The Defence Budget [superthread]

[MarkOttawa]

A post at The Torch:

"Waiting for Defence Budget 2009: First of the Canada First Defence Strategy Budgets?"
http://toyoufromfailinghands.blogspot.com/2009/01/waiting-for-defence-budget-2009-first.html

Excerpts from a "Commentary" by Brian MacDonald, Senior Defence Analyst, Conference of Defence Associations...

Full text here:
http://www.cda-cdai.ca/CDA_Commentary/waiting_for_budget2009.pdf

Mark
Ottawa

 

[MarkOttawa]

As far as I can see the words "defence" and "Canadian Forces" do not appear in the budget:
http://www.budget.gc.ca/2009/plan/topics-sujets-eng.html

Some conservatives.  There is this about the Canadian Coast Guard:
http://www.budget.gc.ca/2009/plan/bpc3e-eng.html

Budget 2009 provides a catalyst to increase activity in the sector by allocating funds to speed-up needed procurement. The Canadian Coast Guard requires investments in vessels to carry out its responsibility to ensure safe and accessible waterways for Canadians. The Government is investing $175 million on a cash basis for the procurement of new Coast Guard vessels and to undertake vessel life extensions and refits for aging vessels. While contracts have not yet been awarded, work will be conducted in Canada, and where possible, by shipyards located within the regions of the vessels' home-ports. New vessel procurements planned are:

        * 60 new small craft and 30 new environmental response barges that will support Canadian Coast Guard operational requirements across the country.
        * 5 new lifeboats home-ported in Prince Rupert (British Columbia), Campbell River (British Columbia), Dartmouth (Nova Scotia), Québec City (Quebec), and Burlington (Ontario).
        * 2 new inshore science vessels home-ported in Mont-Joli (Quebec) and Shippagan (New Brunswick), and one inshore fisheries vessel home-ported in St. Andrews (New Brunswick).

Vessel life extensions involve major repairs such as replacement of hulls, outdated equipment, propulsion systems and generators. The five vessels that will undergo vessel life extensions are the CCGS Bartlett and the CCGS Tanu both home-ported in Victoria (B.C.), the CCGS Tracy home-ported in Québec City (Quebec), the CCGS Limnos home-ported in Burlington (Ontario), and the CCGS Cape Roger home-ported in St. John's (Newfoundland and Labrador).

Vessel refits are smaller repairs, aimed primarily at updating obsolete operational systems to improve the availability and reliability for delivery of all Coast Guard programs. Of the 35 vessels scheduled for refit, seven are stationed in the Pacific region, five in the Central and Arctic region, seven in the Quebec region, seven in the Maritimes region, and nine in Newfoundland and Labrador.

Refits and lifeboats!  No mention of mid-shore patrol vessels or new icebreakers.
http://toyoufromfailinghands.blogspot.com/2008/09/fewer-less-capable-more-delivery.html
http://toyoufromfailinghands.blogspot.com/2008/08/diefenbreaker-in-2017.html

Dismal.

Mark
Ottawa

 

[FSTO]

Maybe they are thinking of making a separate announcement regarding defence procurement?

Or maybe I have been in the paint locker too long.  :skull:

 

[Edward Campbell]

Here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s Globe and Mail is a potentially disturbing report on the forthcoming (March 2010) budget on the CF:

http://www.theglobeandmail.com/news/politics/budget-questions-loom-for-canadian-soldiers/article1443706/

Budget questions loom for Canadian soldiers
Revitalized by Afghanistan, Canada's military has been 'firing on all cylinders.' But given the large federal deficit, analysts question how long Ottawa can keep it up

Campbell Clark

Ottawa
Tuesday, Jan. 26, 2010

It is the most active Canadian military in a generation – a multi-tasking force fighting in Afghanistan, aiding relief efforts in Haiti, and preparing to send thousands of troops to patrol the Vancouver-Whistler Olympics.
Soon, however, the country's armed forces will have to grapple with a different sort of foe: a punishing federal deficit.

Defence Minister Peter MacKay said in Halifax Monday that there is no doubt the military is currently “firing on all cylinders” and operating at a “very high tempo.”

But the question, he said, is “for how long?”

The complexities of the Afghan mission have helped revitalize the military, making it better-drilled and more flexible and responsive for other deployments, such as Haiti. Yet the military has also benefited from a big boost in spending, which could be hard to sustain as Ottawa attempts to haul the country out of deficit.

Canada has 3,000 troops in Afghanistan, about 2,000 in or on their way Haiti, and 4,500 headed to Vancouver in February. It is the busiest time since the Suez crisis of the 1950s, when the forces were almost twice as big.

“It's certainly the most I have ever seen in my 30 years of service,” Lieutenant-General Andrew Leslie, who heads the army as Chief of the Land Staff, said in a recent interview. “We are probably, right this week, the busiest I have seen us, ever. … We could not have done this with the same rapidity and the same competency five years ago. That is categoric.”

More money, for things such as the huge C-17 strategic heavy-lift aircraft that flew equipment to Haiti, made a big difference. Prime Minister Stephen Harper's Conservatives made a political promise to provide the funds, but the fact that the forces had a mission in Afghanistan made the spending a political imperative.

The costs of fighting in Afghanistan, the cost of relief for Haiti, burn holes in the military budget, but also provide a justification for spending.

With the military preparing to leave Afghanistan next year, Canada will face different choices. The Conservatives plan to dig out of deficit by restraining discretionary spending, but one fifth of this sum is the $19.2-billion defence budget – and Mr. Harper has promised that will grow by 2 per cent each year.

Many analysts believe the Conservatives, under financial pressure, will have to scrap the expensive promise to expand the forces to 70,000 from 65,000. Planning may again revolve around the phrase coined by Joel Sokolsky, principal of the Royal Military College: “How much is just enough?”

Canada has had more impressive military capacity, and a more limited one. Queen's University military expert Doug Bland sees two episodes 40 years apart as bookend illustrations.

In 1956, Canada's 120,000-strong armed forces were recovering from Korea, heavily committed with troops and planes in Europe, but had no trouble dispatching a battalion during to the Suez.

In 1996, Canada's stretched forces rushed a mission to Zaire, the so-called “bungle in the jungle.” The forces had sketchy equipment, and couldn't get there before the reason for the mission vanished.

Spending increases since 2004 turned the trend, but now the question is what is needed for the future.

Mr. Bland said Canada should focus on the Western Hemisphere, combatting drug-runners in Latin America and the Caribbean, and providing regional security and relief.

That would make Canada a partner the United States needs, Mr. Bland said. The military can't influence Europeans, but can help relations with Washington, at least on decisions that affect Canada.

“Perhaps when we go to the table and want to talk to the Americans about Arctic sovereignty and so on, they'll be more willing to listen.”

But University of Ottawa professor Philippe Lagassé says Canada cannot expect to use its military to gain foreign-policy influence. A bigger role in foreign missions wins plaudits, but doesn't sway nations to do something they would rather not.

“You may get respect,” he said. “But actual influence is another thing altogether.”

