By Hessie Jones
This $81.8 billion defence budget is based on “fully indigenous Canada’s capabilities, Canada’s know-how, Canada’s needs and Canada’s growing potential.”
I attended a breakfast on St. Patrick’s Day, featuring the Honourable David McGuinty, Canada’s Minister of National Defence.
In recent months, the tone from our Prime Minister and his office has been different. It’s been more defiant, more bold and confident. Canada has always been the quiet one, the reliable one, but it has always taken a back seat to the more dominant political players. But we’ve rested on our laurels. We’ve become complacent. Because of our steadfast partner to the south, we’ve become dependent.
But no more.
This was not a typical speech from an official. It was a rally to ignite a fervour long in the making. I could sense it from McGuinty’s posture, his tone, and the way the audience received his message.
He introduced Canada’s first Defence Industrial Strategy (DIS). As the Brampton Board of Trade, CEO Jaipaul Massey Singh explained,
“It’s not just about a defence policy; it’s actually an economic strategy. And unlocking that significant federal investment in full-use technologies and development capacity, these opportunities that extend well beyond traditional defence and into separate manufacturing, AI, logistics, cybersecurity, and more are really unique opportunities for us.”
(What does this mean for startups and SMBs regionally, in Ontario and Canada? Please refer to the resources listed at the end of this article for more information.)
McGuinty declared,
“We need to rethink how we approach defence. We made a deliberate decision to meet this moment, and we invested over $80 billion to rebuild, to re-arm and to reinvest in our Canadian Armed Forces (CAF). This is a big decision. It’s a commitment backed by a funding package worth $81.8 billion over five years.”
There are an estimated 100,000 Canadians who serve in the armed forces, and McGuinty declared they are an “important piece of the puzzle.”
Thousands of CAF members are deployed across the globe… as part of NATO Multinational Brigade in Latvia, commanded by Canada… providing training for Ukraine’s armed forces through Operation Unifier… training alongside regional partners in the Indo-Pacific… and deployed, at a moment’s notice, when natural disasters strike in Canadian communities.
He elevated the work and dedication of the armed forces members:
That’s a lot of responsibility. A career in uniform is like no other job. It’s immensely rewarding and comes with its own unique challenges. When you’re in the CAF, there’s no refusing dangerous work. There’s no collective bargaining. There’s no compensatory time off. When you’re asked to do something, you do it even if it comes at a great personal cost to you, your spouse or your family.
For the first time in nearly three decades, he announced a “hard-earned pay raise” from 8% – 20% with targeted allowances for in-demand trades like signal operators, combat medics and naval communicators and additional support for operational deployments.”
The increased spending supporting CAF also means:
- 7500 affordable housing units for CAF and their families
- upgrading bases, armouries across the country, creating work for thousands of tradespeople to the tune of $960 million: masons, HVAC technicians, roofers, electricians, framers, architects, designers, carpet suppliers, to name a few.
- modernizing equipment, including new River-Class Destroyers, up to a dozen new submarines, over 140 new aircraft on order, armoured combat support and light armoured vehicles, and 24 new coast guard ice breakers on the way. He declared,
“We have the second-largest fleet of icebreakers in the world, and we’re going to need them with respect to our Arctic responsibilities.
“We have to deliver our capabilities faster.”
McGuinty declared that the global challenges at this scale have not been seen since WWII and that this is Canada’s call to build momentum.
He called out the necessary nexus between the CAF and the industrial base, and the need to recognize they are “conjoined” — key to unlocking Canada’s full potential for the defence sector.
This also means strengthening Canada’s broader economy—especially now, because of tariffs, rising unemployment, and inflation.
In developing the Defence Industrial Strategy (DIS), it rested on things that were unique to Canada:
- What do we need?
- What are we good at building?
- What can we design?
- What can we give rise to?
- What can we sell abroad?
- How does this manifest in broader industrial capabilities?
Ontario’s defence sector contributes to critical capabilities across the land, air, and digital domains. This includes advanced sensors, electronics, military vehicles, aerospace systems, avionics, and beyond.
McGuinty noted the “deliberate” expansion for innovation in emerging areas such as AI, and pointed to our strength in emerging quantum technologies and advanced computing, “where we’re even stronger.” Canada, he noted, is considered the second-most prominent player in cryptography, a role that will be key as military advancements play out.
