various programs and reductions related to the refocusing government spending and Comprehensive Expenditure Review exercises. These decreases are offset by planned increases for other spending, notably the Small Craft Harbours Program for the construction of a new harbour in Arctic Bay and funding received through Budget 2024 for the general repair and maintenance of harbours.
Further to this, and as announced in the Spring Economic Update 2026, another almost $1 billion will be invested over five years to repair, maintain and modernize Canada’s small craft harbours. This provides investments for ongoing repairs in addition to Fisheries and Oceans Canada’s existing annual program budget of approximately $90 million.
Finally, following the tabling of these Main Estimates, the government has made other significant announcements to support economic growth. These include renewed program and funding commitments to revitalize the fisheries funds and a new nature strategy with important investments in several programs, such as the Pacific Salmon Strategy Initiative and marine conservation targets.
Mr. Chair, there’s no question that the demands on our oceans and marine resources are higher than ever before. Funding sought through the Main Estimates and subsequent funding renewals aims to protect our harvesters and fisheries, promote sustainable economic growth and ensure that our marine ecosystems remain healthy and vibrant. It will also ensure that the department can fulfill its mandate on behalf of all Canadians.
Thank you.
[Translation]
The Chair: Thank you very much.
Senator Forest: My first question is on fisheries.
First, the budget increase from $154 million to $190 million for small craft harbours is great news. You mentioned the harbour in Arctic Bay. However, what is the status of the reconstruction of the Grande-Entrée harbour, which the minister announced in May?
People on the ground are extremely concerned because they fear that the harbour, which caught fire, will come tumbling down. Do you have a timeline? We don’t see any timeline or budget allocation in the estimates.
Mr. Burns: Thank you for the question.
I don’t have a specific update on the reconstruction of the Grande-Entrée harbour. However, there is no doubt that the harbour needs to be rebuilt. We will provide the committee chair with an update.
Senator Forest: That is critical, because fishing is the main activity in this community of Îles-de-la-Madeleine.
My next question is on agriculture.
The Quebec Research and Development Centre located in Sainte-Foy will be closing down. We know that every dollar invested in agricultural research can generate as much as $63 in economic benefits.
Perhaps there are potential short-term savings, but in the long term, we are mortgaging the sector, given the potential in agricultural research and the current environment.
Were any impact analyses carried out? Why is this research sector in particular closing down?
Mr. Lagacé: Thank you for the question.
Like all the other departments, we had to develop a program to reduce our resources. Our department is in charge of 20 research centres and 25 satellite farms. A big part of our budget is spent in the science sector, and we had to make difficult decisions.
Some sciences will be relocated or consolidated in other research centres. Running the 20 research centres and 25 satellite farms is expensive. Some of the centres are older and require more investment.
We are keeping a research centre in every province in Canada, and we are continuing to do important research. We believe that by consolidating our expertise, research and portfolio, we will save money to reach our objectives.
Senator Forest: Which centre are you keeping in Quebec?
Mr. Lagacé: We have a centre in Sherbrooke, in Saint-Hyacinthe and in Saint-Jean-sur-Richelieu.
Senator Forest: With regard to the Sainte-Foy research centre, was its specialty the reason for that decision?
Mr. Lagacé: As I mentioned, the initial approach was to keep at least one centre in every province and to see where we could consolidate certain sciences in our other research centres across Canada. Some activities will be relocated to other centres.
It was a substantial amount of work to conduct this analysis to make sure that we can keep doing important science that benefits the entire agricultural industry.
Senator Forest: Thank you.
[English]
Senator Cardozo: I have a few questions, but first I’ll ask a question of Fisheries and Oceans Canada, or DFO, and then a question for Agriculture and Agri-Food Canada as well.
As I see in the estimates, you’re reducing from $6.2 billion to $1.8 billion. Is that correct? That seems to be quite an enormous cut — more than what other departments are facing.
Some of the things you’re reducing significantly are the sustainable management of Canada’s fisheries. Could you provide a little more information: Where does that leave the fishing industry? And in terms of agriculture, I’ll ask the question now. There are a couple of decreases; one is with regard to the Agricultural Clean Technology Program that you mentioned. I would like information as to why you’re reducing that. And in terms of the Youth Employment and Skills Strategy, that is a rather small amount that stays the same, but I am interested to know what you’re doing in terms of youth employment because that is certainly important for the long-term viability of the industry. If I could start with the DFO officials, please.
