Canada’s federal government has historically faced poor records and there are tough trade-offs in the surge in defense spending.

PBO analysis points to chronic shortages in procurement and high demand in the future

News analysis

The Government of Canada intends to significantly increase defense spending. However, recent history shows that the federal government is struggling to reach its capital investment goals.

Defense Minister Anita Anand refocuses on defense spending in the light of Russia’s invasion of Ukraine Ottawa Conference on Security and Defense On March 11th, we promised “a robust package for modernizing NORAD”. [North American Aerospace Defence Command].. ”

“Despite the pandemic, we are still on track to increase defense spending. From $ 18.9 billion to $ 32.7 billion from 2026 to 27“Anand added.

However, Parliamentary Budget Officer (PBO) Yves Giroux told The Epoch Times: [Department of National Defence] Spending. “

PBO said on March 11th report Analysis of capital spending under 2017 defense policy Strong, safe and engaged (SSE)DND was regularly underspending compared to expectations.

According to the SSE, the cumulative shortfall from 2017-18 to 2020-21 was about $ 10 billion for what DND should have spent.

And now, the new spending profile shows higher capital spending, starting in 2025-26 and ending the 20-year period of SSE in 2036-37. Spending from the first four years of SSE has been shifted to the future.

“A significant acceleration in capital spending between 2023-24 and 2027–28 could raise questions about the government’s ability to manage increased funding activity,” the PBO report said. It states that it has at least three planned expenditures. It was double the amount of capital investment in the previous year for the past 20 years.

Anand’s NORAD Modernization Package is an addition to the projected spending under SSE. This is because the initially announced policy funding did not include these costs or major future operations. Working with the United States on the key elements of NORAD’s modernization North alarm system— A network of radars built into the Canadian Arctic 1980s..

Apart from procurement, many other countries are also increasing defense spending, so other reasons that make Giroud difficult to reach defense spending targets include inflation and supply competition.

“As a result, suppliers of the equipment, including domestic suppliers, can be burdened. Even if the acquisition of materials is not exclusive in the country, it can put a significant burden on Canada. I have.”

Giraud also noted the headwinds caused by the sharp rise in prices in achieving the 2% gross domestic product (GDP) target of defense spending agreed by all NATO members in 2014.

Currently, the annual inflation rate is 5.7%The PBO said higher spending may be needed to cover the spending that should have already been made.

“If inflation is higher than expected, more effort will be needed on the part of the government to reach the 2% target for GDP-related defense spending,” Giroud said. “We need to spend proportionally more to ensure we reach our 2% goal.”

Currently Canada is spending an estimated amount 1.39 According to the percentage of defensive GDP CIACountry comparison of military spending.

trade off

With future budgets, defense spending seems to be a higher priority than before.

Former Deputy Defense Minister and National Security Adviser Richard Faden, Prime Minister Stephen Harper, told attendees of the Defense Council on March 11 that rising defense spending would “put more pressure on debt and deficits. The government’s social and economic agenda will suffer or have to bear debt, and the deficit will increase significantly. ”

“If we’re talking about increasing our defense budget, we’re not talking about $ 100 million. It’s just a change. We’re talking about billions,” he said.

In an economic and financial outlook report released on March 1, the PBO noted that the government still has $ 48.5 billion in new spending to implement as the remaining platform measures.

Giroux also said that the deficit would be under great pressure if the state demanded more money for health care and additional demands on defense spending would move the federal government on all three sides at the same time. ..

“But the key question is whether the government wants to move on all three sides,” he said.

Procurement testing, accountability tracking

Defense procurement has long been an obstacle to government, and the purchase of fighters is a good example. According to Anand, the government is moving forward this year to sign a contract for 88 new fighters.

Former Lieutenant Christine Whitecross, who moderated the discussion with Anand, called the procurement system “strict and slow.”

The Defense Minister, and the former Procurement Minister, pushed back.

“When procurement wants to act, procurement can act,” Anand said, pointing out the procurement of the COVID-19 vaccine and saying Canada was the world leader.

“We have expertise in tables and will see a more modernization of the procurement process.”

However, with defense spending expected to increase significantly, Giroud said actual testing of Canada’s procurement system will take place in the coming years.

“I think it’s still a bit premature to see if there have been any improvements in the procurement process.”

Historically, it has been difficult to track, adjust, and demonstrate accountability for government spending on large, capital-intensive projects that span years of life.

Giroud said it proved difficult for the government to have one central repository for tracking spending, but he sees signs of improvement.

“Things have improved significantly over time. I think it’s up to us to ask these questions, so the government sector can scrutinize and track their spending. I think it needs to be much closer and much better. “

The PBO can be said to have fully adjusted the $ 164 billion spent on capital acquisition under the SSE so far.

Rahul Vaidyanath


Rahul Vaidyanath is a journalist in The Epoch Times of Ottawa. His areas of expertise include economics, financial markets, China, defense and security. He has worked at the Bank of Canada, Canada Mortgage and Housing Corp., and investment banks in Toronto, New York and Los Angeles.