Government hints at boosting Canada’s military spending

I have long said that you could fund the CAF to 4 percent of GDP, but we would still lag behind in NATO and be much the same where we are.

It's never the money, it's politics. It's procedures. It's the pork-barreling in our defence spending that makes us a paper tiger in NATO.

My only hope in all of this for the CAF and the GoC, whatever the political stripe that may be, is that it will rouse them out of the "Peace Dividend" slumber. The world has been unstable since 1945. We have used geography, proximity, and association as a Defence Policy ever since. ICBMs don't care how close to the U.S. or how far from Russia/China we are.

Don't give us a dime more, but let us spend money on defence like it matters. The fact we follow the same rules for purchasing a fighter aircraft as we do for buying office furniture for a Service Canada office is disgraceful. Don't treat defense procurement as a stimulus package for Canadian Industry. There I said it.

We spend so much money, time, and effort trying to get that money to stay in Canada; be it by awarding contracts to companies with no capability to produce items without first "retooling" and"developing the production lines", or by hamstringing perfectly competent and competitive bidders by forcing the project to be made in St. Margaret de Poutain de Champignon, QC because the ruling government either lost the seat in the election, or won it with promises.

We spend so much money and staff hours jumping through TBS regulations that are great for other departments, but are terrible for defence procurement. Some items you have to sole source, because there are technologies and capabilities no one else makes. By doing the bid process, you get companies clamoring for a project they can't deliver on, but because they tick the bright boxes on the score sheet....

I truly and honestly belief we need to split from PSPC and legislate that its not beholden to TBS, only to the PBO/PCO. The guiding principles of this new Defence Procurement department should be "Off the shelf, from somewhere else" if there isn't an industry in Canada.

BOOTFORGEN has demonstrated how well we do when we are able to actually get what we need, instead of lining the pockets of a Canadian company that got lucky.

That, but with tanks, fighters, ships, weapons systems....

 

[dapaterson]

CAF purchases are not major. Tripling the number of LVM trucks would still be a drop in the bucket on a modern production line.

Yes, there are authorities that can be exercised. It's a question of where and when to do so.

 

[Grunt_031]

Its because they realize to get to where we need to be means cutting social spending and probably foreign aid. And Canadians looooove their social programs.

And this will be the downfall of the Conservative when they get in, resulting in one term.

 

[dapaterson]

As I recall the biggest single expenditure is Old Age Security. And seniors vote.

 

[QV]

They can, but as a G7 nation maybe we should stopping running in fear of the vendor and remember that not only are we the customer- but a pretty damn big one at that. It's one thing to safeguard against shenanigans like using a misleading/smaller RFP to intentionally backdoor a materially different/bigger contract. But that wouldn't be the case. The situation has fundamentally changed. New geopolitical reality, potentially new government, new priorities. Sometimes pragmatism needs to win the day.

That sounds like bringing more of a business approach to government. Where have we heard that?

Bottom line: we need to suspend risk adverse bureaucratic approaches and become agile and efficient quickly. The situation has changed and so must the response.

 

[IKnowNothing]

CAF purchases are not major. Tripling the number of LVM trucks would still be a drop in the bucket on a modern production line.

Yes, there are authorities that can be exercised. It's a question of where and when to do so.

That's only with respect to a product that also has widespread commercial use.

But even in that case- remembering our size as a customer isn't just about exerting demand side leverage- I'd argue that the far larger aspect is maintaining perspective on the scope of a potential complaint/dispute relative to the overall operation, and limiting the degree to which we let it influence our decision making. Worry about accomplishing strategic priorities in an ethical manner, not whether a vendor who lost a contract representing a tiny fraction of government spending is making a stink.

 

[FJAG]

The question is when, not if, 2% will be achieved. But major acquisitions do not happen overnight.

Which is a different problem. 2% could be allocated and set aside in a reserved fund designated for a certain line of equipment for when acquisitions actually take place. Yeah. Yeah. I know it's not that simple but it should and could be.

Weren't those UOR's, and UOR's are still projects, which take project time and staff?

Many projects are well developed and awaiting funding. Yes there are still things to be done but most major projects do not have to start from scratch.

 

[dapaterson]

GoC has moved to accrual vs cash based accounting. So paying $100,000 today for a truck that has a lifespan of 10 years mean that the Defence expenditure is $10,000 per year for ten years.

 

[IKnowNothing]

GoC has moved to accrual vs cash based accounting. So paying $100,000 today for a truck that has a lifespan of 10 years mean that the Defence expenditure is $10,000 per year for ten years.

Does NATO count our 20% as our annual depreciation of capital equipment assets or our cash capital investment?

 

[dapaterson]

Which is a different problem. 2% could be allocated and set aside in a reserved fund designated for a certain line of equipment for when acquisitions actually take place. Yeah. Yeah. I know it's not that simple but it should and could be.


Many projects are well developed and awaiting funding. Yes there are still things to be done but most major projects do not have to start from scratch.

That is in fact how it's done. There's a 20 year fund for accrual acquisition.

 

[Good2Golf]

PP needs to resign for a centrist or a Tory that won't be viewed as suspicious or disloyal. PP has become completely toxic politically. I think the Conservatives are snatching defeat from the jaws of victory.