Carl Boisvert, Director General, Financial Management, Fisheries and Oceans Canada: The main decrease is actually related to the Canadian Coast Guard transitioning to the Department of National Defence; that accounts for over $3 billion.
The rest is what I would call mostly timing differences because there is always a difference between the presentation of the Main Estimates and by the time programs are renewed.
We have a significant amount — almost a billion dollars in different reductions were planned under the nature strategy, which now the government has announced. It’s called A Force of Nature strategy, under which most of our programs have been renewed. So that is really two things: the transfer of the Canadian Coast Guard and these timing differences between programs.
Senator Cardozo: And the sustainable management of Canada’s fisheries is a reduction from $15 million to $3 million. What is involved there?
Mr. Boisvert: That would be the nature strategy, the renewal of sunsetted programs. It’s programs like the marine conservation targets that were not renewed at the time of the presentation of the estimates but have since been renewed as part of the announcement by the government.
Senator Cardozo: It will show up in estimates later on?
Mr. Boisvert: Yes, it will show up. As the department goes through the machinery process to access funding, it will be showing up in future estimates.
Senator Cardozo: Okay.
Mr. Lagacé: I’ll start and let my colleague Ms. Foster finish off.
On the Agricultural Clean Technology Program side, you are right; it is winding down. There is a portion of the program that is sunsetting, which is why you’re seeing a decrease in the Youth Employment and Skills Strategy. It is a very important program for farmers to get access to people between 15 and 30 years old to work on the farm. We had a recent budget decision on that to continue the program. But I will defer to Ms. Foster to give a bit more insight on that.
Liz Foster, Assistant Deputy Minister, Programs Branch, Agriculture and Agri-Food Canada: Regarding the Agricultural Clean Technology Program, there are two aspects: One is related to adoption, and one is related to research and innovation. And it was already planned that the adoption aspect would be sunsetting. So that is what you’re seeing shift in the budget.
Under the research and innovation part of that program, we have recently launched an accelerator component. That program is still active and does still receive funding in the Main Estimates.
Regarding the Youth Employment and Skills Program, that is a very important program for farmers and agribusinesses to receive funding to support the hiring of youth. It also helps with training youth in the sector.
The department does have a small portion of that funding in its regular budget, and we receive supplemental funding for that program. Actually, all told, whether it is in the Main Estimates or not, our profile for that program has remained relatively steady, and it is a high-demand program. We are working now through the applications that we have had for this year.
Senator Ross: Thank you for being here today. I’m interested in the transfer of funds of the Canadian Coast Guard to DND, and I’m wondering how this may have affected services within the department. Were employees transferred? What kind of an impact has this made on a day-to-day basis?
Mr. Boisvert: Thank you for the question. The transfer of the Canadian Coast Guard was about $3 billion, so it was significant and almost half of the department.
In terms of services, inside its own department, the department already has a memorandum of understanding, or MOU, to have agreement on services.
Regarding what we transferred to DND, we created an MOU as a department, and basically the service has been continuing since then.
A good example is when the fishing season opened, the Canadian Coast Guard was present and helping out to open the fisheries, so this MOU has been proven to be very effective so far. So we’ll continue working, of course, very closely with our colleagues at National Defence.
For the people, all the people from the Canadian Coast Guard changed. And, of course, we had to send certain internal services people, such as people like accountants and human resources officers, and that transitioned to the Canadian Coast Guard without loss of employment. Basically, National Defence has taken on some of the responsibilities of supporting the Canadian Coast Guard, so they are now actively working there.
We had, of course, a big change in the management regime, and so far we think it’s been successful.
Senator Ross: Thank you. My other question is with regard to the decrease in the Department of Agriculture and Agri-Food. There was a decrease of 6.6% from last year to this year in the Main Estimates, and I wonder if you can explain to me the key programs that have caused the decreases and if there have been job cuts that relate to these decreases. And what has been the impact on service to the public or service to the industry?
Mr. Lagacé: Thank you for the question. You’re correct: Our mains to mains from last year to this year have decreased by $278 million. The biggest decrease is from one of our supply management programs: the Dairy Direct Payment Program. So this is a $100-million decrease. It is due to the winding down of the program. This was a 10-year program at almost $3 billion.