So, he said, Canada's military should focus on goals that are important to Canada: protection at home, as in the Olympics, responding to a crisis, like an ice storm here or an earthquake in Haiti, and an expeditionary force to serve as an ally in international-security efforts, like Afghanistan. In effect, what it is doing now.

It might make sense to focus on the Western Hemisphere, Mr. Lagassé said, but Canadians will not want their government to reject calls from old NATO allies, or appeals for relief in a far-off disaster. “Are we going to say we don't do tsunamis in Asia?”

To maintain the forces at the current capacity, the military will need both the breather it will get from leaving Afghanistan and the projected 2-per-cent annual increases, he said.

The military would do more missions if it had more money, but doing much more is not likely to increase influence much, and Canadians won't accept the cost in lean years, Mr. Lagassé said. “In the end, Canadian defence policy ends up being the art of the possible.”

It has been Canadian tradition, for almost as long as I have been alive – and even longer, to cut defence spending whenever there is a financial crisis. Sometimes the results have been deadly.

With a possible respect to Prof. (and retired lieutenant colonel (VIIICH)) Doug Bland (Queen’s University), recasting foreign policy in (regionally) specific terms does not help the budgeting exercise. One must decide, as Prof. Joel Sokolsky (RMC) suggests on what is, broadly, needed and how much of that is “just enough.”

The answer to “just enough” is a smallish (but ‘complete’ – which means it’s going to have a poor tooth to tail ratio) and flexible (again, more tail than tooth) permanent force (to resurrect and old term) base that can be augmented, reasonably quickly, by people (and things) from a large, well equipped, well trained reserve – part(s) of which might be on full time or near full time service.

 

[Edward Campbell]

But cuts to defence spending are not the only or best answer according to this column by Terrance Corcoran, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from todays’ National Post:

http://network.nationalpost.com/np/blogs/fullcomment/archive/2010/01/25/terence-corcoran-lots-of-options-for-spending-cuts.aspx

Terence Corcoran:
Lots of options for spending cuts
The battle must be waged anew to drive the Legendary Immovable Spending Blob out of Ottawa

By Terence Corcoran

The Legendary Immovable Spending Blob appears to be descending over Ottawa’s pre-budget consulations. Forecasters now predict the federal government is heading for years of deficits unless something is done. By 2013-14, Ottawa could still be racking up annual deficits of $19-billion, according to the Parliamentary Budget Office. So what, exactly, is that something that must bedone? Enter the ISB, ritually dragged onto the scene by a little army of volunteers who will tell you that, no matter what the state of the economy, the one thing that can’t be done is spending cuts. Just impossible. Beyond the realm of possibility. Don’t even waste time thinking about it.


The Rev. Jeffrey Simpson did his bit last week to prop up the idea that Ottawa’s spending is more or less immovable, a great fixed thing that can never be reduced in size. It can grow, but never be cut. As a result, when Ottawa moves into deficit territory, there is only one alternative.” The economists all believe,” said Rev. Simpson in one of his regular sermons, his iPod on direct download from the higher powers in Ottawa, “the federal government should raise taxes to eliminate the defict with certainty, pay down debt to prepare for aging, and give Canada a buffer against future shocks.” The preferred option: raise the GST.


Spending, apparently, cannot be cut. Back in 2001, when Paul Martin was still finance minister and federal spending was a mere $130-billion a year, the idea of spending reduction was seen as just not feasible. There is nowhere to cut, no fat to trim, and no program that can be scaled back. In the wake of his own 2001 budget, Mr. Martin said: “People always come back and say, ‘You can’t find the money to do that within $130.5-billion?And the answer is no.’”


This year federal spending is expected to top $270-billion on its way to $300-billion by 2015, an increase of 160%. So we have gone in a little more than a decade from a place where Paul Martin could find nothing to cut from $130-billion to a place where nothing can be cut from $300-billion.


This is ancient history now, but back in 2001, just to get the ball rolling, I recommended some possible reductions in Ottawa’s annual expenses, a suggestion-list of cuts. The Western and Atlantic business subsidy agencies ($500-million), the Technology Partnerships Program ($200-million), the Sustainable Development Foundation ($100-million), the Prime Minister’s Africa Fund ($500-million), the anti-tobacco marketing campaign ($200-million), the green municipal funds ($250-million), new cultural programs ($500-million).Needless to say, these ideas were ignored and I imagine most of these spending categories have since been renamed and expanded.


So the battle must be waged anew to drive the Immovable Spending Blob out of Ottawa. Spending can and must be cut. Fortunately we have two rough blueprints at hand to get us all started. Over at Maclean’s magazine, Andrew Coyne has crafted a handy plan  to trim federal spending over the next few years. In “How to cut $20-billion from spending without really trying,” Mr. Coyne proposes cuts that would bring the budget deficit to zero over 5 years. A useful but tougher companion document is the Canadian Taxpayers Federation’s pre-budget call for about $20-billion in cuts over three years.

In brief, the Coyne cuts would include $6-billion in reduced transfers to the provinces between now and 2014. Via Rail and AECL should be put on full cost recovery to save $500-million. Half the CBC allocation should be raised by the CBC via direct cable fee, saving $500-million. Assorted regional development agencies would be shut down ($700-million). Handouts to private industries could be trimmed by $1-billion. Tax breaks for Labour Sponsored Venture Capital Funds, farmers, fishers, resource industries would save another $2-billion.


The taxpayers federation has similar ideas in mind, including cuts in equalization ($4.3-billion), a 5% reduction in departmental spending ($8.5-billion), and $2.5-billion saved by reducing regional development spending and crown corporation outlays. A public sector wage freeze and a freeze in public sector hiring, along with reductions in spending on consultants and advertizing could also be used to bring the deficit under control.


Spending can’t be cut? Not true. There are lots of options. And now’s the time for Ottawa to start making a list.

There are many areas that can and should be cut, before the defence budget is even considered, as Corcoran and (in the embedded links) Coyne and the CTF point out. One can quibble about the details – three years to a balanced budget or four or five; cut all stimulus or maintain some for (necessary) infrastructure maintenance; decrease transfers or cap transfers; etc – but there is no doubt that much of the Government of Canada’s spending is unproductive and, often, counter-productive. But every programme has champions and a constituency, a constituency  that benefits and maybe even votes.

 

[Edward Campbell]

And here is the Canadian Taxpayers' Federation's plan. It is worth a read.

Here is a key line from the report (page 22):

"Canada’s debt has gone through four major periods of explosive, sustained growth: World War One, World War Two, the prime‐ministerships of Pierre Trudeau and Brian Mulroney, and currently. The pace of the debt burden’s growth today is paralleled only by this country’s darkest hours of war and its darkest hours of fiscal recklessness."

"Fiscal recklessness" is a good term to describe most government spending since around 1968. Good government, more productive (effective) government and 'cheaper' government is possible; we've done it before. The 'culture of entitlement' (thank you Pierre Trudeau) has to change, that's all.


Caveat lector: I am a member of the CTF and I make occasional donations to support its work.

