Moved second reading of Bill C-7, An Act for granting to His Majesty certain sums of money for the federal public administration for the fiscal year ending March 31, 2026.

She said: Honourable senators, as promised, I’m back to discuss Bill C-7, which seeks approval of the spending plans outlined in the Supplementary Estimates (A) for the 2025-26 year. As usual, these were tabled shortly after the Main Estimates, a few weeks ago, and referred to the National Finance Committee for study. What’s unusual about these supplementary estimates is that they focus almost exclusively on defence-related priorities.

Earlier, you heard me outline the $33.9 billion for Defence included in the Main Estimates. These supplementary estimates tack on an additional $9 billion for the same reasons I mentioned in my remarks on Bill C-6.

We’re at a unique geopolitical moment, and these estimates reflect the government’s intent to meet that moment by allocating the resources needed to protect the people of Canada, assert Canadian sovereignty and work in partnership with international allies to counter foreign threats.

In these uncertain times, our world is increasingly defined by a rise of both state and non-state actors who have no qualms about violating international laws and norms, modern weapons and technologies that can reach Canada and do us harm, and a changing global order that has forced us to view our partnerships and place in the world in a new light. In this context, the government is redoubling its efforts to make Canada more self-sufficient and better prepared to address military and non-military threats.

As the King read in the Speech from the Throne, “The government will protect Canada’s sovereignty by rebuilding, rearming, and reinvesting in the Canadian Armed Forces.” Accordingly, through the Supplementary Estimates (A) 2025-26, the government is proposing historic investment in Canada’s defence and security capabilities.

Of the $9 billion in planned spending, Parliament’s approval is required for $8.6 billion, with the remainder already authorized under other legislation. This funding will go to two organizations. The bulk of it — $8.2 billion — is for the Department of National Defence itself, with $370 million for Communications Security Establishment Canada, or CSE. I’ll briefly cover these investments in a bit more detail.

A sum of $2.1 billion is proposed for the Department of National Defence to accelerate the recruitment of new members for both the regular and reserve forces, augment capacity to provide basic and occupational training, improve retention of existing members and enhance health services to members.

A further $2.1 billion is also requested to enhance Canadian industry’s ability to support our Armed Forces, focusing on immediate needs and initiatives that can be advanced quickly. This will boost made-in-Canada production and drive innovation in vital sectors, laying the groundwork for a defence industry strategy that will not only strengthen our Armed Forces but create opportunities for workers across Canada.

These estimates also propose $2 billion to expand cooperation with international partners, especially Ukraine. Aid will support the acquisition of drones, Armoured Combat Support Vehicles, pilot training, ammunition, small arms and other equipment. The funding will also be used to expand cooperation with other partners related to military training, defence policy and intelligence.

The estimates also propose $1 billion to enhance military capabilities, with particular focus on the Arctic. As many of us might remember from the last Parliament, the Standing Senate Committee on National Security, Defence and Veterans Affairs produced a report entitled, Arctic Security Under Threat: Urgent needs in a changing geopolitical and environmental landscape. Among other things, the report called for urgent investment in security and defence capabilities in the Arctic in light of the evolving geopolitical situation and increased global interest in the Arctic related to climate change.

The geopolitical environment has only become more challenging since that report. The need to defend and assert sovereignty in the North has only become more pressing.

The funding in these estimates will support initiatives, including Joint Support Ships, an undersea monitoring and surveillance system, Arctic over-the-horizon radar, long-range artillery, domestic ammunition production and additional logistics and light utility vehicles.

The Department of National Defence is also requesting $834 million for a range of procurement, including defence equipment, personal gear, technology, infrastructure maintenance and essential services. In addition, this funding will support the modernization of training infrastructure, the expansion of ammunition infrastructure and various preventative and corrective maintenance, repairs, upgrades to, and minor construction on, the department’s real property portfolio.

Finally, the last request is for $550 million to bolster Canada’s cyber capabilities, support greater interoperability with allies and partners, better equip Canada to counter the full spectrum of cyber threats and enhance network infrastructure, information management, connectivity and data storage.

That’s an overview of the spending plans we’ll be approving by passing this bill.

