Steven Staples Op-ed: Canada is overspending on defence

by Steven Staples. Embassy, Nov 16, 2011.

The CBC’s financial “dragon” Kevin O’Leary recently interviewed me about the Harper government’s $35-billion shipbuilding announcement.

It was a remarkably calm discussionbetween me and a fiscal hawk, as we would typically have little to agree upon.

I questioned the wisdom of spending so much on defence, given the state of the economy, and he shared essentially the same concerns about the spending announcement and the track record of big military spending projects going over budget.

At a time when Canadians are being told to tighten their belts, the defence establishment has access to an ever-increasing supply of funds for buying and maintaining capabilities that have not been proved essential to Canadian security. In this period of fiscal restriction, the Canadian government is asking almost every element of the public service to fight tooth and nail to prove that their departmental sections, equipment and staff levels are truly essential. The field of defence spending, however, continues to be held to different standards. Why the double standard?

In 2010-11, Department of National Defence spending is estimated to reach $22.2 billion, its highest level since Canada was in Europe fighting Hitler. That level is 12 per cent higher than it was before the beginning of the global recession, 19 per cent higher than during the last days of the Cold War, and 40 per cent higher than immediately before the terrorist attacks of September 11, 2001.

National Defence has spent an extra $45.5 billion over the years since 2001, but it’s not the only department seeing a 9/11 bump in its budget. The terrorist attacks on the United States had an impact on national security spending levels that extended far beyond DND—$46.5 billion has also been spent to augment the rest of Canada’s national security establishment. In particular, expenditures at Canada’s spy agency and Public Safety Canada have tripled and quintupled respectively since 2000-01.

The question at hand, however, is not whether Canada was right in so drastically increasing the funds spent on national security in response to 9/11. The question is whether it is in the interests of Canadians to continue this heightened level of spending for another decade.

Ten years ago, the political situation was dominated by attempts to devise an adequate response to threats from terrorism that were impossible to fully assess at the time. The realities of the Canadian security situation have changed since then. The mission in Afghanistan is winding down, the country’s international obligations have shifted, and the global financial crisis has developed into the primary threat to the livelihood of Canadians.

Supporters of continued defence increases argue that a return to 2001-level defence funding will endanger the security of Canadians. Undaunted in pushing for more spending, they are not even afraid to point to dead and wounded soldiers to lobby for more funding.

For instance, the Conference of Defence Associations, an advocacy group led by retired military brass and funded by the Department of National Defence, told MPs during the pre-budget consultations: “After the sacrifices made in Afghanistan and the casualties taken there because we weren’t ready, let us never again find ourselves having to rebuild essential military capabilities which we should have kept up all along.”

In addition to divorcing their argument from changing priorities and international pressures, this advocacy ignores the threat to economic  security that unchecked military spending entails. The ambitious buildup of the last decade has allowed large military equipment programs to proceed without adequate demonstration that they were required.

The recent F-35 and naval warship procurement programs, representing some of the biggest equipment acquisitions in Canadian history at a time of massive economic uncertainty, ought to be subjected to the same level of scrutiny faced by any other type of government spending.

In order to protect against future spending creep, an explicit policy of systemically getting defence spending levels under control, with particular emphasis on equipment procurement, is needed. In this spirit, the Rideau Institute has made the following recommendations for the government’s next budget:

• The government should reduce National Defence spending, with the ultimate goal of returning to pre–September 2001 levels.

• A comprehensive review of planned equipment spending is needed to ensure that projects continue to meet Canada’s evolving national defence priorities.

• Defence equipment spending oversight should be increased through the establishment of a parliamentary committee responsible for major crown  projects (projects exceeding $100 million).

Increasing parliamentary oversight for both current and future procurement projects, as the auditor general has warned, is crucial for proper use of Canadians’ tax dollars. The current lack of accountability has led to a spending environment that is, at times, highly uncompetitive, resulting in acquisitions that do not guarantee jobs or even specific costs—as in the case of the F-35 stealth fighters—and that allow the mismanagement of public funds.

This is one point on which even Kevin O’Leary and I will agree.

Steven Staples is a defence analyst and president of the Rideau Institute.

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