 

[Edward Campbell]

Here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s Financial Post is another useful contribution to the 2010 budget debate – it’s only me, talking to myself, so far, here on Army.ca:

http://www.financialpost.com/news-sectors/economy/story.html?id=2484209

Cut taxes to lift productivity, Ottawa urged
Conference Board

Paul Vieira, Financial Post

Published: Tuesday, January 26, 2010


In a report, issued today, the board said policymakers should keep tax reform as a top issue in an effort to reverse a 20-year slump in productivity.

OTTAWA -- Even though they face deteriorating fiscal conditions, Canadian governments should continue to keep corporate income taxes low -- better yet, reduce them further -- to boost moribund productivity levels, the Conference Board of Canada recommends.

In a report, issued today, the board said policymakers should keep tax reform as a top issue in an effort to reverse a 20-year slump in productivity. Tax reform is crucial in sparking a revival in business investment in machinery and equipment investment, which has slowed considerably since the early 1980s and might help explain Canada's awful productivity record.

"We have overinvested in people relative to the plant," said Glen Hodgson, vice-president and chief economist at the Ottawa-based think-tank.

A stronger Canadian dollar versus its U.S. peer will make it easier for businesses to invest in the necessary technology, because the equipment has never been so cheap. The high-flying loonie might have boosted business investment in machinery and equipment in the third quarter of 2009, which jumped more than 25% annualized, recent data indicate.

But lower corporate income taxes, including the abolition of capital taxes, would help accelerate the process.

If necessary, governments that find themselves too strapped for financing could opt to increase consumption taxes, or introduce a new so-called green tax, to offset the shortfall created by lower corporate tax receipts.

"It is a rebalancing of the tax system," Mr. Hodgson said. "Put less weight on investment and income and capital, and more weight on consumption taxes. Tax the things we value the least more, and try to lighten taxes on things we really do value."

Tax reform is one of the elements the federal and provincial governments must tackle as part of productivity puzzle. Late last week, Bank of Canada governor Mark Carney warned the country faced years of sputtering economic growth -- no greater than 2% a year -- unless productivity levels improve.

Productivity growth is widely considered the best way to increase a society's standard of living, as income gains are produced with less effort. For Canada, improving current moribund levels will be more crucial in an era of slowing growth in the labour force, as Baby Boomers retire.

The Conference Board study indicated the real problem for Canada is the lack of investment in equipment. The quality of labour has climbed steadily since 1961, whereas the amount of capital -- or machinery and equipment -- deployed has been stagnant as of the 1980s.

"Sluggish growth in the capital stock has been a bigger impediment to Canada's productivity performance than has the labour force," the report said.

Besides tax reform and the stronger dollar, the report said governments should tackle the following to boost productivity: measures to improve the country's venture-capital market; continued investments in infrastructure, such as public transport, roads and railways; and removing "burdensome" government regulation that removes the incentive to invest in technology.

pvieira@nationalpost.com

Two points, and I know I’m repeating myself:

1. There is only one taxpayer – you and me. Corporations can and do pay taxes but they do so only with the money they get (earn) from you and me. Corporate taxes are, indirectly, paid by us. It is the indirect nature of corporate taxes that makes them inefficient – more expensive to collect. ‘We,’ consumers mostly, would pay less, overall, if there were NO corporate taxes at all and other taxes were increased to provide the ‘lost’ revenue; and

2. Productivity does mean making workers do more for less. Workers are only a minor part of the productivity equation. What needs to happen is to allow each worker to do more in the same time – maybe for a higher wage – by giving him or her better tools, including better management practices, better training and  better technology.

My, personal, preference, would be:

• No further changes to the GST/HST except to harmonize across the country;

• Steady decreases in the income tax which is, essentially, a tax on savings and, therefore, a tax on investment and, consequentially, a tax on jobs because jobs are created by investment;

• A total, 100%, reduction in corporate taxes;

• A new carbon tax – a pure consumption tax, paid by each of us whenever we fill up our tanks, turn up our thermostats, take a hot shower, watch our large screen TV or buy groceries.  This would be sufficient to offset ‘losses’ from the corporate taxes and pay for the steady decreases in the income tax; and

• Serious spending cuts, as discussed above.

That would allow us to afford all the essentials, including a strong military, and have a more productive economy with more and better paid jobs for Canadians.

 

[Northalbertan]

Carbon tax is a dirty word out here in the west.  I don't think that idea will ever fly out here.

 

[Edward Campbell]

Carbon tax is a dirty word out here in the west.  I don't think that idea will ever fly out here.

I understand that; that doesn't make it a bad idea.

A new consumption tax, all dressed up in bright green, that might, actually, reduce pollution (because it will not do anything about climate change), remains a good idea to offset the costs of a balanced budget after about $15 Billion per year have been cut from existing spending - without touching defence or transfers to provinces.

 

[Jed]

Mr. Campbell I agree on about 99 44/100 % of your opinions and insight but I disagree with a Carbon Tax. Yes it is a consumptive Tax and it will be theoretically distributed against the wealthy people first, but it would not be distributed 'regionally' very effectively. Folks living in rural and isolated areas away from the main centres or living in more northern climates, would be most likely taxed to the breaking point. Such a departure from the Status quo would mean having to reshift taxation on a macro basis. Please excuse my layman terminology and probably my spelling and grammar.

In my point of view it is all about production. I can not see how the completely redundant bureaucracy in Ottawa, or Toronto or any of the provincial capitals adds to efficiency.

Canada used to be relatively efficient at making things happen without killing entire forests to supply paper for legions of clerks to ensure new and improved forms are filled out correctly. What ever happened to guys like CD Howe who would go through an in basket piled 2 feet deep in one day making decisions and folks actually getting on with their work?

Before we had computers, when typewriters were the main writing tool and numbers were added primitively, major work occurred. Why do the bosses at the top of the pyramid need to have every last detail immediately? Whatever happened to appropriate delegation of tasks and matching authority and responsibilty correctly?

As long as we have micromanagement at the highest levels of our governmental organizations and the resulting lack of trust from employees down the line, productivity will never improve.

 

[a_majoor]

I don't think people are not listening to you Edward, after all, similar ideas are on display in the Making Canada Relevant Again economic superthread.

Tag teaming will work even better if parliamentarians, the media and every influential individual and decision maker is offered the arguments given and links to these URL's (and others) with a very polite but insistent message to read them (or your political party/newspaper/business will no longer receive my patronage). As an Aikido practitioner, I would also suggest placing the links on every left wing site imaginable in order to generate controversy and discussion in the spirit that free publicity is better than none.

Army.ca is supposed to have almost 10% of the entire CF as members, so there is a critical mass to cover the nation if everyone gets aboard the project...

 

[Edward Campbell]

I hate to keep saying “I told you so,” but this, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s Globe and Mail web site illustrates that Canadians so-called affection for the CF may be a mile wide but it is, at best, only an inch deep and it does not extend to building and maintaining the military capability that one of the world’s richest and most important nations needs. Defence, according to EKOS Research boss Frank Graves is where Canadians want Ottawa to cut:

My emphasis added
http://www.theglobeandmail.com/blogs/bureau-blog/budget-should-target-fat-cat-ottawa-poll-suggests/article1465710/

Budget should target 'fat-cat Ottawa,' poll suggests

Jane Taber

Friday, February 12, 2010

1. Economic advice. Canadians want the government to cut services and spending to reduce the deficit, according to a new poll. Are you listening Jim Flaherty?

