Why a debate on the economy must include defence

by George Petrolekas

The Globe and Mail
September 16, 2015

On Thursday, The Globe and Mail will host a debate on the economy. On Sept. 28, foreign policy and security will feature at the Munk Debate. Defence must be an element in both.

The relationship between the economy and defence is often overlooked, but the link is material to debates on balanced budgets, deficit spending or potential program cuts.

The largest portion of the government’s direct program spending is defence. Transfers to provinces such as the Canada Health Transfer consume a larger portion of the budget but are not considered direct program spending as these are non-discretionary allocations. Defence cuts and deferred spending contributed more to the attainment of the government’s balanced budget than any other department.

Those cuts came at a cost. This year four of Canada’s warships were retired (a fifth likely on the way), a result of delayed procurement and increasingly high costs of maintenance within diminished budgets and simple obsolescence. Aging fighter jets are carefully husbanded as there is no visible horizon for a fighter replacement. The cuts have been so significant that there is not much left in defence to finance other programs without affecting core capabilities.

When parties propose fixing defence their solutions must be costed within the overall fiscal framework and the effects these decisions have on Canada domestically and internationally.

With the National Shipbuilding Procurement Strategy alone being worth $35-billion over its lifespan, and the projected fighter acquisition tagged at $9-billion – a figure eroded by inflation with each year of delay – the economic, defence and foreign-policy implications of these questions are not inconsequential. Fewer fighters mean we may not be able to patrol our own airspace let alone have enough for any international engagement. The same with the type and number of ships.

These choices affect what roles Canada wishes to undertake in the world. For example, Canada is no longer able to independently send a naval task group overseas. Should we have a role in disaster relief, and with what assets? Should Canada meet minimum obligations set by its collective security arrangements with NATO – which implies at least a 1-per-cent increase of spending against GDP, or are we freeloaders, as the Economist suggests.

Given that aircraft and ship lives extend to 40 years and beyond, decisions made today have implications for up to 10 future governments in turn expanding or limiting their options.

Additionally, the procurement approach of any government has a greater impact on regional development, job creation and technology clusters than any other federal program. There is cost to those decisions. Using the defence budget as an economic stimulator generally means that we will pay more for some capabilities and, in doing so, either reduce capacity or narrow the fields of capability we have.

As a trading nation, it is important to define what regions of the world are critical to us. For years, our trade focus has been U.S.- and Euro-centric as have our collective security alliances … but where trade goes, security follows. If the markets of Asia and the Pacific represent areas of growth for Canada, then the capabilities we invest in should reflect that paradigm. If the Pacific represents Canada’s future, then our navy, our air force and our army will be substantially different than they are today.

Domestically, we often are not cognizant how large our country is. When a First Air airplane crashed in Resolute Bay, Nunavut, in 2011, it was only luck that Canadian Forces were in proximity to help. At any other time, assets from southern Canada would have flown 3,400 kilometres to effect a rescue. That’s flying from Toronto to Los Angeles.

Some have suggested that search and rescue (SAR) in Canada could be accomplished with more helicopters and fewer airplanes; if we were to do that, SAR would risk becoming a remains-recovery operation rather than rescue. Even domestically, choices are an amalgam of fiscal considerations and geographic demands and SAR will be the first procurement file a new government will have to decide upon.

Internationally, decisions on the anti-Islamic State coalition will affect allied perceptions of Canada. Security-related decisions will affect U.S. attitudes on whether Canada is an open back door, directly impacting our border. That affects the largest trading relationship in the world. And so, in the upcoming debates, the parties’ ideas on defence will also reflect their stance on the economy, budgets, trade and also what role they envision for Canada in the world.

They are all interrelated.

George Petrolekas is a fellow with the Canadian Global Affairs Institute. He has served in Bosnia and Afghanistan and has been an adviser to senior NATO commanders.