Before I wrap up, I would like to note that we’re discussing this legislation while world leaders have been meeting in The Hague for the NATO summit. NATO is as important now as it has been since the Cold War. Ukraine is in its fourth year of fending off Russia’s full-scale illegal invasion. The dangers facing us and our allies show no sign of abating.

Canada’s recent commitment was to bring our planned defence spending to at least 2% of the GDP; these estimates are a part of that commitment. By supporting Bill C-7, we can send an important message to our allies that they can count on Canada to be a reliable and effective partner. We can send a message to Canadians that we take our national defence and national sovereignty seriously.

Would Senator LaBoucane-Benson take a few questions?

First, I would like to obtain more detail on some of the investment that would be made into the Armed Forces with this $9 billion. When you did a breakdown in your speech, you listed $2.1 billion to accelerate recruitment and to retain service men and women. Then you listed what you said was $2.1 billion to “support our Armed Forces.” I didn’t hear any detail on that particular element.

Could you please tell us what it means for that portion of it: “support our Armed Forces?”

The amount of $2.1 billion is requested to enhance Canadian industry’s ability to support Armed Forces, focusing on immediate needs and initiatives that can be advanced quickly. It’s about boosting made-in-Canada production and driving innovation in vital sectors, laying the groundwork for a defence industry strategy that will not only strengthen the Armed Forces but create opportunities for workers across Canada.

That $2.1 billion is focusing on the needs of the Canadian Armed Forces and finding Canadian industries that can provide for those needs, building jobs into our economy while providing the Armed Forces what they need.

I don’t understand what that means. Is that giving companies money to provide those types of services and supports for our Armed Forces? I don’t understand what that explanation meant.

I’d be happy to. The Armed Forces are going to be procuring many things it requires. The idea here is to find Canadian industries that can provide in a Request for Proposal, or RFP, procurement process that is rigorous, while ensuring that Canadian industry is going to have an opportunity to provide things for the Armed Forces. This $2.1 billion is all about supporting Canadian industry’s ability to do that. It’s not that they’re getting money for doing nothing; we want them to be a part of that RFP process. That’s my understanding of what this is.

You talked about $834 million that went to what I will call the “bucket of odds and sods,” showing you that defence spending has lagged so far behind in terms of gear, technology and essentials.

You mentioned training infrastructure and minor real property investments. One of the biggest challenges is that most of our bases are located in fairly remote areas of Canada where housing is a crisis for military families. In fact, there are certain bases in Canada where Canadian Armed Forces members go when the economy drops, and they’re having to declare bankruptcy.

Have you seen anything in that amount of money that also deals with housing that is outside of defence proper and will be looking at bases, families, et cetera?

The information I have doesn’t achieve that level of granularity, and I’m not sure we obtained that type of granular information at the Finance Committee either.

You and I both know infrastructure includes housing in the Armed Forces. That’s all the information I have.

Senator, is this money in any way going to support the purchase of the F-35 or is that totally separate?

It is separate. At Finance, we heard about the procurement of those planes. Ms. Tremblay told the committee that in the case of the F-35s — the plane you’re talking about — we’re going to take delivery of the first planes in 2026, which will be delivered in the U.S. for the training of our pilots. In 2028, we’re going to be taking delivery of the first ones that will be delivered to Canada. She said it’s a complex program, but it’s demonstrating good progress so far.

My understanding is that this is in the main estimates, not in the supplementary estimates.

The $2 billion we’re giving to Ukraine — is it $2 billion we’re loaning Ukraine for drones, equipment, ammunition and hardware? I just wanted to know if we have that here that we’re giving them, or if we are giving them the money and they’re purchasing. I don’t think we have that hardware and those drones here, do we?

Just to be clear, the $2 billion includes Ukraine but isn’t inclusively for Ukraine; it also includes international partners. I don’t have the details of whether we’re creating them here or purchasing them from other places. I don’t have that level of detail, senator.

Again, on that, because that would be interesting and important to know, so perhaps during a third reading time frame, we can find out more information about that type of amount, which is $2 billion.

In your speech, when you were speaking about the $834 million, I have written down that you said “for a range of equipment.” What type of equipment is included in that? As far as I heard, I didn’t hear any other amounts within this $9 billion specifically for equipment. If there is other equipment in that $9 billion, I’d like to know about that, too.

With regard to $834 million for a range of procurement, including defence equipment, personal gear, technology, infrastructure maintenance and essential services, that was all bundled into the $834 million.

