Defence Minister David McGuinty, pictured during Question Period earlier this month, says the initiative 'reaffirms our commitment to strengthening Canada’s defence industrial base.'Justin Tang/The Canadian Press
Canada’s regional development agencies are receiving an injection of funds from the federal government to bolster opportunities for defence businesses across the country.
On Friday, Ottawa released details of its $357.7-million Regional Defence Investment Initiative, which will be split among Canada’s seven regional development agencies, from coast to coast.
According to the federal government, the money will help businesses integrate into domestic and international defence supply chains, as well as increase their “industrial and innovation capacity.”
This includes businesses already working in defence, those with products that have both military and civilian applications, as well as those interested in pivoting to defence.
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“The establishment of the Regional Defence Investment Initiative reaffirms our commitment to strengthening Canada’s defence industrial base and supporting Canada’s growing economy,” Defence Minister David McGuinty said in a written statement.
More specifically, Ottawa said the goals of its regional initiative are to “drive research and innovation, strengthen domestic supply chains, grow critical resource stockpiles, and improve access to funds for Canadian small- and medium-sized defence businesses.”
Federal Artificial Intelligence Minister Evan Solomon, who’s also responsible for economic development in Southern Ontario, announced the initiative in Toronto on Friday, adding that the allocation to Southern Ontario’s development agency would be $94.7-million.
The other regional development agencies will make their own announcements Friday. These include ones in Atlantic Canada, Quebec, Northern Canada, Northern Ontario, the Prairies and British Columbia.
Southern Ontario’s agency, known as FedDev Ontario, will be allocating an additional $106-million toward the initiative, bringing its total pool of funds up to almost $200-million. The agency Friday highlighted advanced manufacturing, aerospace, automotive technologies, cybersecurity, robotics and AI as sectors that stand to benefit.
According to FedDev, Southern Ontario is home to more than 900 organizations that could contribute to Canada’s defence industrial base, with major clusters in the Greater Toronto Area, Ottawa and London.
Small-to-medium-sized defence enterprises (SMEs) across Canada have reported struggling with gaining access to customers, dealing with the country’s lengthy contracting timelines and receiving financing to help them scale, according to a survey by the Council of Canadian Innovators and Canadian defence innovation network The Icebreaker.
Deepak Dutt, CEO of Ottawa-based company Zighra, which builds AI systems for defence, said getting contracts with government is a huge driver of growth for SMEs, allowing them to scale their capabilities.
“If those contracts don’t happen, then we could be building stuff, but then for whom? Sure, we’ll build, but the market has to be there, and the customer has to buy,” he said.
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The federal government said that by funnelling funds through regional agencies, it aims to strengthen ties between government and industry and make it easier for companies to become integrated into its supply chains.
“Running a business is hard, exhilarating, brave work. It’s risky. And our economy is built on the backs of these folks. That’s why we must support small and medium-sized businesses,” Mr. Solomon said to a crowd gathered at the Downsview Aerospace Innovation and Research hub in Toronto on Friday.
Each agency has a set of stipulations that participating businesses must adhere to, such as where they operate, how long they’ve been operating and how many employees they have. And all companies that receive funding through the initiative must execute their corresponding project within the timeframe of April, 2025, to March, 2029.
Mr. Dutt said he plans to take a closer look at the details of the program but if they match his company’s trajectory, he says he’ll seriously consider applying.
Friday’s announcement is a preview of what’s to come in the federal government’s Defence Industrial Strategy, which is expected to be released before Christmas.
In its fall federal budget, Ottawa allocated $6.6-billion over five years to the forthcoming strategy.
The Regional Defence Investment Initiative counts as part of that and helps the federal government inch closer to its target of spending 2 per cent of GDP on defence this fiscal year.