The Finance Minister and Prime Minister Stephen Harper vow they can wrestle down the $56-billion deficit without having to raise taxes or to cut spending. Many economic experts believe this to be impossible.
EKOS Research asked Canadians to tell them how they would do it. What is their preferred approach to deficit reduction? Forty-six per cent of respondents said they would cut services and spending.

And 56 per cent of those who identified themselves as Conservatives supported cuts, compared to 38 per cent who say they are Liberals, 36 per cent NDP, 42 per cent Green and a huge 56 per cent of the Bloc Quebecois.

Only 14 per cent said they would raise taxes; 10 per cent of respondents said continue to run deficits and 30 per cent said they didn’t know.

The poll of 3,006 Canadians was conducted between Feb. 3 and 9.

Mr. Flaherty is to deliver his budget on March 4, which many observers are hoping will lay out the roadmap to deficit reduction.

EKOS pollster Frank Graves believes the Conservatives will “accent the need for severe cuts to the ‘bloated bureaucracy’.” In other words go after so-called “fat-cat Ottawa.”

“This will be effective in the short term,” he says. He also says his research team has done a lot of “hard testing” on where to cut - and it’s the Defence Department.

“My guess is that the major resources being devoted to Defence will be eyed by many Canadians as a possible target given he Afghan exit plan,” he says. “This will clash somewhat with the rising affection for the ‘troops’.”

Mr. Graves says that he has also done polling which has shown “receptivity to re-introducing some of the cut GST and dedicating it to the deficit.” That would be a tax hike.
Meanwhile, Canadians are feeling pretty good about themselves.

Dimitri Pantaxopoulos, of Praxicus, a national polling firm that has done research for the Conservatives, recently looked at Canadians’perceptions of their wealth.

He found that 75 per cent of Canadians felt they were the same or better off than they were at the same time last year. Last year, in the midst of the recession, only 46 per cent of Canadians felt that way.

The poll of 1,000 Canadians was conducted between Jan. 18 and 22.

However, he also found that although 72 per cent of respondents believe they are at least as well off as their parents at the same stage in life, only 46 per cent of the respondents said “they expect the next generation will be at least as well off as they are.”

It is encouraging that most Canadians disagree with Red Ed Clark, CEO of TD Canada Trust and his economist and big business colleagues that more taxes are the answer. Some taxes are necessary, even ‘good’ but deep and wide cuts to wasteful spending must come first – must, but, most likely will not. My guess is that there will be cuts to necessary, even productive spending but the waste will stay and will, eventually, be augmented with more waste funded by new taxes.

 

[Colin Parkinson]

The Bartlett is undergoing a major refit at Allied shipyard right now. We got new 47' cutters a few years back to replace the 44's. The 41' cutters likely are due for new engines and electronics. the Hulls are in good shape. The 70' Point class are getting long in the tooth, the 47's are to small for Prince Rupert, likely another Europeon design to replace them. To bad they "sold" *cough* gave away *cough*  the John Jacobson. I suspect they could use her right now. Considering the interest in the Arctic, they could build a new 1100 class icebreaker for the West Coast and send her North in the summer, we used to have 2 x1100 on this coast. (Martha Black and George Pearkes)

They could increase SAR response in Comox by making the Crashboats a 24/7 operation with a SAR sector.

As for Canadians understanding the need to fund the military, they need to educated in terms they can understand. Few people understand that for each soldier/sailor/airman deployed overseas, they need another 4 to keep a body there. Also war costs should come from general revenue.

 

[Edward Campbell]

Here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s Globe and Mail are two articles that are, simultaneously, complementary and competing one with the other:

http://www.theglobeandmail.com/news/politics/budget-must-tackle-rising-costs-of-greying-population-watchdog-warns/article1471991/

Budget must tackle rising costs of greying population, watchdog warns
Slaying deficit isn't enough to counter looming squeeze on Canada's coffers, budget officer says

Steven Chase

Ottawa

Thursday, Feb. 18, 2010

Ottawa's battling to rein in record deficits, but there's a bigger problem at play that will make life even more miserable for politicians and taxpayers: Canada's aging population.

Parliamentary budget watchdog Kevin Page is releasing a report Thursday that warns it's not good enough for Ottawa to simply balance the books – because of the increasing squeeze Canada's greying ranks will place on coffers.

He predicts that even if Ottawa slays the deficit, it will still have to confront an expanding “fiscal gap” in revenue over the next decade of $20-billion to $40-billion annually.

This will arise as Canada's work force shrinks in proportion to its growing pool of retirees, a trend that should both slow the growth of government tax revenue and increase demands for health-care spending and old-age benefits.

Mr. Page's new report effectively pours cold water on the idea Canada can “grow” its way out of trouble – as the economy expands and generates more tax revenue – or make do with a moderate restraint program.

The budget watchdog says the federal government must prepare to eliminate this revenue gap – through tax hikes or spending cuts – in order to keep its debt levels stable relative to the size of Canada's economy.

Ottawa will be forced to take actions equal to between 1 per cent and 2 per cent of Canada's estimated annual economic output merely to stabilize its debt burden, the Parliamentary Budget Officer calculates. (Mr. Page is using economic output forecasts for 2013-14 to derive the $20-billion to $40-billion prediction.)

His report also says that Ottawa would need to act on an even grander scale if it wanted to go further and shrink the size of its debt relative to economic output.

Failing to at least stabilize the problem will lead to growing deficits and “severe debt problems” over the next couple of decades, Mr. Page warns.

The year 2011 is the beginning of what has been called a “demographic time bomb” for Canada: an explosion of the 65-plus population over two decades coupled with a sharply declining proportion of Canadians in the work force as boomers retire.

“Right now we have a mindset that if we got back to balance, everything would be fine. That's a very short-term perspective,” Mr. Page says.

The watchdog takes care to avoid criticizing politicians for past fiscal decisions, but his analysis clearly suggests the combined efforts of the Harper government and former Liberal governments resulted in tax cuts that were deeper than can be sustained. Since 2006, the Tories have reduced taxes on individuals, families and businesses by an estimated $220-billion over 2008-09 and five subsequent years. That works out to roughly $36-billion a year in lost tax revenue.

Canada's demographic troubles are a slow-growing menace to this country.

The number of workers supporting each elderly Canadian is expected to dwindle to 2.5 to one in 2030 from five to one today because of this country's low birth rate, rising life expectancy and aging boomers.

This carries a fiscal cost. As the federal Finance Department warned in the 2005 budget, this looming demographic shift could sap economic growth each year over the 2010-30 period by half a percentage point.