As you can imagine, programs will fluctuate. They start slowly and then ramp up, and at the tail end of the program, they wind down, and that is the nature of the program itself. Those are direct payments made to farmers.
The second one that we alluded to is on our Agricultural Clean Technology Program, and there is a $75-million decrease there. That, again, is the winding down of a program that is sunsetting as per the comment made by my colleague.
The third item, for us, is our reduction exercise, so it’s the Comprehensive Expenditure Review and refocusing government spending. You alluded to the impacts to employees and jobs, and for that one, I can say we’re at the start of the reduction process. The majority of our reductions right now are mainly attrition based. And the department put in some controls in the past couple of years so that whenever somebody left, we didn’t replace them. We have been doing this for a while now and getting ready for what’s now in front of us.
I would say the level of service that we’re providing is still on par. We haven’t seen any decrease in that sense or any major impacts in terms of delivery of our services.
Senator Ross: Thank you very much.
[Translation]
Senator Galvez: My question is for Mr. Lagacé and concerns the amendments.
[English]
It’s the amendments to the Pest Control Products Act, which was already scheduled for a statutory review. It’s been six years, and we are waiting for a statutory review.
So my first point is: Why not wait and do the statutory review instead of using an omnibus budget bill to put forward these very important amendments? I listened to your opening remarks, and you said that this is to increase productivity and new markets, and you’re going to do it science-based.
But the fact is that even the Canola Council of Canada has said that we have too much residue of pesticides and the markets in Europe are becoming stricter. The only new markets that will receive our products are Mexico and the U.S. That’s a concern. I don’t see the coherence with that.
The last point is with respect to the reduction on your science and innovation, which is a 4.4% decrease. It is like you are saying, “We will do this,” but in reality, there are all these obstacles. Can you please explain?
Mr. Lagacé: I’m not in a position to explain the first part of your question about pest management and pesticides. I would defer to my colleague Ms. Foster if she has any insight.
Ms. Foster: Certainly, I can add. The Pest Control Products Act doesn’t fall under the purview of Agriculture and Agri-Food Canada. I think you will find that falls under the Minister of Health. That said, through the Sustainable Canadian Agricultural Partnership, some work of Agriculture and Agri-Food Canada does go toward the science aspects of supporting pest control products.
[Translation]
Senator Dalphond: My question is on the same subject as Senator Forest’s. I have a special attachment to Îles-de-la-Madeleine.
The Grande-Entrée harbour fire occurred on June 30, 2024, which is almost two years ago. In July that summer, Minister Lebouthillier, the then minister responsible for your department, announced that it would be rebuilt quickly. I can even quote her:
There is a lot of work that will be done beforehand, but I can assure you that we will work to get things done as soon as possible.
Last May, Minister Lightbound also said that reconstruction would happen soon. However, I understand that there still isn’t a plan for reconstruction?
Mr. Burns: Thank you for the question.
As I mentioned earlier, I don’t have an update today on this small craft harbour. Of course, there are a thousand or so harbours, but we will prepare a written update for you.
Senator Dalphond: I assume that the contracts have for all practical purposes been awarded or will be very soon, so I look forward to reading your confirmation.
My second question is for the same department.
Your budget was cut significantly, mainly due to the Canadian Coast Guard being transferred to National Defence. Were all the employees and people in the department’s administration who were involved in Coast Guard operations transferred to the Department of National Defence? Were there any layoffs? Did some positions become redundant?
Mr. Boisvert: I can answer that question.
Transferring the resources to National Defence was quite a big endeavour for several internal services since they provided services to both departments. An exhaustive analysis had to be conducted, position by position, to know who was providing services to whom. Once the study was finalized and put into implementation when the order-in-council was issued, the internal service employees were transferred. No jobs were cut when they were transferred.
Did National Defence make any cuts thereafter? I don’t believe so, but you would have to ask them.
Senator Dalphond: How has the workforce evolved in your department?
Mr. Boisvert: I can’t tell you about the entire department.
Senator Dalphond: Even so, the part that was removed accounts for more than half of your budget.
Mr. Boisvert: Yes, there are two parts. The Coast Guard’s workforce or employees who left for National Defence represented several thousand employees. Additionally, we had a few hundred internal services employees who left.
Were cuts made within the department, such as reducing management levels or consolidating positions due to the reduction of its workforce? Absolutely. This was done as part of the comprehensive expenditure review in which these positions were cut at the same time as the transfer to the Coast Guard.
