In their 2015 election platform, the Liberal Party charged that the Conservative Government had left Canada’s Armed Forces “underfunded and ill-equipped, and the courageous members of the Forces unsupported after years of dedicated service”. Under Stephen Harper, the Liberals claimed, “investments in the Canadian Armed Forces have been erratic, promised increases in funding have been scaled back, and more than $10 billion of approved funding was left unspent.”
If elected, the Liberals promised things would be different. They would not let the armed forces be “shortchanged”. They would “maintain National Defence spending levels, including current planned increases”. They would “ensure that equipment is acquired faster”. Investing in the Royal Canadian Navy would be a “top priority”.
As it turns out, there is little reflection of these sentiments in the Liberal Government’s first federal budget. Instead, the government proposes to “reallocate” some $3.716 billion to be spent on large-scale military equipment over the next five years to “future years”. The government insists this is not a “reduction in National Defence’s budget”, just prudent planning “to ensure that funding is available for large-scale capital projects when it is needed”. Sometime after 2020/21 it seems.
Following are the paragraphs from Budget 2016 which refer:
The Government is steadfast in its commitment to providing greater security for Canadians. This includes ensuring that the Canadian Armed Forces have the equipment and personnel required to protect Canadian sovereignty, defend North America, provide disaster relief, conduct search and rescue, support United Nations peace operations, and contribute to the security of our allies and to coalition operations abroad.
The Canadian Armed Forces will continue to play an important role in the coalition fight against the Islamic State of Iraq and the Levant (ISIL), and in North Atlantic Treaty Organization (NATO) assurance measures in Central and Eastern Europe. Budget 2016 also reaffirms Canada’s contribution to support Ukrainian forces through military training and capacity-building in 2016–17, in coordination with other countries providing similar training assistance.
The Government will conduct an open and transparent process to create a new defence strategy that will deliver a modern, more agile and better-equipped military. A new defence strategy will include improved processes to ensure more accurate costing for major defence procurements and to provide Canadians with regular updates on project costs and timelines. Over the course of 2016, the Government will seek the input of Canadians, experts, allies and partners, and Parliament on the strategic environment for the Canadian Armed Forces, the roles for the Canadian Armed Forces, and the Canadian Armed Forces size, structure and capabilities.
Renewing Major Equipment for the Canadian Armed Forces
A modern, well-equipped Canadian Armed Forces is needed to support missions at home and abroad. The Department of National Defence is in the process of renewing its major equipment, including Canada’s aging fleets of CF-18 fighter aircraft and maritime warships.
For the purposes of fiscal planning, funding to support large-scale capital projects for defence, including the associated operating and sustainment costs, is set aside in the fiscal framework and managed on an accrual basis. In this context, the cost of a given capital project is amortized over the useful life of the asset; for example, a $1-billion capital project with a 25-year useful life would typically have an amortized expense profile of $40 million per year over 25 years. The amortized costs of all projects cannot exceed the total funds available for large-scale capital projects in a given year. Cash appropriations for projects are sought as required by National Defence and are reflected in the department’s Estimates.
Total funding available to National Defence for large-scale capital projects is $84.3 billion over 30 years out to 2044–45, and $2.8 billion per year ongoing starting in 2045–46, on an accrual basis. To ensure that funding is available when key capital acquisitions will be made, funding that is not yet allocated to specific projects, or that cannot be spent due to unforeseen delays in planned projects, can be moved forward into future years when it will be needed.
Budget 2016 proposes to reallocate funding of $3.716 billion for large-scale capital projects from the 2015–16 to 2020–21 period to future years. This is not a reduction in National Defence’s budget. This will ensure that funding is available for large-scale capital projects when it is needed. Funding is being shifted into future years to align with the current timing of National Defence’s major equipment acquisitions. Chart 6.2 shows funding for large-scale capital projects available to National Defence prior to Budget 2016 and following Budget 2016, reflecting the shifting of funding into future years.
Featured image: A Canadian soldier with the 2nd Battalion, Royal Newfoundland Regiment, 37th Canadian Brigade, at the start of Exercise Southern Raider 13, Fort Pickett, Va. March 2013 (Source: Combat Camera)