Until the recession hit and blew Ottawa off course, this issue was a central preoccupation for the Finance Department, which warned repeatedly that it was the reason why Ottawa had to keep driving down the national debt until it was only 25 per cent of the economy. Less debt means more room to borrow when the spending pressures of an aging population begin to climb.

The number of Canadians aged 65 and over has been growing at about 2.5 per cent annually. But this rate will climb to between 3 per cent and 4 per cent starting in 2011, when the first in the massive baby boom generation celebrate their 65th birthdays.

Separately yesterday Stockwell Day, the federal cabinet minister tapped to lead the charge on restraining spending, said that he believes Canadians expect “considerable sacrifices” from Ottawa as it slays the deficit.

The Treasury Board president said the March 4 budget will identify some areas where Ottawa expects to ratchet back spending plans to help balance the federal books. “You will see some of the specifics; other areas will be more general where we will want ongoing input from Canadians.”

And

http://www.theglobeandmail.com/news/opinions/ottawa-should-just-show-spending-restraint/article1471713/

Ottawa should just show spending restraint
The emotional GST battle obscures the fact that the government doesn't have to raise taxes

William Robson

Thursday, Feb. 18, 2010

Anxiety over projections of red ink in the federal budget through 2015 and beyond sparked a flare-up over the goods and services tax recently. Suggestions by business leaders, and a prominent banker in particular, that Ottawa should reinstate the 7-per-cent GST to get back to a surplus drew a rebuke in a Conservative Party e-mail. An alternative path – spending restraint – could help move us past this dichotomy, and the government should take the lead with a tough and convincing budget on March 4.

Certainly the anxiety over the federal deficit is well-founded. Business leaders, policy-makers and most adult Canadians recall the frustrations of trying to rein in government over-borrowing in the 1980s and early 1990s. To get stuck on the same treadmill of interest payments mounting beyond the capacity to pay in the coming decade would be doubly foolish.

Unlike last time, when the movement of the baby boomers into their highest-earning (and highest-taxpaying) years gave a fiscal boost, the boomers are now beginning to leave the work force. Equally serious, governments around the world are in deep fiscal trouble: Fears of inflation and even default in some cases could drive borrowing costs much higher, pushing interest payments, taxes and borrowing up together.

As for the debate over the GST, feelings are high because even before the financial crisis and slump made it look fiscally imprudent, the cut to 5 per cent pitted business people and economists against political tacticians.

Most of the former see the GST as a “good” tax – much less economically damaging than alternatives such as taxes on personal incomes and business profits. For them, the cut was a missed opportunity for implementing growth-friendly tax relief instead.

Politically, however, cutting the visible and unpopular tax looked smart. The 5-per-cent GST was one of five key planks in the Conservatives' first winning election platform, one they felt obliged to enact early in their mandate. Reversing the cut would be intensely embarrassing, and advice to do so is correspondingly irritating.

We should consider what outcome promises the best fiscal future for Canada.

If, as most business people and economists would prefer, consumption taxes such as the GST should provide a larger share of government revenues over time, the provinces need them far more than Ottawa. The provinces face the relentless pressure of health-care spending as the boomers age, and the GST-like taxes that Newfoundland and Labrador, Quebec, Nova Scotia and New Brunswick already have, and Ontario and British Columbia soon will, are the most robust sources to fund it.

Ottawa's fiscal situation has deteriorated so sharply partly because both the previous Liberal and the current Conservative governments committed to increase transfers to the provinces faster than the economy and the federal tax base can grow. This situation is not just fiscally unsustainable, it also undermines accountability: Governments serve citizens better when the legislature that provides the programs levies the taxes.

Those transfer commitments expire before 2015, and by then Canada will be better off if Ottawa is raising and transferring less money, and the provinces are posing honest questions to their voters about how to fund their health-care promises.

The battle also risks obscuring the key fact that Ottawa does not need to raise taxes to balance the budget. The scary projections start from a stimulus-bloated baseline. As many commentators have pointed out, and as the C.D. Howe Institute's upcoming “shadow budget” documents, simply returning real per-person spending to its 2008 level can end deficits before 2015.

The spending cuts overseen by prime minister Jean Chrétien and finance minister Paul Martin in the late 1990s not only yielded big surpluses, but also were accompanied by robust economic growth. Similar moves today are both desirable and practical.

The main obstacle to balancing the budget through restraint is opposition inside the government and among those who benefit from its spending. Talk of tax hikes will strengthen that opposition and make a necessary job harder.

Prime Minister Stephen Harper and Finance Minister Jim Flaherty can and should lay out a credible path for spending that restores budget balance before five years have passed. If they do not, people will infer that the government lacks the conviction or will to proceed. In that case, the pressure for tax hikes will grow – and if the government responds to that pressure, it will be more damaging personal and business taxes, not the GST, that go up.

If the March 4 budget does lay out a clear and compelling program of spending restraint, the task of restoring fiscal balance will be far easier to accomplish.

William Robson is president and CEO of the C.D. Howe Institute.

First: two cherrs to Kevin Page for bringing some long term thinking to this process.

Second: to more cheers to William Robson for highlighting the single most important element of budgeting – restraint.

At the risk of repeating myself, we need:

1. Massive cuts to expenditures, excluding cuts to –

    a. Health and social transfers to the provinces,
    b. National defence/security;
    c. Post-secondary education; and
    d. R&D – with emphasis on the R.

2. Restraint in transfers to provinces – holding increases to the rate of inflation;

3. Restrain in defence spending – holding increases to the rate of inflation for military hardware (which is much, much higher than the general rate of inflation) and funding unforecasted operations from general revenue;

4. Cuts to taxes and fees, specifically –

    a. Cuts to the income tax aimed at taking hundreds of thousands of the lowest income (from employment) Canadians off the tax rolls entirely
    b. The complete elimination of corporate taxes, which are, essentially, just consumption taxes (like the GST/HST) but with an expensive, convoluted collection system,
    c. Reductions to the employers’ share of EI and the CPP,

5. Then, if necessary, two new taxes –

    a. A surtax on income from employment over some defined amount, say, just for argument) income from employment (salary and bonuses) exceeding $2.5 Million, after deductions, and
    b. A new carbon tax, a green tax that would be collected à la the GST/HST on a flow through basis so that the ‘burden’ ends up, visibly, with the end user consumer, from Victoria, to Yellowknife and on to St. John’s, every time (s)he heats the family home or business, fills up the gas tank, turns on the big screen TV or buys groceries.

You can bet that defence spending (which accounts for about 7.5% of federal spending or about ⅓ of the deficit) will be on many, many, many ‘cut’ lists – starting with the political left but including people in Finance and the Treasury Board.

 

[Edward Campbell]

Here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from the Globe and Mail and National Post, respectively, are two more articles on possible cuts to defence spending:

http://www.theglobeandmail.com/news/politics/afghan-pullout-sets-budget-quandary-for-harper/article1473645/

Afghan pullout sets budget quandary for Harper
Should expected savings of up to $1.5-billion after troop repatriation be used trim the deficit or to keep priming the military?