The Chair: What is the precise evolution of the workforce in your department?
Mr. Boisvert: I can get back to you on that.
However, I can tell you that this year, in the Main Estimates, the planning is 6,892 employees. I will get back to you in writing for the previous spring.
The Chair: Please do. Thank you. It was a specific question, so I’d like the answer.
Senator Dalphond: [Technical difficulties] evolution of the actual workforce, both in terms of employees and management.
The Chair: That’s what I understood.
Mr. Boisvert: Just to clarify, it wasn’t a reduction, it was a transfer. Subsequently, during the expenditure reduction review process, there was a reduction. The two numbers go together. We can give you the breakdown.
The Chair: The details, thank you.
Mr. Boisvert: Yes.
[English]
Senator MacAdam: My question is for Fisheries and Oceans Canada. I am a senator from Prince Edward Island, and harbours are essential to our coastal communities and their commercial fisheries. I see $1 million is allocated under the Main Estimates for the Small Craft Harbours Class Program. I’m wondering how these funds are prioritized to the various harbours. Also, with respect to money announced in the Spring Economic Update, there is $957.8 million over five years starting in 2026-27. Can you tell me your understanding of how much of this money will be allocated during this fiscal year versus over the next five years? Are any of those expenditures through other departments, or is it all through Fisheries and Oceans Canada?
Mr. Burns: Thank you for the question. I will start by speaking to the process we undertake for project investments at small craft harbours. Our harbours are evaluated by engineers on a three-year rotating cycle. There are 1,000 small craft harbours, of which roughly 650 we consider to be core small craft harbours that primarily support the commercial fishing activity.
We undertake this rotating review in terms of the state of repair of the harbour. That informs a prioritization exercise that we undertake annually, looking at safety, functionality of the harbours and the socio-economic considerations, including whether there are other nearby harbours that could support the commercial activity with some latent capacity. Based on that assessment, we prioritize the necessary work and then proceed with the investments.
This has a longer-term view as well because, certainly, bigger projects and more capital-intensive projects which require permitting and other aspects are on a multi-year cycle as well.
In the current fiscal year, we’re winding up the final year of the Budget 2024 investments and undertaking the planning work for the new Spring Economic Update 2026 investments. The primary focus or the primary investments coming out of the Spring Economic Update announcement would begin next year. There is some funding this year associated with that preplanning exercise. That’s just an ongoing cycle that we undertake.
I can also give a quick update on Grande-Entrée, which was an earlier question. In Budget 2024, we initiated the first phase of repairs, and the Spring Economic Update 2026 investments will include Phase 2 of those repairs.
Senator MacAdam: In the June 2025 report entitled Integrated Oceans Management, the Commissioner of the Environment and Sustainable Development found that Fisheries and Oceans Canada had made little progress in implementing its integrated oceans management plans. What key actions has Fisheries and Oceans Canada taken to implement the recommendations of the Commissioner of the Environment and Sustainable Development?
Mr. Burns: I will pass this to my colleague Jennifer Saxe, who is the assistant deputy minister responsible.
Jennifer Saxe, Assistant Deputy Minister, Aquatic Ecosystems, Fisheries and Oceans Canada: Thank you very much for the question. Yes, the Commissioner of the Environment and Sustainable Development did undertake an audit and did find that there was good collaboration. We fully support the recommendations from that audit. We work very closely with our Parks Canada colleagues and with our Environment and Climate Change Canada colleagues. As well, when we are undertaking our work, obviously working closely with industry, with local communities and with Indigenous partners continues to be key. So there are frameworks and policies that we continue to advance in that regard as well as when we are looking at the establishment of sites and in the management of sites continuing to do that collaboration.
[Translation]
The Chair: Thank you very much.
Senator Oudar: I had questions about FTEs, or full-time equivalents, which Senator Dalphond already asked. I want to make sure we have the written answers in advance. Thank you. I believe you’ll be providing us with the information.
Fisheries and Oceans Canada’s 2026–27 Departmental Plan shows that it’s actually a reduction from 12,307 to 8,945 FTEs. Earlier, you said that would now be 6,892 FTEs. The departmental plan shows the resource decreases are in Marine Navigation and Marine Operations and Response. Were the employee transfers you told us about earlier from these two categories, Marine Navigation and Marine Operations and Response?