Watching Peter MacKay get scorned twice by the CPC leads me to believe that indeed the CPC may snatch defeat out of the jaws of victory this time around.

To further elaborate, on one fle I am familiar with, TB approved less than half of what Cabinet approved...18 months later. Taking a $250M cut to a Cabinet approved program is a problem......

Because the one or two individuals who direct the President of the Board how to roll it, chose it to be thus…

As I recall the biggest single expenditure is Old Age Security. And seniors vote.

Although it is a statutory expenditure, not voted. Seniors vote, yes…but one could argue the impact they have on existing statutory expenditures.

 

[dapaterson]

I meant, the statute was passed and amended by legislators because they know who will show up to vote them in or vote them out.

 

[ytz]

It's no secret he's using this threat to push us to spend more on defence.

That's not clear at all. He keeps talking about us becoming the 51st state. He has not really linked defence spending to tariffs.

This also means that the government now has to worry about keeping fiscal room to support industry in the event of tariffs.

If Trump was actually clear about linking defence spending to tariffs, than you'd be right.

 

[calculus]

I think we could satisfy the US with something like the following presentation:

1. Look at all the US-built stuff what we have bought recently : F35, P8, Aegis, Spy 7, ESSM, etc..(we could toss Chinook and C130J in there as well, for good measure).
2. Look at what we are planning to buy: E7, Abrams (maybe) M109 (maybe), more SPY 7, more Aegis, SM2, Tomahawk, RAM, NASAMS, MLRS, etc, etc.

I'm not necessarily advocating we buy all these things, but if we had a list of purchases and planned purchases, all from US companies, worth "billions and billions" of dollars, and a clear path to 2% (I would not go any further than 2027), I think that would do a lot towards placating this administration (even if we aren't at 2% by June). It would even be better if we exceeded expectations a bit, and committed to something like 2.3%.

 

[ytz]

Its because they realize to get to where we need to be means cutting social spending and probably foreign aid. And Canadians looooove their social programs.

Alternatively, raise the GST back up by 2%. People can't have their cake and eat it too. Low taxes, comprehensive public services, decent military. Pick two. And at least consumption taxes will hurt business the least.

 

[Czech_pivo]

Alternatively, raise the GST back up by 2%. People can't have their cake and eat it too. Low taxes, comprehensive public services, decent military. Pick two. And at least consumption taxes will hurt business the least.

A 1% increase to the GST will provide an extra 10$ billion/yr - devote, by enshrining in legislation, that this 10$ billion/yr goes directly to CAF funding and its above and beyond existing budgetary outlays.

 

[ytz]

A 1% increase to the GST will provide an extra 10$ billion/yr - devote, by enshrining in legislation, that this 10$ billion/yr goes directly to CAF funding and its above and beyond existing budgetary outlays.

An honest PM would make the case to Canadians that the GST needs to be raised and will be used to bring the CAF to 2% and beyond.

And it's not just the CAF. I have worked with our intelligence partners and diplomats. They are hurting too. Although, they don't need nearly at much as we do. Foreign policy is just a complete afterthought in this country until there's a crisis.

 

[ytz]

As I recall the biggest single expenditure is Old Age Security. And seniors vote.

OAS is on track to hit $100B by 2030. It's at $70B right now. Current projections are for $181B in 2045. If we're aren't going to raise the GST, we need to have honest conversations about OAS.

I always think of my personal situation. With my CAF pension ($60k) and CPP ($17k), why would I need the extra almost $9k per year at 65? It's ridiculous that OAS doesn't begin to get clawed back till you make $86k. And doesn't phase out till $140k. Nobody making more than $70k as a senior really needs OAS in my opinion. And that would include me.

It's even crazier cause these folks are getting pogey they don't need at a point in their lives when they don't have childcare expenses and are most likely to have fully paid off homes.

If we don't fix OAS, it will eat the entire budget and kill literally every other priority this country has. We're debating whether $50B on a train is worthwhile. Or $30B on a pipeline. And those are one time costs. Meanwhile $70B goes to seniors every year.

 

[dapaterson]

Plus, unlike CPP and PS/RCMP/CAF pensions, OAS has zero assets underlying it, it's paid out of general revenue.

 

[ytz]

Plus, unlike CPP and PS/RCMP/CAF pensions, OAS has zero assets underlying it, it's paid out of general revenue.

Incidentally, CPP should actually be much higher. It isn't. And that's part of the problem. Today's generation of seniors didn't make CPP substantial enough. So now they want generous OAS top ups. What was meant to ensure that seniors weren't homeless and eating cat food is now vacation money for those with defined benefit pensions.

 

[dapaterson]

Incidentally, CPP should actually be much higher. It isn't. And that's part of the problem. Today's generation of seniors didn't make CPP substantial enough. So now they want generous OAS top ups. What was meant to ensure that seniors weren't homeless and eating cat food is now vacation money for those with defined benefit pensions.

The decision for CPP and for pensions for those employed by the GoC was to pay into the funds on a go forward basis, with the legacy amounts owed kept as liabilities in the public accounts.

The good (?) news is that the combination of markets outperforming expectations and premature deaths during the pandemic have contributed to surpluses in the funds...