Campbell Clark

Ottawa
Friday, Feb. 19, 2010

The Harper government will save up to $1.5-billion a year after the Canadian troops are repatriated from Afghanistan in July of next year but the move will leave the Prime Minister with a tough budget choice: Use the money to pay down the deficit or roll it back into the military.

Signs of what decision Stephen Harper will make could come as early as March 4, when the federal budget is delivered and his government maps out plans for a return to balanced books.

This spring, the government will update its defence spending projections for the next three years.

Two new think-tank papers put the estimate of savings when troops return at $1-billion to $1.5-billion.

“It may be that during this year's budget speech, which will concentrate on the way in which the government plans to deal with the massive budget deficit, the government may mention that the planned withdrawal from Afghanistan will result in savings of approximately $1-billion annually,” wrote retired colonel Brian MacDonald in a paper released Thursday by the Conference of Defence Associations.

Mr. MacDonald notes that the government has already signalled it expects to lop $765-million in 2011-12 from the $943-million in special funds allocated this year to the military for the Afghan mission.

But he argues the government has yet to really clarify the plans for the military's base budget.

The current public projections for 2011-12 show the main budget declining slightly and don't even include the 2.7-per-cent annual increase that the Harper government promised in its 2008 defence strategy. An update to that figure this spring, and new spending projections for the following year, will indicate whether the military's multiyear spending plans will include big-ticket items, or restraint.

Mr. MacDonald argues that, unless some of the Afghanistan spending is pumped back into the military, the Canadian Forces will not be able to replace desperately needed equipment like the navy's ships and destroyers and the air force's fighter jets.

Suggestions that Canada forego the spending for five years to fight the deficit will mean foregoing a fully functioning navy or air force, he says: “We don't have the luxury.”

The Conference Board of Canada argues that the withdrawal from Afghanistan provides an opportunity to slow increases in military spending that have averaged 8 per cent per year since 2000.

Conference Board economist Alexandre Laurin said not all of the $1.5-billion in annual operating costs for Afghanistan estimated by Parliamentary Budget Officer Kevin Page can really be banked when the troops withdraw, since some of it is, for example, the cost of equipment that would go to waste if not used elsewhere.

But it will still make it easier for the government to slow the rate of increases in military spending to 3 per cent per year – which the Conference Board estimates would save $1-billion in 2011-12 and $1.5-billion by 2013-14.

“What's the alternative? To keep it growing at such a high rate,” Mr. Laurin said.

Recent increases have allowed the military to rebuild its capacity, but that growth cannot be maintained when cost cuts are needed to combat the deficit, he said.

“We've done most of the catch-up. … Yes, we should be able to at least maintain our [defence] capacity, but we don't need to increase it further.”

“We need to find some areas for spending reductions, and that would be one of them.”

And

http://network.nationalpost.com/NP/blogs/fullcomment/archive/2010/02/18/don-martin-forces-prepare-for-funding-cuts.aspx

Don Martin: Forces prepare for funding cuts
Posted: February 18, 2010

Don Martin, Canadian politics

Thousands of Canadian soldiers now simulating Kandahar combat in the California desert have had their fresh meals reduced to twice daily while bottled water is replaced by tanker truck fillups.

This is not to experience civilian life in poverty-stricken Afghanistan. It is, at least partially, military conditioning for an oncoming budget squeeze.

Now, before images jump to mind of malnourished soldiers weakly staggering around the airfield pleading for boxed rations, they still have access to plenty of snack food. And phasing out bottled water has as much to do with environmental considerations - plastic bottles, very bad - as it does cost savings. 

But a military which enjoyed a 57% surge in funding over five years is suddenly preparing to fight against restraint as the government's $56-billion deficit elimination project moves onto the Conservative agenda.

Internal documents show the forces are banking on a $2 billion increase in next month's budget to bring national defence spending to $21.1 billion.  But the good times stop rolling after this year and military planners are already scrambling for ammunition to take a shot at new funding ideas. 

Their timing is lousy. The forces will be shifting from full tilt to full stop on the battlefield at the precise moment when the Conservative government takes aim at easy cost-cutting targets.

While budget cuts this year are not expected, military brass will still ding land, air and naval forces 5% of their total spending to create a slush fund to cover unforeseen deployments.

The big fear is that a decade of twilight will arrive in 2011 as a military confined to Canadian bases using battle-battered equipment waits for another call to action.

Let's face a squeamish reality here. The supreme sacrifice of 140 soldiers, with hundreds more maimed or mentally scarred, has rendered military budgets almost bulletproof from ministerial reduction.

Nothing boosted recruitment faster or opened government wallets wider than posting a full battle-ready deployment to the wilds of southern Afghanistan. Add in soldiers rushing to disaster relief or keeping the Winter Olympics secure, and filling military coffers has been the sexiest investment on the books.

Prime Minister Stephen Harper nailed that point home during his Haiti tour this week when he saluted Canada's heavy lift Globemaster fleet as a uniquely Conservative contribution to elevating Canada into a ‘hard power' on military matters.

Of course, he neglected to mention that most of the money to buy all this equipment was courtesy of Liberal Prime Minister Paul Martin's five-year, $13-billion budget boost from 2005, a pot of gold which dries up this year.

But the perfect storm for the troops is ending. Many soldiers are poised to come home from Haiti next month, the 3,000-plus on Winter Olympic security detail starts leaving in two weeks, the California training will end soon and the withdrawal of all soldiers and hardware from Afghanistan begins in 16 months.

The question looms large: What next?

It takes a very shiny object to catch a finance minister's favorable eye, particularly when he's been ordered into the era of spending cuts,  and running, flying or sailing troops around domestic bases is not exactly an attention-grabber. 

This means the must-seize military moment has arrived for Canadian Forces to create a blueprint for continued funding with causes that have mass voter appeal. 

Be it stamping out Somalian pirating, fortifying our Arctic boundary, bolstering our search and rescue capabilities or some fresh brainstorm developing inside DND headquarters, the forces need a post-Afghanistan reason-to-exist recalibration. 

When deadly force gives way to peacekeeping with brass waiting around for new equipment to arrive years late and over budget, soldiers could again disappear from the government's priority radar.   

Then, sadly, Canada's armed forces are vulnerable to an attack which hurts them the most -- a direct hit on their bottom line.
 

National Post
dmartin@nationalpost.com

I suspect that M. Laurin of The Conference Board of Canada represents most of the advice being offered to Finance Minister Jim Flaherty; Brian MacDonald’s voice will be, largely, unheard or, at least, unheeded in the finance ministry boardrooms where budget plans are crafted.

Will events, or Prime Minister Harper, provide a nice new, shiny object - in the form of a tough, dangerous mission - to rescue the defence budget from the death of a thousand cuts à la the ‘70s (and repeated in the '80s and ‘90s)?

 

[MarkOttawa]

More at The Torch:

The CF's budget--and missions--after Afstan
http://toyoufromfailinghands.blogspot.com/2010/02/cfs-budget-and-missions-after-afstan.html

...
Note what Mr Martin writes:

"...the must-seize military moment has arrived for Canadian Forces to create a blueprint for continued funding with causes that have mass voter appeal..."

