Canada’s space companies make national-security pitch for chunk of defence dollars

Canada’s space industry is jockeying for a chunk of the federal government’s defence dollars, selling itself as a sector that’s critical to national security and, quite possibly, the first frontier for Canada in any impending conflict.

And its sales pitch appears to be working. At a two-day conference held in Ottawa, two federal ministers, several high-ranking military officials, a handful of senior executives from major defence contractors and a mayor filled a conference room on the third floor of the city’s nature museum.

There, they listened to the industry’s ask: to receive 5 per cent of the 5 per cent of GDP the federal government is planning to spend on defence by 2035. According to a new report by Royal Bank of Canada titled A Higher Orbit, this could inject $7.5-billion annually into the Canadian space sector.

The global space economy is expected to nearly triple to US$1.8-trillion by 2035, according to RBC’s report. As part of that, Canada has an opportunity to grow its domestic space industry four-fold to $21-billion in the next 10 years. But only if it can attract $12-billion in public and private capital to spur this growth, RBC writes.

It’s off to a promising start. In the fall budget, Ottawa committed to spending $182.6-million over three years to establish a sovereign space launch capability. This is critical if Canada is serious about attracting investment and working with other countries who are also looking to boost their spending on space and defence, said John Stackhouse, senior vice-president for the office of the CEO at RBC.

He said that other countries are paying attention to Canada’s moves in space and it risks losing potential partners if it missteps.

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“The importance of launch and this budget was really critical for that. I didn’t fully appreciate this until someone in London said to me, ‘That is huge’ and ‘Don’t slip on that Canada, because if you don’t have launch, we’re not really interested in a whole bunch of other things,’ ” Mr. Stackhouse said.

On Tuesday, Canada took another step toward getting serious about space by ramping up its spending on European Space Agency programs by $528.5-million. The announcement was made at the conclusion of the first day of the SpaceBound conference by federal Industry Minister Mélanie Joly, who said the money would increase opportunities for Canadian companies and represent a tenfold increase from the country’s current contributions.

European Space Agency programs are awarded geographically, based upon the contributions countries have made. In a note to clients Wednesday, Bank of Montreal analyst Thanos Moschopoulos said he expected MDA Space, based in Brampton, Ont., to be a “key beneficiary of this spend” owing to its prominence in Earth observation and satellite communications.

The specific programs that Canada’s money will go toward will be decided next week during the agency’s ministerial council in Germany.

Canadian industry is currently anticipating the release of the federal government’s defence industrial strategy, expected sometime before Christmas. Within that document, Ottawa will outline the sectors and capabilities it intends to prioritize.

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Some of those sectors, like shipbuilding and aerospace, are already well-established in Canada and poised to become even more entrenched with an injection of new funds. Others, like quantum technology, AI and drones, exist at an earlier stage but are keen to take advantage of increased defence spending, helping Canada remain relevant on a modern battlefield.

The space industry seems to settle somewhere in the middle of those two camps. It’s filled with companies working on emerging technologies and new capabilities, such as sovereign launch and nuclear reactors for the moon, but it’s also building upon a legacy that includes robotic feats such as the Canadarm, which was deployed in 1981.

Canada was also one of the first countries to put a satellite in space. Today, roughly 20 per cent of the Canadian economy functions because space, and the satellites within it, exists, said Brigadier-General Chris Horner, commander of the 3 Canadian Space Division.

“If we were to lose access to software control or freedom of manoeuvre in space, we lose a billion dollars, give or take, of GDP per day,” he said.

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Yet, Canada doesn’t own all of its satellite communications capabilities and still leases some from the U.S. That’s why Brigadier-General Brendan Cook, director of general space, combat and support for the Royal Canadian Air Force, is prioritizing Canadian companies as he works to fill in gaps and revamp coverage in the country’s north.

“As long as the U.S. is able to give us capacity, we have it. But if the world really cracks up and gets into a dust up, any nation would make sure they provision their own service, their own government first,” Gen. Cook said.

All of this work should add up to making Canada’s space systems combat-ready by 2030. At least, that’s the goal of Mr. Horner over the next few years under direction from Chief of the Defence Staff General Jennie Carignan.

If China decides to invade Taiwan in the next few years, Mr. Horner said Canada needs to be prepared for its navigation and communication abilities to be one of the first avenues through which it feels the effects.

“From a space-domain perspective, the first 72 hours of conflict at that scale, against a major adversary, absolutely involves space,” he said.