The Ploughshares Monitor Summer 2012 Volume 33 Issue 2
The multibillion-dollar military procurement plans outlined in the 2008 Canada First Defence Strategy (CFDS)1 have run up squarely against the imperatives of the government’s fiscal policies. The goal of balancing the federal budget by 2015–16 requires cuts in previously announced capital spending plans at the Department of National Defence (DND).
DND is the largest federal department with the largest level of capital spending and the largest pool of capital assets. To meet the government’s deficit fighting goals, cuts must be made to the anticipated annual capital expenditure growth through 2015–16, and likely then through the remaining years of the 20-year period (2008–9 to 2027–28) covered by the CFDS.
In 2011 we asked former Project Ploughshares staffer Bill Robinson to review the capital spending plans outlined in the CFDS. Working from publicly available documents he provided the analysis based on the 2010 budget and related documents. Although Robinson anticipated that further cuts would be made in subsequent years, changes in procurement plans over the past year and further cuts to DND announced in the 2012–13 budget are not factored into his article, which follows.
However, the major points Robinson raises remain relevant:
- As of 2010, it was highly unlikely that the funding outlined in the CFDS for various DND procurement processes was adequate to pay for the items listed.
- “The size of the probable shortfall is difficult to estimate with available information.”
- In the interests of transparency and public accountability, the underlying financial assumptions being used in the CFDS should be clarified by DND:
It would be helpful if the government would make public more details about its procurement plans, including cash estimates of total life-cycle cost, inflation assumptions, and cost overrun contingencies. The question of the depreciation of pre-2008 assets also needs to be resolved to properly assess the accrual accounting-based numbers provided in the CFDS.
In early June public reports (Berthiaume 2012; Brewster 2012) based on access to information requests indicated that the newly elected majority Conservative government was advised by officials in May 2011 that funding was inadequate for the shopping list of military equipment in the CFDS. In other words, Robinson’s conclusion was correct. Officials recommended then that the list of military equipment to be acquired under the CFDS be “reset” or “refreshed” by scaling back capital acquisitions.
Defence Minister Peter MacKay has now confirmed that the CFDS is being reviewed by officials. In a conversation with a DND official I was told that no timeline will be announced for this process; neither will there be public consultations on the military’s capital procurement program.
The issues that Robinson highlights in his analysis of the CFDS remain relevant to the CFDS reset process. Cash estimates, inflation assumptions, cost overrun contingencies, pre-2008 asset depreciation, and the implications of accrual vs. cash-based accounting need to be disclosed if the Canadian public—usually referred to as taxpayers by the government—is to be able to properly understand and assess the military spending plans for the Canadian Forces.
More importantly, the choices being made about which planned military capital expenditures to keep or drop speak directly to underlying assumptions about potential threats to Canadian security and the means used to meet these threats. The CFDS reset provides an important opportunity to reconsider how Canada chooses to protect the homeland and participate in expeditionary exercises with its military allies.
Much like the sudden appearance of the CFDS in 2008, the results of the reset of the CFDS in 2012 are slated to appear in an announcement at some undetermined time and without the benefit of wide public consultation. This is unfortunate, not only for the Canadian taxpayer footing the bill, who deserves to be informed along the way, but for the government itself. The ongoing tortured process and backtracking in the government’s pursuit of new Canadian fighter jets illustrate the problems that arise when military procurement decisions are taken behind closed doors. An increasingly skeptical public should take note.
1. For more information about CFDS, see John Siebert, 2008, Threats to Canada and the “Canada First Defence Strategy,” The Ploughshares Monitor, Autumn; John Siebert, 2011, Canada’s proposed Joint Strike Fighter purchase and the Canada First Defence Strategy, Briefing 11-1, April.
Berthiaume, Lee. 2012. Tories knew last year shopping list of military equipment was ‘unaffordable,’ documents show. National Post, June 4.
Brewster, Murray. 2012. F-35: Tories redraw Canada First Defence Strategy spending plans amid F-35 fighter jet frustration. The Huffington Post Canada, June 3.