Good flippin' grief. It is not for the military to identify specific missions that may require funding. It the function of the civilian government, from time-to-time, to call on the CF to carry out specific missions that the government decides are in the national interest (the military clearly should be allowed to give their best professional advice in advance, especially when there are competing possibilities). That is the essence of civilian control of the military. Mr Martin would be loud amongst those screaming bloody murder were the CF to be perceived as challenging that control by telling the government what the CF should be doing. What a hypocrite despite the "sadly" thrown into his last sentence above.

More broadly, it is the function of the government to identify for the military the general types of missions that they may be required to perform. It is then up to the military to tell the government what numbers and types of forces and equipments are required and roughly what they may cost. The government finally should make the decision about what capabilities it is ultimately willing to pay for.

But our recent governments, Liberal and Conservative, have been both unwilling and (more important) incapable to engage in the sort of serious, and politically fraught (some traditional missions may have to be ditched and there may be job losses somewhere), analytic thinking that is required for such an exercise. Sadly, the CF themselves have done little or nothing to encourage such thinking, each service being afraid that it may be gored in the process. For more along these lines see the end of this post...

British defence budget woes--a lesson for Canada too?
http://toyoufromfailinghands.blogspot.com/2010/01/british-defence-budget-woes-lesson-for.html

The key thing to watch for future budgets is the 2.7% promised ongoing annual increase--and even that is hardly what it seems...

Mark
Ottawa

 

[Edward Campbell]

Here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s Globe and Mail, is more speculation on the fate of defence spending when Finance Minister Jim Flaherty brings down his national budget in a few weeks:

http://www.theglobeandmail.com/news/national/budget/defence-priorities-subject-to-tough-budget-decisions/article1479089/

Defence priorities subject to tough budget decisions
As next week's cost-conscious federal budget draws closer, the Department of National Defence may be in for a rude awakening after years of steady and strong Tory funding

Bill Curry and Daniel Leblanc

Ottawa — Wednesday, Feb. 24, 2010

Icebreakers, fighter jets, helicopters and armoured vehicles: no other department spends quite like the Department of National Defence.

Tory times have been good times for Canada's defence budget. When the Conservatives won power in January, 2006, Canada's total defence spending stood at $14.7-billion a year. It's now more than $21-billion, a 44 per cent increase. The Afghan mission is partly behind the higher costs, but the government has also made long-term commitments to upgrade the equipment of the Canadian Forces.

But with the Afghan mission winding down and the government's focus shifting to balancing the books over the medium term, these big hikes in defence spending are coming to an end.

In a briefing this week, a senior government official told journalists that starting in 2011, the government will look for savings by scaling back the rate of growth in program spending. The official indicated that whilehealth care  and education transfers to the provinces will be exempt, defence spending will not.

No one expects defence items will be cut in next week's budget, but observers do predict that some of the more expensive purchases the government had planned for the coming years could be delayed. The Defence Department has an annual budget of $2.3-billion for capital expenditures and $2.4-billion for maintenance and upgrades.

This is a sample of some of the high-profile projects the government is working on for the coming years, highlighting a number of tough decisions that will need to be made.

Next-generation fighter planes: As part of a project worth more than $4-billion, Canada's fleet of CF-18s will need to be replaced within the next decade, and the government is being asked to choose a replacement aircraft in the near future. The government is participating with the United States in a program overseen by Lockheed Martin to design a new strike fighter, but proponents of the Eurofighter Typhoon and the Boeing Super Hornet are trying to entice Ottawa to go for their planes.

Search-and-rescue planes: Ottawa has been talking for years about spending $3-billion for new planes to conduct search-and-rescue operations all over the country. The job is currently handled by aging Buffaloes and large Hercules, and the government will face domestic pressure over concerns that the current fleet won't be up to the job.

Land-combat vehicles: DND is working on a $5-billion plan to upgrade its light armoured vehicles (LAV IIIs) and select a new generation of close combat vehicles (CCVs). The project has been on again/off again, with the government having to decide whether to pay for the development costs of a new fleet of CCVs for future ground military operations.

Supply ships: A $3-billion project to buy three new vessels to bring supplies, including fuel, to naval task forces was announced in 2006, and has yet to get launched. Odds are the government can buy only two ships if it wants to stay within budget, and it might have to ditch its plan for fully equipped, multitasking vessels. Still, the project benefits from the fact that the ships could be built in Canada, and thus contribute to the country's economic recovery.

Arctic offshore patrol ships: The government has promised to buy six to eight vessels, at a cost of $3.1-billion, to navigate year-round in the North's icy waters. The plan is a key element of Prime Minister StephenHarper's  campaign in support of Canada's sovereignty over the Arctic, which makes it hard to axe, but the ships are expensive, with an estimated cost of $4.3-billion to operate over 25 years.

Operation and maintenance: In addition to buying new gear, the Canadian Forces spend a lot of money every year upgrading, maintaining and operating their equipment. The decades-old Sea King helicopters are high-maintenance aircraft, for example, and the government could cut back on the use of its equipment in times of fiscal restraint.

O&M, the last item on the list, is always an easy target, even inside DND where people – including admirals and generals – ought to know better; cutting O&M always comes back to bite us in the bum.

 

[Edward Campbell]

Here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from a recent edition of the National Post, is a plea to “keep the military off the budgetary chopping block.” We will know is just a few hours if the government is so inclined:

http://www.nationalpost.com/news/canada/story.html?id=2629573

Keep the military off the budgetary chopping block

Matt Gurney, National Post

Published: Tuesday, March 02, 2010

On Thursday, the government will bring down a new budget. It is widely rumoured to be a stay-the-course affair that recognizes the need for tough fiscal choices. But tough choices must still be correct ones, and sometimes that means knowing where not to cut.

A recent C.D. Howe Institute report, approvingly cited by Terence Corcoran in his Financial Post series on proposed deficit-reduction measures, called for a freeze in military spending at current levels, adjusted for population growth and inflation, noting that the end of the Afghanistan campaign would provide Ottawa an opportunity to "limit the expansion of spending on National Defence without lowering our military capacity." While I share the Institute's concern over the deficit, its scholars are mistaken in two key ways: Current spending would not be enough to sustain our current capabilities, nor are those current capabilities sufficient.

As the report notes, military spending in Canada has climbed at an annual rate of 8% since 2000, far outpacing the growth in the overall economy. Beginning under Paul Martin and continuing during the Conservatives' leadership, chronically undermanned units began to return to something close to full strength. Rusted out equipment was replaced. When specific problems with Canadian gear were discovered -- for example, when the infamous unarmoured Iltis patrol jeeps fared poorly in an IED-strewn Afghan desert -- new equipment was ordered and rushed to the troops.

It can't be denied that the Harper government has delivered what the troops needed. German-made tanks, American transport helicopters and British artillery cannons have made our troops more effective and harder to kill. But it has also revealed an enduring flaw in Canadian military procurement policy: In peacetime, we convince ourselves we'll never need a military, and in wartime, we pay through the nose to buy one off the shelf. From building virtually a whole new navy and air force to battle the Nazis, to the recent race to get drones and helicopters into Kandahar in time to make a difference, it's how we've always done it. This must change.