Government Procurement Will No Longer Be a Bottleneck: The Mandate to Build, Partner and Buy
McGuinty noted they are modernizing their approach to procurement.
Going forward, they’ve created a new agency to handle contracts of $100 million or more, including the purchase of submarines, the largest single procurement Canada has ever undertaken. As McGuinty explains,
We’re looking to build, we’re looking to partner, and then we’re looking to buy… in that order
This means partnering with trusted allies, multinational firms, to jointly develop capabilities and open new markets. The goal is to create an ecosystem that generates jobs and supplies goods and services as inputs, not only to the military or navy but across Canada’s industry.
This also means creating economic opportunities for Canadian companies that have secured U.S. military contracts. He recalls a discussion with a company in Quebec,
I told a company in Quebec, 9 employees, one of the top companies in this country in radar technology. I asked them, ‘How are the sales going with the Canadian government?’ The owner said, ‘I haven’t had a single sale. 92% of my sales are to the Pentagon.’ I said, ‘That’s good. How do we get you from 9 employees to 30?’
In Partnering with Trusted Allies and Multinational Firms: “We are Very Demanding Now…”
McGuinty is clear that in negotiating with our allies, he is adamant that there be industrial benefits to Canada in the form of jobs, resource inputs like Canadian steel or aluminum. He says,
I regularly sit across the table from ministers of defence, and I have a really good, productive meeting, and then I slide a sheet of paper across the table and say, ‘Now I want to talk to you about these six outstanding contracts for our six countries. How well are we doing, and how can we land these?’
And I’m shameless about it. Because we need to be shameless about this, because we have the talent and we have to be a little bit more forward-leaning, maybe even a lot more.
He announced Canada signed on to the Security Action for Europe (SAFE) Program, noting that Canada was the only non-European Union country admitted to the deal. What does it mean? Canada has access to EU lending and borrowing totalling 150 billion, which will then be able to procure materials from Canada. As McGuinty emphasizes,
We’re in the tent. We get to sell in that tent. By the way, Germany and other European Union members fought hard for Canada to be part of this because they see Canada as a foothold in North America and a trustworthy partner.
“We Are a Country that Says What it Means and Means What it Says.”
McGuinty joked that this is not the case everywhere, “if you know what I’m saying.” Today, business is predicated on trust, which is an important signal, and this has made it possible for Prime Minister Mark Carney to secure important global relationships and strike deals:
- In India, Australia and Japan, meeting with leaders to strengthen relationships in the region and invest in Canada to produce more defence material
- In the last eight months, six new defence agreements have been signed
- In six months, 12 new trade and defence agreements were signed
- Two days ago, successful meetings with Arctic countries in the Nordic region
Canada’s space capabilities will become a key area of investment. McGuinty highlights that 20% of Canada’s economy depends on satellites: for cell phones, energy grids, logistics, deliveries, and satellite relay. In a $2 trillion industry, there is strong demand for launching satellites into space. In Europe, Norway’s only launch pad is heavily backlogged. The announcement to build up to six new launch pads in Nova Scotia has been met with enthusiasm. As per McGuinty,
When I told my German counterpart about this, he asked, “How fast can you get that built? We don’t want to launch anymore from a particular American location.’
We have to make sure that we have our own sovereign capabilities, are not dependent on others, and are not made vulnerable as a result of others trying to cut off access to those satellites, or worse, mess with the satellites already in space.
The Defence Minister pointed to the expected return for this strategy over the next 10 years:
- 125,000 new jobs across Canada
- Defence revenues increase by more than 240%. Current revenues $14billion annually
- Defence exports increase by 50%
- Raise the share of defence contracts for Canadian firms to 70%
- Boost government in-defence-related R&D by 85%
Canadian universities will serve as a pipeline for STEM talent to develop the skilled workforce necessary in the coming decade. He aptly phrased it this way: “We need our universities and colleges at their best to provide the feederstock of human capital.”
“National Security and Economic Security Have Always been Two Sides of the Same Coin.”
McGuinty admitted, however, that there has never been a formal acknowledgement of this. Canadian businesses will be a vital partner in upholding safety and sovereignty. The benefits of DIS will unlock the full potential of the government’s relationship with business, which will be readily felt across the economy.
