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Monday, February 6, 2017

Canadian Defence Spending Must Grow Significantly

By Tony Battista and Dr. David McDonough, OnTrack Magazine (Vol 21, No. 2) Originally published by The CDA Institute 

The Canadian government triggered some controversy with its most recent defence policy announcement – that it now plans to delay the open competition for the CF-18 replacement by five years, and instead opt to procure an interim fleet of 18 Super Hornets as a stopgap measure to fill what it says is a capability gap.

The subsequent news stories following this announcement have only raised further questions. It now appears this capability gap only arose following a policy shift in the government’s approach (and increase) in commitments, especially to its NATO and NORAD commitments. Without further information on the rationale, it is difficult to make any definite assessment about this decision.

Clearly, it is the government’s prerogative to set policy, although the timing of it, when the government was trying to justify a plan for interim Super Hornets, is certainly curious. One must then ask about the extent to which subject matter experts were consulted on this decision, and whether such a decision should more properly be part of the Defence Policy Review (DPR) – and the value of the DPR when such key decisions are taken outside of it?

Another equally troubling story is that the government has forced over 200 civil servants involved in the CF-18 replacement project to sign lifetime non-disclosure agreements. Given that there are already existing stringent measures to protect classified government information, such a draconian measure is certainly at odds over the government’s stated position on transparency and openness, and raises questions about the underlying intent of such a policy. Is it really only about protecting sensitive information or trade secrets? Or is it simply a way to prevent officials from criticizing the government’s handling of this file after they leave office?

Of course, much remains unknown about how the government will ultimately proceed with its plan. What fighter aircraft will realistically be available to compete in the CF-18 replacement competition in five years’ time? With the exception of the F-35, most of the other possible aircraft will already be at their mid-life point by that time. And will the US government even agree to sell interim Super Hornets? Lest it be forgotten, Lockheed Martin remains the single largest contractor for the American government, and there is little doubt that Washington has a vested interest in the future of the F-35 – and much less so with the Super Hornet, which is becoming a legacy aircraft for them.

Yet the most worrisome aspects of this decision is on the question of cost. How much will it cost to purchase an interim Super Hornet fleet? What is the additional cost of operating a mixed fleet? A possible answer to the former can be seen in Australia’s purchase of 24 Super Hornets for 6.1-billion (Australian $). A roughly similar amount could be expected. On the latter, it will undoubtedly be an expensive proposition – as noted in a Defence Research and Development Canada (DRDC) report that has (coincidentally?) disappeared from the DND/DRDC website.

And is the interim Super Hornet fleet to be a permanent fixture of the RCAF force structure? Or is it merely a bridging fleet that will be retired soon after the permanent CF-18 replacement are delivered? Of note, Australia had planned for a bridging fleet with its own Super Hornet purchase, which quickly emerged as a permanent mixed arrangement, with all its attendant additional costs. Then there is the matter of what is the requisite size our fighter fleet in light of the government’s increased commitments to NORAD and NATO – and whether the permanent CF-18 replacement will take that number into consideration?

Is Canada’s defence budget large enough to handle the governments reported and impending defence decisions? What conclusions can be made from the many procurements, as well as current and emerging military commitments (procurement of an interim fleet of fighter aircraft, a major building of new naval ships, increasing the CAF operational tempo with new deployments to Latvia and to a still unknown locale in Africa (possibly Mali), current anti-ISIL mission in the Mideast, and likely more money for recruiting, training, education, readiness, retention and transition)?

Moreover, what will the budgetary situation be like in five years, when Canada expects to choose a permanent CF-18 replacement fleet? Then, it will have to address other competing spending priorities in other areas of security and defence, but also on social programs, health, dealing with the effects of climate change and its challenges on the environment, a direr financial situation for many western countries, and social upheaval (extremism, nationalism, protectionism, etc), not to mention the resurgence of China and Russia?

As the PBO and others have pointed out, the existing budget is simply too small for the existing force structure. And the government has shown little interest in decreasing either personnel numbers or basing infrastructure to make things more manageable. Indeed, as its decision on the interim Super Hornets seems to indicate, it may have set itself on the road to acquiring more fighter aircraft than even its predecessor. That is not necessarily a bad outcome, and may indeed be a silver lining of sorts – as having more aircraft will allow the CAF greater flexibility in terms of readiness and operational deployments. But much depends on whether there will be sufficient funds to allow for such growth.

It seems clear: The Defence Budget Has to Go Up! Canada’s defence budget needs to grow starting with this next Federal Budget. As the recent Senate Standing Committee on National Security and Defence report on UN peacekeeping notes, the government needs to “ensure adequate funding is available to meet the operational priorities of the Canadian Armed Forces” – and this is as true with the government’s plan for peace support missions as it is with national priorities and commitments to NORAD and NATO.

And the window of opportunity for such growth may be limited. After all, the government plans on running deficits, but will likely need to start curtailing spending prior to the next election in three years. Otherwise, what will likely grow is a substantive commitment-capability gap, leaving behind an unpalatable central legacy of the current government with both a large deficit and an ill-equipped Canadian Armed Forces.

 As a result, the next budget in 2017 may be the most feasible opportunity for the government to increase the baseline of the defence budget – and to put National Defence in a better position to deal with the expected military requirements of the foreseeable future. It also coincides with the arrival of the Trump administration in the United States, which many expect will make burden-sharing a centrepiece of its engagement with key allies.

A decision by the Trudeau government to increase defence spending starting with the next Federal Budget could go a long way to establish its credibility when it comes to security and defence policies, to look after Canada’s short and long-term security and defence needs, and to reassuring our American ally on this issue.
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Tony Battista is the Chief Executive Officer of the CDA and CDA Institute. 

Dr. David McDonough is Research Manager and Senior Editor at the Conference of Defence Associations Institute (CDA Institute), and a Research Fellow at the Centre for the Study of Security and Development (formerly CFPS) at Dalhousie University.