Considering that Canada ranks as the 14th largest spender on defence, are we truly lagging behind in defence spending? Or do you think it’s a matter of effective allocation and prioritisation? Are we overly concerned with comparing ourselves to other countries despite our unique circumstances?
I think the big thing is that whatever numbers you use, you come up with different ideas about whether it is doing well or not. If you say how much Canada spends, and don’t use a per GDP metric, but just how much it spends overall, then we’re the sixth biggest spender in NATO. Once you make it per GDP, then that allows some countries to look better simply because they’ve got a small economy. It’s easy for Latvia, Lithuania, and Estonia to spend 2% of GDP because their GDPs are tiny, so they buy a couple of artillery pieces, and suddenly they’re at 2%. Greece, who I always beat up on, is always above 2%, but we never consider them to be a particularly effective or reliable ally.
I would say that Canada doesn’t effectively allocate and prioritize, but if we hit 2%, that might’ve meant that we spent a lot of money on a piece of equipment that may not serve us well. For instance, the shipbuilding programme is going to get us closer to 2% because of the cost overruns, but are those the ships we need? Could we have done this better? Could we have done it faster? I think those are all reasonable questions to ask. So, I think the 2% shorthand can be useful, but it tends to cause us to be distracted. We need to think about what we’re buying and what is it that we need.
What are some of the reasons why NATO sets a policy goal of 2% of GDP defence spending and do you think that the 2% expenditure target accurately demonstrates the political will of NATO member states?
The 2% metric is something that the Allies could agree to. Everything that NATO does has to be by consensus, so what NATO agreed to do years ago under the Harper administration is that we would move towards or aspire to 2%, which was not actually saying that we would be at 2%, but rather, make progress. Canada has made progress in some ways because we are now spending more money than we were under the Harper government. But there’s a lot of reasons why countries spend a lot of money on the military. The United States exceeds 2% but is that about NATO or is that about other obligations around the world, or is it about the US Congress and its demand for pork barrel spending so that people can stay in power?
Greece’s spending has largely addressed personnel. When they did spend on capabilities and equipment, they pointed them at Turkey, another NATO member. The 2% measure is something that they could agree to and that is easily measured. But I don’t think that it’s very helpful for understanding whether Canada is really spending enough or appropriately.
Do you think that we should try and meet that target, even in the case that it might only be beneficial from an optical or symbolic perspective?
What matters more is whether Canada shows up. Canada showed up in Kandahar, Canada showed up in Latvia, and Canada actually showed up before everybody else or nearly everybody in Ukraine. We are at a point where our ability to do is constrained by what we’re spending. To follow through on our Indo-Pacific Strategy for instance, we had to move a ship from the Atlantic to the Pacific. We just don’t have enough ships. That means that we are not as involved in the various Baltic operations as we once were at sea.
One of the things we get very nervous about is how NATO feels about it, but other countries have similar problems—we’re not alone in this. The document from a few months ago, where the Germans had concerns about us was a bit outrageous because the Germans have a much more severe problem with their planes, ships, and tanks.
They’ve got an extreme readiness problem and they’ve been an obstacle getting stuff delivered to Ukraine. Remember, they were the ones blocking the sale and delivery of tanks. This 2% thing matters, but I don’t think it should be driving decisions, and it shouldn’t be driving our conversations as much as it does. It’s simple, so it dominates, but it’s not necessarily useful.
How could we better allocate funding we already have so that we’re more effective with it, as opposed to perhaps increasing the percentage of GDP?
This is tricky because the politicians have their priorities, and their priorities are winning elections. The best way to do that is not to appear strong on defence, but to create jobs in areas where there are votes. The shipbuilding programme is a “jobs” programme more than a “defence” programme. The liberal defence platform from 2015 mentions jobs, but it doesn’t mention defending Canada because they define the shipbuilding programme as jobs. I think it’s going to be very hard for us to ever make a lot of progress in this given the incentives that all the politicians face.
For instance, SSE was good, and it developed long term planning and made a bunch of commitments that they’re following through on. What’s happened lately is the Liberals have made a lot of promises about long term programmes, but it’s less clear that they’re willing to allocate new money. Consider the announcements around NORAD modernization, what is that money going to be spent on? Is it going to squeeze things out of the defence budget or are you going to increase the defence budget?
When the most recent budget came out, it didn’t show any real commitment to spending new money, despite the fact that they made commitments that indicated there would be new money spent. I think that’s one of the things that helped to spawn the open letter that your organization sponsored recently.
How much has this current government spent on defence relative to previous administrations? What are some of the historical trends in terms of defence spending?
One of the continuities in Canadian defence politics is that each government, when cutting spending, tends to focus on the military because that’s the biggest part of discretionary spending. This is true in other countries as well. Harper and Chretien did it. Multiple parties do it. One of the differences between Trudeau and Harper is that Harper was really focused on budget deficits—his big campaign promise in 2015 was getting down to a balanced budget. He spent far less on the military in 2014 and 2015 than one would have expected given his rhetoric in 2008.
The Trudeau Government came in, implemented a defence review, made budget decisions, and are buying the F-35. They are continuing to spend large amounts of money on the shipbuilding programme too. They are spending more money. In absolute terms, we’re spending more money now than we were 10 years ago. I think the defence budgets back then were in the order of $18 to $20 billion, and now they’re up to $26 to $30 billion. Even if you control for inflation— and defence inflation tends to be higher than our own inflation—the Liberals have spent more money. But they’ve spent less money than what their promises would suggest they spend. So that’s the trap they’re caught in, which is they need to spend yet more money.
If I’m talking about NORAD modernization as the unwritten chapter of SSE, it’s not in it because they didn’t want to spend the money on it. It was on the horizon in 2016 and 2017—it’s not an unwritten chapter. It was something they had not written, and they had not funded. Now they’ve got to make decisions on what to spend.
With this defence policy update that’s coming out soon, the big question will be what promises they make about what they’re going to spend money on, and I can almost guarantee you that the next unwritten chapter will be the submarines. I don’t think they’re going to want to tackle the submarines in this review because that would imply another $20-$40-billion project. They could spend a lot more money, which would help get them to 2%, but that would mean sacrificing other interests and raising taxes, something. I do think that this government is spending more, but its mouth is writing cheques that they’re not willing to cash.
