OTTAWA – As Canada builds its military industrial complex to spur the economy and meet its NATO commitments, Mark Carney’s government is transforming the fledgling Defence Investment Agency into a Crown corporation. The Liberals are trying to accelerate the pace of military procurement by tabling Bill C-40 – called the Strengthening Canada’s Defence Sector Act. The proposed move would enable the Defence Investment Agency (DIA) to function more like a private company, free from government bureaucracy. The legislation was tabled in the House of Commons Tuesday by Secretary of State for Defence Procurement Stephen Fuhr. “Canada needs a defence procurement system that can keep pace with the world around us,” Fuhr said. “Our armed forces need the right equipment. Our industry needs clear direction, and Canadians expect us to deliver.” In a backgrounder, the DIA says becoming a Crown corporation would provide the agency “with a clear mandate, a permanent structure and dedicated ministerial leadership focused on defence procurement production” to support National Defence and the Canadian Armed Forces. The new organization aims to give the DIA the ability to make decisions more quickly, reduce, fragmentation and provide predictability across defence acquisitions. According to a background briefing, the Crown corporation would have its own board of directors and have greater independence and authority to manage defence-related investments, procurement, and production activities. The draft legislation would change the name of the DIA to the Canadian Corporation for Defence Investment. It would move the DIA out from the umbrella of the department of Public Works and Procurement and put it in the portfolio of National Defence. “With the introduction of this legislation, we are making clear that large-scale, agile defence production and procurement is here to stay. Procurement and investment must live together, by connecting the capabilities our armed forces need with the investments that will deliver them and the industrial capacity that will sustain them,” said Joel Lightbound, the minister of government transformation, public works and procurement, who sponsored the bill in Parliament. The new Crown corporation would operate at arm’s length from the federal government and report to a new associate minister of national defence of procurement. As part of its commitment to NATO, Canada plans to substantially increase defence spending over the next decade. Canada currently spends two per cent of GDP on defence. By 2030, that will increase to four per cent and rise to five per cent by 2035. According to new analysis by the Office of the Parliamentary Budget Officer, the federal government would have to spend $164.6 billion in 2035-36 to meet the five per cent target. This fiscal year, Canada is spending approximately $75 billion on defence. In a decades time, the PBO projects, Canada will have to more than double its military spending to meet its NATO commitments. CTV News asked why the federal government was reducing oversight as military spending balloons. In response, Defence Minister David McGuinty said that “National Defence will still be subject to Treasury Board submissions.” “We will be subject to the scrutiny of committees. We will be subject to the power of Finance and Treasury Board and the Privy Council Office asking their important and probative questions,” McGuinty said. Even though there will be a minister responsible, Philippe Lagassé, a defence procurement analyst, says there could be more “finger pointing.” “If things go wrong, the minister can always say, ‘Well this is a Crown corporation, they were acting independently, I wasn’t aware,’ or things of that nature,” said Lagassé, a professor at the Norman Paterson School of International Affairs at Carleton University. “The minute you create an arm’s length entity you do provide ministers with a bit of shield from direct accountability.” But Lagassé also points out that simplifying procurement in the public sector is necessary. “The major impediment in the past was the culture in Ottawa that tries to protect ministers … there is quite a bit of risk aversion around making sure that the government is protected from legal risk.” Once legislation is passed, Lagassé expects the Canadian Corporation for Defence Investment to move its headquarters to Toronto or Montreal. “If you’re trying to attract people in lucrative finance positions off Bay Street or various other companies, you’ll want to locate it in one of the major urban centres.” The DIA’s current CEO, Doug Guzman, who was appointed by the prime minister, is expected to remain in the top job. Before his appointment, Guzman, previously worked in Toronto, where he served as deputy chair of the Royal Bank of Canada