Senator, there are other funding buckets that are for equipment throughout this spending. Of course, the $2.1 billion that we spoke about earlier is all about procurement, and that is about equipment, as well. We are hoping Canadian industries can supply that.

Only two weeks ago, on Monday, June 9 — I just looked it up — Prime Minister Carney announced that the federal government would meet the NATO benchmark target of 2% of GDP by the end of the current fiscal year, in March. Now, just in the last few days and since the last House of Commons Question Period has concluded, two weeks later, all of a sudden, there’s talk of 5% of GDP. I believe it was yesterday when a foreign reporter, Christiane Amanpour, was asking Prime Minister Carney how much 5% of GDP would be for Canada. Prime Minister Carney answered that it was $150 billion.

Given the amounts we are speaking about — and it has taken a long time for this government to get to sizable amounts of defence spending — how on earth are we going to get to $150 billion, which 5% of GDP would amount to?

The pledge that was made recently for 5% of the annual GDP is by 2035. As part of this pledge, Canada will invest 3.5% of GDP in core military capabilities, expanding on recent investments. That means further investments in the Canadian Armed Forces, modernizing military equipment and technology, building up Canada’s defence industries and diversifying defence partnerships.

We’ve also been informed that an additional 1.5% of GDP will be dedicated to investments in critical defence- and security-related expenditures, such as new airports, ports, telecommunication, emergency preparedness systems and other dual-use investments that serve defence as well as civilian readiness. That will be a part of that 5%.

Importantly, the progress on this pledge will be reviewed in 2029 to ensure that all ally expenditures align with the global security landscape.

Senator, concerning the whole idea of ramping up the numbers of people in the Canadian Forces, can you provide some assurance that during that process — that rush to invest and spend money — the existing diversity, equity and inclusion guidelines will govern during that rapid process?

Thank you for the question, senator.

Actually, in my main speech, that was a part of it: making sure our Armed Forces reflect Canadian society in that. The term “DEI” was not in there, but that’s what I was talking about — that there’s gender balance and that our Armed Forces reflect our society.

Will Senator Marshall take a quick question?

Without it being specified, do we know where this money is actually going? We know the broad calendar of what it is going to be spent on, but without the actual day-by-day occurrence, do we know where this money is going, how it will be spent, who’s going to get it and if it’s going to be used wisely?

No one has been more worried about defence, since I came into the Senate, than myself and a few of my colleagues.

Are you optimistic that this money will be well spent? That’s my main concern about this money, because I don’t know, with all the ramifications, whether it will be. If it is not, we’re back to square one at a time when we should be focused on helping our soldiers.

Thank you very much.

Senator Marshall, as you said in your speech, we’re already three months into the new fiscal year. There is no plan. The departmental officials may have done a good job when they were in front of you, but then the day after that, more detail regarding the figures came out. You didn’t have that when you were able to question them.

What confidence can Canadians have that the government will actually get to what they’ve said is the target of 2% of GDP by the end of this fiscal year — we’re already three months in — if they don’t have a plan to spend that $8.2 billion?

Honourable colleagues, I will focus on the supplementary estimates, in particular on the defence spending that responds to the NATO requirement that it be increased.

First, let me thank Senator LaBoucane-Benson for her provision of the information that we have, and Senator Marshall for her usual insightful analysis.

As a member of the NATO Parliamentary Association, I was attending the recent spring conference in Dayton, Ohio, where it was clear we needed to do more in terms of defence spending. But I was also aware of the elephant in the room, the American government, which appears to be intent on undermining the economies of all the other NATO allies. Our opportunity now — our obligation — is to increase defence spending while we build our own economy.

As Senator LaBoucane-Benson noted, budgetary spending will increase by $8.6 billion in comparison to the 2025-26 Main Estimates. She outlined five requests from the Department of National Defence; the first includes a pay raise for those Canadian Armed Forces, or CAF, personnel below the rank of colonel, and that is a badly needed and overdue development. The other four points provide opportunities for manufacturing. They are defence R&D, aid to Ukraine, strategic military capabilities and CAF equipment and infrastructure.

