Question Period Note: SUPPORT FOR THE AEROSPACE SECTOR

What measures is the government proposing to help Canadian businesses in the aerospace sector?

• Aerospace is one of the most innovative and export-driven industries in Canada, contributing close to $29 billion to GDP and more than 218,000 jobs to the economy.
• The Government of Canada is developing an Aerospace Strategy to enhance Canada’s competitiveness and solidify its position as a global leader.
• The Strategy will look at important areas raised by industry, such as workforce development, sustainable aviation fuel, defence, innovation and certification.
• The government is continuing to engage with stakeholders to ensure the Strategy meets the needs of Canada’s dynamic aerospace sector.

Aerospace Industry Context
In February 2024, Minister Champagne expressed an interest in working with industry to develop an Aerospace Strategy for Canada. In July 2024, at the Farnborough International Airshow in the United Kingdom, Minister Champagne reaffirmed this commitment. Work is underway with other departments and engagements are ongoing.
The aerospace sector continues to be a key driver for the Canadian economy as well as a hub for innovation and R&D. In 2023, Canada’s aerospace manufacturing revenues reached 97% of pre-pandemic levels. While R&D expenditures returned to pre-pandemic levels in 2023 ($1.2 billion), the industry’s contribution to jobs (218,000 in 2023 compared to 227,000 in 2019) and GDP ($28.9 billion in 2023 compared to $36.5 billion in 2019) remained below pre-pandemic levels. The aerospace industry ranked first in research and development (R&D) among all Canadian manufacturing industries in 2023. Canada is also ranked in the top five globally for civil flight simulators, civil engines, and civil aircraft sub-segments.
Budget 2021 identified a $1.75 billion aerospace investment target under the Strategic Innovation Fund (SIF). Since that time, hundreds of millions of dollars in funding has been announced for projects focused on sustainable aviation. Notably, in June 2023, the Government of Canada committed $350 million to support INSAT aimed at accelerating the green transformation of the aerospace industry. This SIF investment established a pan-Canadian, industry-led aerospace network focused on funding collaborative research and development projects with companies of all sizes across the Canadian supply chain. Projects will focus on four key technology areas: hybrid and alternative propulsion; aircraft architecture and systems integration; transition to alternative fuels; and aircraft support infrastructure and operations.
Additional aerospace projects announced through SIF include:
• Pratt & Whitney Canada: $61 million to develop technological components for the first hybrid-electric propulsion demonstrator plane;
• CAE: $190 million to implement a global R&D program in digital technology, electric aviation and health care over the next five years;
• General Dynamics Mission System Canada: $10 million to integrate, demonstrate and test various cutting-edge mission systems technologies on a Canadian-designed and manufactured unmanned aerial vehicle (UAV) platform.

Industrial and Technological Benefits (ITB) Policy Context

Canada’s ITB Policy leverages major defence procurements to contribute to jobs, innovation, and economic growth across the country. The ITB Policy requires companies awarded major defence and Canadian Coast Guard contracts to undertake business activity in Canada equal to the value of the contracts they have been awarded. It is estimated to contribute more than 44,000 jobs and over $5 billion to GDP annually in Canada, with the aerospace industry comprising 49% of the business activity.

Given upcoming major aerospace procurements, it is expected that significant investments as a result of the ITB Policy will continue to support this sector over many years. On May 21, 2024, Boeing announced that it will invest a total of $240 million in Quebec including funding for a new Aerospace Development Centre ($110 million) as part of Espace Aéro, a new aerospace innovation zone, and R&D investments in Héroux-Devtek ($35 million) and Wisk ($95 million). These investments are part of Boeing’s ITB commitment to Canada for the selection of its P-8A Poseidon as the solution for the Canadian Multi-Mission Aircraft project.

• The Government of Canada supports the aerospace sector through a variety of programs, including the Strategic Innovation Fund (SIF). Notably, in June 2023, the Government of Canada committed $350 million in SIF funding to support the Initiative for Sustainable Aviation Technology of Canada (INSAT) to help drive research and development to accelerate the green transformation of Canada’s aerospace industry.