Neglecting our Forces in peacetime and then racing to properly equip them once they're already committed to battle not only puts our men and women in danger, it's fiscally inefficient. It would be better, both for our military and our treasury, to commit ourselves to maintaining a large, robust military in peacetime that is capable of going to war on short notice, with all it needs already on hand. That means maintaining a high tempo of training, recruiting enough manpower to fill the ranks, and replacing obsolete or worn out equipment promptly.

Our navy desperately needs new supply ships and fleet-support vessels. The Forces should abandon the bizarre plan to build two bloated all-purpose ships and instead immediately design and order smaller, specialized ships which can carry out those tasks independently (and which can be built in Canadian shipyards), starting immediately. Our three 40-year old destroyers should be retired and replaced with modern, perhaps foreign-built vessels, preferably in greater numbers. The air force will soon need to replace the increasingly elderly CF-18 fighters, an enormous expense for which we should budget now. The army's fleet of armoured vehicles, battered by eight years of war, needs upgrading and retrofitting.

The steps above are what's necessary to simply maintain our current capabilities. But arguably, each branch of the Canadian Forces, most particularly the army but certainly the navy as well, ought to be considerably larger than it is. Even if Canadians are willing to settle for the status quo -- a small military that uses technology and guts to punch above its weight -- we're going to need to spend to keep us there.

Many will no doubt argue that Canada doesn't need a powerful military. But to their credit, the Conservatives, who've spent the last several years positioning themselves as the party that gave the military its pride back, aren't taking that line. Thursday's budget -- and those that follow it -- must put the money where their mouths have been.

mgurney@nationalpost.com

There is, of course, a counter argument that says that military spending is wasteful and we should, always, do just barely enough to prevent the Americans from offering unwanted help. The government’s commendably hasty response to the Haitian earthquake, made possible only by increased defence spending does not ‘earn’ the government any points in the polls: Why, therefore, spend more if there is no political return?

 

[dapaterson]

Figures lie, and liars figure.

What is the Defence budget?  A seemingly simple question, until you examine how the government operates.

Is the Defence Budget the Parliamentary appropriations in the Main Estimates only?  Do we include the Supps as well?

The Government could increase the funding to DND in the mains, but cut off the supps - that would be an "increase" that would result in less money.

There are many games that can be played in Ottawa...


(An example of the games: the announcement that PO&M budgets will be frozen for departments.  Since current collective agreements call for a 1.5% pay increase, the only way to manage that will be to attrit personnel by 1.5% per year.  Over three years, that's a 5% reduction to the size fo the public service - a desired outcome, but not cast as such)

 

[Edward Campbell]

I don’t know how the number in this story, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from the Ottawa Citizen, align with the government’s numbers from its own polls, but if they agree that about half of Canadians want the defence budget cut then we are in for some lean years:

http://www.ottawacitizen.com/business/Most+Canadians+aren+worried+federal+deficit+Poll/2638129/story.html
(my emphasis added)

Most Canadians aren't worried by federal deficit: Poll

BY ANDREW MAYEDA, CANWEST NEWS SERVICE

MARCH 3, 2010

OTTAWA — Most Canadians aren't bothered right now by the red ink flowing out of Ottawa, but they wish the government weren't killing the home-renovation tax credit, according to the findings of a new poll.

The survey shows an overwhelming majority of Canadians are in favour of the government cutting spending to eliminate the deficit, projected to hit $56 billion this year. However, most Canadians also support the idea of running a deficit until revenues rise with the economic recovery, according to the poll, commissioned by Canwest News Service and Global National.

The results suggest public opinion is roughly in line with the deficit-reduction plan put forward by Finance Minister Jim Flaherty. Flaherty, who will introduce the budget Thursday, has vowed not to hike taxes or reduce overall spending to balance the budget. Instead, the government has said it will restrain spending growth, while hoping that tax revenues will recover sufficiently from faster economic growth to eventually eliminate the deficit.

Recently, a number of economists, former public servants and business leaders expressed concern that deficits could become entrenched unless the government takes bolder steps to get its finances in order.

However, 54 per cent of poll respondents said a federal deficit doesn't bother them "at this stage."

Ipsos Reid pollster Darrell Bricker said the results suggest that most Canadians understand the need to rack up deficits to stimulate the economy through the injection of public funds.

"When you talked about the deficit previously, it really was a representation of government waste and inefficiency," said Bricker, CEO of Ipsos Reid Public Affairs. "Now when people talk about the deficit, it's about an investment in trying to turn the economy around."

Seventy-five per cent of Canadians support cutting spending, while only 28 per cent back a tax hike, the poll found. By contrast, 59 per cent support the idea of running a shortfall "until revenues rise to help reduce the deficit."

The survey helps to explain not only why the government isn't taking any radical fiscal steps, but also why the Opposition Liberals haven't been more critical of the deficit. Recently, Liberal Leader Michael Ignatieff has focused on urging the government to create jobs, and he has been vague about the Liberals' own deficit-fighting plan.

"To come out and radically attack the deficit, at a time when people probably still think the economy is fragile, is probably not good political positioning," said Bricker.

A senior government official revealed last week that the home-renovation tax credit will not be renewed. The credit, which allowed individuals to claim expenses on home renovations, covered work done before Feb. 1.

However, 76 per cent of poll respondents believe the credit should have been extended for another year.

"It's a missed opportunity," said Bricker. "It's obviously a program that's popular with Canadians."

Respondents were also asked to express their support for cutting government spending in different areas. Canadians expressed the most support — at 63 per cent and 60 per cent — for cutting subsidies for arts and sports organizations, respectively. It should be noted, however, that support for cutting arts funding was only 58 per cent in Quebec, where a proposal by the Conservatives to do just that provoked a backlash in the last election.

Fifty-nine per cent of respondents were in favour of cutting foreign aid; 48 per cent, subsidies for industry and agriculture; 47 per cent [of respondents were in favour of cutting] the armed forces and defence; 29 per cent, the environment; 29 per cent, justice and crime prevention; 25 per cent, social services; and 16 per cent, health care.

To complete the poll, Ipsos interviewed 1,000 randomly selected adults by phone from Feb. 18 to 22. A poll of that size has a margin of error of 3.1 percentage points, 19 times out of 20. Regional error margins tend to be significantly larger.

© Copyright (c) Canwest News Service

I will repeat what I have said over and over again: despite all the red T-shirts and yellow ribbons, Canadians’ support for the military may be a mile wide but it is only an inch deep. That is based, largely, on the fact that the overwhelming majority of Canadians – military supporters and opponents alike - haven’t the foggiest bloody idea of why we have armed forces and what those forces do. In fact I would guess, based on some very, very old data, that the opponents of national defence and defence spending – the Stephen Staples, Maude Barlows and so ons and so forths – are better informed about what the CF is and does than are the ‘supporters’ most of whom appear to be uncritical, uninformed ‘cheerleaders.’


Edit: typo