But on the military side, McGuinty admitted,
We need to get our mojo back. We need to get our groove back. After the Second World War, we were the third-largest air force in the world. We were the fourth-largest navy in the world. Think about that. Our companies are global leaders in aerospace, communications technologies and advanced research. We’re not starting from scratch.
Canada has the ingredients. We have water. We have steel and aluminum. We’ve got space. We’ve got critical minerals — 11 of the 12 NATO-defined critical minerals are on Canadian soil, as McGuinty pointed out.
« We continue to dance with our American Neighbours… We’ve moved from a Tango to a Waltz »
McGuinty said that 75 cents of every dollar we spend goes toward procuring military supplies for the United States. He said,
“That’s been our tradition. We’ve been integrated that way. We will continue to purchase from the United States. That’s a fact of life. They’re very good at what they do and have a lot of investments in this country. We are connected. Our defence sectors are connected. This is a great privilege and one we’re trying to maintain, and I think we will. But we’re going to diversify. And we’re going to continue to, as I say, dance with our American neighbours. It’s just that we move from a tango to a Waltz.”
As a sovereign nation, we are making sovereign decisions.
He noted that Canada is not planning to stop.
We are more overt now, more public, and more forward-facing about the link between our Defence Industrial Sector and our defence needs…
One of the biggest drivers of the strategic shift has been NATO’s 2% of GDP military spending target. It will be reached by March 31st. It’s the first time in history. And we’re going to be moving forward with 3.5% and then 5% by 2035.
He emphasized that Canadians can’t be naive. We have to respond to a changing threat landscape. As McGuinty shared, Prime Minister Carney is always two steps ahead. It’s not a knee-jerk reaction. It’s a measured plan to build not only for sovereignty, but for Canadian economic resilience.
Resource and Funding Opportunities for Canadian Companies
For regional startups and SMBs in the province of Ontario the following funding and resource opportunities are available:
- Business Development Bank (BDC) recently announced the new Defence Platform that will provide $4 billion in financing, advice and investment solutions to help businesses supporting Canadian companies working in defence and national security. This is subdivided into:
- $3.5 billion in financing and advisory services to help Canadian businesses scale and “participate in the value chains of defence contracts and national projects focused on sovereignty.”
- $500 million in investments to strengthen broader innovation ecosystem through:
- Strong North Fund – a new venture capital fund focused on deep technologies and dual use applications
- Catalyst Innovation Fund – innovation catalyst for the startup ecosystem
- More information about BDC here.
- The Economic Development Corporation (EDC) provides financial solutions, risk management and market knowledge to help Canadian companies scale and compete globally.
- Newly launched February 2026, this organization will consider support for projects that increase Canada’s domestic defence and security capabilities including:
- Cybersecurity
- Drones
- Munitions
- Critical Minerals
- Quantum computing
- Artificial Intelligence
- Land Vehicles
- More information about EDC here
- FedDev Ontario has initiated funding for projects that “drive innovation and business growth” in the defence sector, with the goal to allocate $200 million as part of the Regional Defence Investment Initiative (RDII). Note: applications are now closed as of January 21, 2026.
- FedDev Ontario’s allocating $200 million in defence support to target businesses seeking to enter or grow within defence supply chains. Note: applications are now closed for this as of January 21, 2026
- FedDev Ontario funding – Please refer to other funding opportunities here.
- Brampton Tariff Resource Hub – launched by InvestBrampton, this provides the latest updates on trade developments, sector and funding opportunities for Brampton companies to remain competitive. Funding opportunities up to $50k through the CanExport SMEs program
- More information on the Brampton Tariff Resource Hub here
- More information on CanExport SMEs
- Ontario Government-Led ICT Export Missions to Europe: AI, Cybersecurity, Semiconductor Electronics and Telecom – Canadian companies are invited to participate in Ontario-led and supported missions to priority international markets.
- Ontario AI & Big Data – Paris, France, September 14-18
- Ontario Semiconductor and Electronics – Electronica 2026 in Munich Germany – November 5-13, 2026
- Ontario Cyber & Digital Trust – ISF Congress 2026, Milan, Italy, November 14-17, 2026
- Ontario ICT Export Business Mission to Mobile World congress 2027, Barcelona, Spain, March 1-4, 2027
To learn more about the funding opportunities as part of the Defence Industrial Strategy please visit: BDC Defence Platform, and The Economic Development Corporation (EDC)