The central point I want to raise today is to encourage the government to make sure that as much spending as possible is made within Canada for R&D, innovation and manufacturing. I’m building on the comments that we heard earlier from Senator Colin Deacon with regards to innovation and manufacturing.

Here are a few facts about the Canadian defence industry in Canada as noted by the Canadian Association of Defence and Security Industries. The industry contributes $9.6 billion to the GDP of Canada, 49% of their sales come from exports, they invest $440 million in innovation annually and they cover 81,000 jobs. The industry is located in all regions of Canada, and is composed of some 580 large, medium and small enterprises, certainly ripe for growing.

Canada’s defence industry produces a range of equipment including light armoured vehicles, rifles and ammunition. Let me highlight just a few specific examples of Canadian-made defence equipment. Roshel Canada produces light armoured vehicles, and is based in Brampton, Ontario. As a side comment, when we look at our challenges facing the automotive sector, perhaps we can look at light armoured vehicle manufacturing to help that sector. Magellan Aerospace produces rockets and flares. IMT Defence produces forged projectiles and specialized machining. HFI Pyrotechnics Inc. produces pyrotechnic products.

My call to the government is that they focus on defence spending as much as possible within Canada to build Canadian industry. Given the tariff threats from the U.S. and talks of the 51st state, I think we need to do three things: buy Canadian wherever possible, build Canadian and invest in Canadian R&D.

Colleagues, you may know that I’ve been recording a series of conversations with Canadians about Canada-U.S. relations. Today, I posted a conversation with Daniel Tisch, President and Chief Executive Officer of the Ontario Chamber of Commerce, my province. Let me quote him:

On defence, our members in the sector welcome the positive signs in the news about defence investment that would benefit Canadian industry, reinforced this week in the PM’s visit to the NATO Summit.

This is quite urgent because there’s a risk of losing that industrial base to other countries that are also increasing their defence spending.

Let me quote from Benjamin Bergen, President of the Council of Canadian Innovators:

The government’s investment in Canada’s defence will be a generationally-missed opportunity if we don’t also ensure that the money is used to build Canadian companies as vendors for our security needs. If innovators know that there are significant government contracts available for made-in-Canada defence solutions, that helps de-risk R&D for companies bringing cutting-edge technologies to market. If we are spending upwards of 2% of GDP on defence, we should not be satisfied with just buying products off the shelf. The government must be collaborating with the private sector players to co-develop the defence systems and technologies for the 21st century. Indeed, that’s what every other leading country is also doing.

Both of these folks indicate that other countries are using defence spending for building their own industrial policy and industry in their countries. We must certainly do the same.

When it comes to buying abroad, we need a quid pro quo approach. For example, take the March 18 announcement of the purchase of a $6 billion over-the-horizon radar system for the Arctic, which we purchased from Australia. We should build a purchase like that of a trade deal. We buy $6 billion from them, and they buy $6 billion of something we produce. That’s a win-win expenditure for both.

While large sums are set aside for major maintenance and repair in the monies put forward, we must focus on manufacturing in Canada. This is key. I want to state clearly that we cannot be just the Maytag repairman of the defence industry; we must strive to be the innovators, the intellectual property rights holders and the manufacturers of defence equipment.

I accept that we do face a conundrum. On the one hand, the new spending to meet the NATO target has to happen soon. We have a tight and important target. On the other hand, we have a once-in-a-generation opportunity to build our innovation and manufacturing sectors and create many well-paying, long-term Canadian jobs. As Prime Minister Carney has said, “We need to build the strongest economy in the G7.”

In closing, colleagues, I encourage departmental officials and ministers, especially those responsible for National Defence, Public Services and Procurement Canada and defence procurement, to go all-out to ensure that we spend these billions wisely, to build the Canadian economy and support good jobs for Canadians.

In this turbulent world, we can make sure that our NATO commitments build the Canadian economy and create good jobs for Canadians. Thank you.

Senator, I have so many questions. We’ve given all this away before, Senator Cardozo. We threw the Avro Arrow into Lake Ontario. We’ve given way artificial intelligence. Gerald Bull and his system for Canada putting satellites into space — we denied him access, so he went to work for Saddam Hussein and was shot in Belgium. All this happened under the watch of the last three or four governments, or before that in the case of the Avro Arrow in the late 1950s.

I’m just wondering: How are we going to change our whole idea of how to do things now when we didn’t do it in the last 65 years?