Mr. Boisvert: That’s correct. Those are the two program activities involving the Canadian Coast Guard, which were transferred to the Department of National Defence.
Senator Oudar: Some 2,300 FTEs are listed under Marine Operations and Response and 700 under Marine Navigation. Does that mean that 3,000 people were transferred? That many?
Mr. Boisvert: Yes.
Last year, the department’s budget exceeded $6 billion. This year, it will be about $1.9 billion. Nearly half of the department’s FTEs left with the Coast Guard. That said, there is a large pool of FTEs to maintain the programs that are now under National Defence’s responsibility.
Senator Oudar: Earlier, you mentioned that there were internal services that served these two departments. I am very familiar with that, having been in Quebec’s public service for 35 years. It is extremely difficult to separate things when internal services are shared across multiple departments. How did you do it? Did some employees experience a significant change in duties, to the point that it could be considered a reclassification, to their disadvantage?
Mr. Boisvert: Thank you for the question.
The Coast Guard transfer turned out to be a complicated activity, because all of our activities and all of the services we offer had to be reviewed to determine which type of activity to keep in the department and which to transfer to National Defence.
Several hundred employees were transferred. During the transfer to National Defence, when the order-in-council was applied, these positions left the department and became the responsibility of the Department of National Defence. It welcomed these new employees and reintegrated them into their roles.
At Fisheries and Oceans Canada, as part of this activity, we had to look at our internal services to assess whether levels of management had to be consolidated. There were no budget cuts during the transfer to the Department of National Defence.
Were any positions reclassified? Were employees required to take on other responsibilities? You would have to contact my colleagues at National Defence to see how things stand after the first six months.
Senator Gignac: Welcome to the witnesses.
My question is for Mr. Lagacé.
It’s more of an economic question, but I’m interested in that because I grew up on a farm and I follow the agricultural sector closely. We often talk about productivity problems in Canada. I believe you were saying earlier that the agricultural sector’s productivity stagnated between 2016 and 2026. I know that you created the Dairy Innovation and Investment Fund in 2023, with an envelope of up to $333 million over 10 years. Can you tell us about that? Earlier, it was mentioned that cuts were made to research, and I am a bit concerned about that. Can you tell us about how these funds are used?
Mr. Lagacé: Thank you for the question.
As you know, the global economy has taken several hits. Certain geopolitical events, including higher energy costs and tariffs, are impacting farmers. Our programs try to adapt to this type of situation.
We are subject to a five-year framework. We work with the provinces. We are currently in the third year of a five-year framework approved in 2023, and that will run until 2028. This partnership represents $3.5 billion, with $1 billion managed by the federal government and $2.5 billion by the provinces. Sixty per cent of the overall funding comes from the federal government and 40% from the provinces.
We have a variety of programs and initiatives on risk management, and I would like to draw your attention to these, including AgriRecovery, AgriInvest and AgriAssurance, which help to mitigate impacts on farmers. They are designed to reduce risks that are outside farmers’ control, such as natural disasters, tariffs and the canola crisis.
I would defer to my colleague for a more accurate answer to your question.
Senator Gignac: We have the Supply Management Processing Investment Fund, with nearly $400 million. I am trying to see if these programs will help increase productivity in the sector. There is still some uncertainty around the renewal of the CUSMA.
Ms. Foster: I will answer in English.
[English]
We do have the Supply Management Processing Investment Fund that is intended to support not only the dairy sector but all the poultry and egg sectors. We’ve seen significant uptake of this fund from the poultry and egg and dairy sectors. Poultry and eggs are fully allocated, and we are still working through the dairy side of that. That program is intended to run for another almost two years, so we are not yet through that program.
In terms of fully having the results and the impacts of those investments, we are not yet at that stage, but it is still in progress.
Senator MacAdam: The question I had asked was regarding the implementation of the recommendations from the Commissioner of the Environment and Sustainable Development’s report. This was to Fisheries and Oceans Canada. I don’t think we got a complete response because we didn’t have enough time. I am requesting, through you, chair, that we get a written response to that question in the future.
Ms. Saxe: I’m happy to provide a response in writing with further details.
Senator MacAdam: Thank you very much.
[Translation]
The Chair: That concludes our work. We will now go in camera for a report.
(The committee continued in camera.)