Defence Policy and Economic Policy Must Go Hand-In-Hand

By Daniel Perry
Director of Federal Affairs

Since becoming Prime Minister, one of the defining initiatives of Mark Carney’s leadership has been on Canada’s national defence and industrial capacity. At the NATO Summit in The Hague, he promised an additional $9 billion for defence this year, with spending set to reach 5 percent of GDP by 2035. 

“These investments won’t just build our military capacity – they will build our industries and create good, high-paying jobs at home,” Carney said.

The launch of the Defence Investment Agency (DIA) is the first major step toward that vision which is turning defence spending into a national industrial strategy.

For too long, Ottawa’s procurement approach has defaulted to buying from foreign primes, even in areas where Canadian firms are building world-class solutions. From drones and quantum sensing to AI-enabled surveillance and secure communications, domestic companies are already developing the technologies our armed forces, and indeed our allies, need.

Yet despite this capacity, recent multi-billion-dollar defence contracts have bypassed Canadian innovators in favour of foreign suppliers.

This is a mistake Canada cannot afford to repeat. At a time of global disruption, Canada must ensure that our defence dollars reinforce national security and economic sovereignty.

Defence Spending as Industrial Strategy

Defence procurement must now be viewed as a tool to build domestic capability and economic resilience. NATO allies like the U.S. and U.K. already leverage military spending to drive industrial capacity and innovation. The DIA can help Canada finally do the same.

Building Canada’s Dual-Use Technology Base

Dual-use technologies are innovations that have both civilian and military uses. They are the backbone of modern defence and security. These technologies cut across AI, quantum, aerospace, logistics, cybersecurity, telecommunications, and more. They are also central to Canada’s long-term competitiveness in the global economy.

In recent months, CCI has worked with our members to map Canada’s dual-use technology ecosystem. What we found is clear: nearly 400 Canadian companies are building critical technologies that could be scaled into defence applications if the right procurement pathways and financing tools were in place. These firms are not start-ups in search of an idea; they are proven innovators whose products already compete globally.

“Canada’s defence spending must be treated as a strategic investment, not just an expense. When the government acts as an anchor tenant, our first customer, it de-risks commercialization and validates that Canadian technologies are trusted and secure. That’s how we turn domestic innovation into allied export capacity and build true technological independence.” 

— Mike Sekerka, General Manager, Defence and Government Business Unit, Ranovus

 "As Canada looks to strengthen its defence posture and improve resilience, investing in sovereign technologies like samdesk isn't just good economics; it's critical to saving lives, protecting infrastructure, and ensuring mission readiness at home and abroad." - James Neufeld, CEO and Founder of samdesk.

The barrier is not capability, it’s access. Unless procurement pathways like those under the DIA actively pull Canadian innovators into supply chains, Canada will continue to rely on foreign technologies in areas central to our sovereignty.

What Needs to Happen

Budget 2025 is the moment to set a new course and connect the dots between the DIA, the Defence Industrial Strategy, and the NATO spending plan. CCI recommends Minister Champagne and Prime Minister Carney:

• Prioritize Canadian companies in procurement under the new DIA procurement framework. 
• Establish dual-use tech mandates for defence and security R&D programs.
• Launch BOREALIS and equip with the authority to co-develop and co-procure technologies with defence applications.

And critically, CCI recommends that at least 25 percent of new defence R&D and procurement funding flow to Canadian-headquartered dual-use firms by 2028.

The Stakes

Defence spending is now an economic strategy. The DIA’s success will determine whether Canada builds sovereign capabilities at home or continues outsourcing its future abroad.

The choice is urgent and unavoidable. Ottawa has the opportunity to align defence with industrial capacity and, in doing so, to build the future of Canada’s innovation economy at home.

CCI has published a full pre-budget policy brief which goes into much more detail.