I hope you don’t take this wrong, I don’t mean it flippantly, but I hope that the brilliance of people like you who push these ideas — that we all keep pushing these ideas.

My hope is that we have reached the point where Canadian governments and industry have realized that we really need to take our intellectual property rights more seriously and take our manufacturing more seriously. I hope that we see all these things related to this massive new spending that we’re going to do — possibly more than the 2% that we’re talking about here in terms of these supplementary estimates. All I can say is God help us if we don’t. It’s really an opportunity.

The two people I quoted both said that if we don’t do these things, we’ll not only lose out because we will lose out but because everybody else is already doing it. If we don’t follow everybody else’s example to use these funds to build our economy, then we’re in trouble. But my hope is that we will see this competitive opportunity. My sense is that when the Prime Minister talks about building the strongest economy in the G7, this is really a great starting point. It has ripples that go well beyond just the defence industry to deal with a large range of innovation and technology.

Will Senator Cardozo take a question?

Sure.

Certainly conceptually, building capacity is about more than research and development. It’s about long-term, sustainable investment in the defence industry, which will require a complete change in thinking in Canada because any for-profit enterprise must have sustainable contracts.

We’ve certainly heard about the Defence Industrial Strategy that is being put forward. Germany has tried that and has put €100 billion against it to start. What would you like to see in any defence industrial strategy so we can move beyond R&D and have a truly sustainable defence in future? This is a dividend that will pay off well beyond this session of Parliament.

I certainly don’t have all the answers to your question, but your question is really an important one. You’re challenging us to think big and to think long-term, realizing that we have a once-in-a-generation opportunity to build long-term.

I hope that those of us who are interested in this issue, whether it’s at the National Security Committee — the committee on which you and I sit — or in other opportunities, will keep raising this issue and keep making the point.

As a slight aside, we live in a hyperinformation society where so many different things are going on. It’s hard to keep a strong and growing narrative. Part of our challenge as senators is to use our opportunities, such as with the National Security Committee, to continue to make the point you’re raising.

Senator Cardozo, would you take a question?

Sure.

Thank you. In your many meetings and many conversations that you’ve been a part of, have you ever experienced a conversation that not only looks at the wonderful benefits of increasing defence spending in many ways but also considered a question about what will happen as a result of the shifting of those resources onto the defence side? Who will miss out? Who will not be supported anymore in society when there’s such a massive shift of resources to defence?

You raise a very important point because we live in silos. Sometimes the silos that talk about this don’t talk about the social costs. But it’s certainly our responsibility as parliamentarians charged with responding to a wide range of issues.

I don’t want to give the trite answer that if you help the economy it helps social policy — which is true — but I do want to point out that when we help industries, many people are employed through those industries.

I was at a steel plant in the Toronto area a couple of months ago. Someone had kind of attacked me about something that I said on social media, so I called him up and we got to know each other. I went to see his steel plant, and we’ve become friends.

As we were talking about various aspects, it was interesting that his entire plant workforce was made up of newcomers and people of colour. This wasn’t defence: this was making steel parts for cars, parts that can certainly be used for light armoured vehicles.

When we look at various industries, we’ll see that they’re multilayered. My hope is that when we do see that kind of thing, we’ll see an industry that employs people who have come from all over the world. We’ll see a plant that is — I don’t want to use the phrase “racism-free” — very diverse in its nature. A lot of the people had worked there for a very long time and were satisfied and happy.

Creating jobs in itself is useful in dealing with some of those issues. Many issues don’t just respond to the economy but do take public resources. It’s for us to ensure that we don’t move away from the values that we have as Canadians.

Are senators ready for the question?

Is it your pleasure, honourable senators, to adopt the motion?

All those in favour of the motion will please say “yea.”

Some Hon. Senators: Yea.

The Hon. the Speaker: All those opposed to the motion will please say “nay.”

Some Hon. Senators: Nay.

The Hon. the Speaker: In my opinion the “yeas” have it.

I see two senators rising. Is there agreement on a bell?

Yes, there is: now.

I will still ask. Is leave granted?

Honourable senators, when shall this bill be read the third time?

(On motion of Senator LaBoucane-Benson, bill placed on the Orders of the Day for third reading at the next sitting of the Senate.)