In The Media

As federal deficit soars, expected cuts in upcoming budget could significantly gut Canadian Forces

by Matthew Fisher (feat. David Perry)

National Post
February 25, 2016

Whatever the new government announces in its first budget on March 22, Canadian Forces operational readiness, training and maintenance will probably suffer in order to free up funds for units that have to deploy.

That is the opinion of Dave Perry of the Canadian Global Affairs Institute, who may be the best informed independent expert on Canadian defence spending. But, as the affable 33-year-old political scientist admitted with a smile, he probably wins the title by default.

Although defence spending is the single biggest departmental item in the federal budget, Perry is almost the only person in the country not working for government or the military who closely tracks the roughly $20 billion spent on national defence, and understands the big picture of the funding and technologies required to respond to current and emerging threats.

The Trudeau government faces hard choices about how much money it gives to the military — with the federal budget deficit soaring, a larger military training mission in Iraq and possible missions in northern Africa, huge bills in prospect for new warships and warplanes, and growing pressure from NATO to increase spending because Canada spends less per capita on defence than any major alliance member.

Ottawa has provided few hints about spending plans, but during last fall’s election campaign the Liberals indicated they expected $3 billion in “efficiencies” from all ministries. Perry said this means the Department of National Defence could contribute about $600 million a year in savings in three years.

Harjit Sajjan, the defence minister, has pledged the number of men and women in uniform will stay more or less the same.

“Because fixed personnel costs take 50 per cent of out of the budget, if you keep the size of the force the same, the cuts elsewhere (in the department) would be fairly consequential,” Perry said.

“The pot from which the $600 million will be taken is not that big. It could have a big impact on force readiness and operational effectiveness. They are going to have to restrict training funds, maintenance, repair and the purchase of spare parts — what regular forces and special forces need to make their equipment usable.”

Military spending was cut in the early days of the Harper government before it established a budget escalator that got funding this year back to about where it had been. It would be harder to find $600 million in savings now because the earlier cuts and freezes had already “imposed a fair bit of fiscal pain,” Perry said. “There is less fat than previously.

One of the many unknowns is whether the Iraq training mission will be paid for from existing funds or “incremental funding because you can’t cover it under a normal budget,” Perry said, adding the cost will be “fairly significant. For past Liberal budgets, if there were big operations like this, they would top up the budget. I hope they have some extra money for that, but I am not sure that is the case.”

Given the fiscal squeeze, he wondered how the military could afford new equipment “when everyone knows they are having trouble moving forward to acquire big-ticket items – ships and jets – as well as upgrades to protect against new technologies.” Improvements are required for satellite and cyber capabilities, and North American surveillance, detection and warning systems built in the 1980s.

There are 200 such capital projects but most are not nearly as expensive as the ships and jets, Perry said, although “they are potentially more expensive in their totality than the big, shiny things. From peace support to humanitarian aid to war fighting you need baseline investments in areas such as surveillance and cyber counter-measures. I am not sure how fully-seized the government is about how expensive the military is.”

One of the hottest political potatoes in Ottawa remains the tens of billions of dollars the next fighter jets and surface combat ships will cost. Perry praised the decision this week to combine the ship building competition into one process, rather than two, because this would mean the navy gets badly needed ships a few years earlier than expected. However, he finds it hard to believe the government’s campaign rhetoric it could “save tens of billions” from the $40 billion earmarked for the F-35 by buying another aircraft.

A defence policy review is due to be published by the end of this year. Aside from the $600 million in efficiencies being looked for in the existing fiscal plan, inherited from the Harper government, Perry said he expected there would be no major impact on defence funding in next month’s budget. But once the policy review was complete, a harsher reckoning is likely in the 2017 budget.

“We have not been hearing a lot about what the government’s (defence spending) priorities might be,” he said. Nevertheless, “I think the bean counters at defence are quite worried. My worry is that there are not enough people over there counting beans.”

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