Canada’s economic approach signals go-ahead for billions for fighter jets, missiles and warships

Photo: Finance Minister Chrystia Freeland, Defence Minister Harjit Sajjan.

This past Friday November 13, Defence Minister Harjit Sajjan spoke about the need to maintain the budget for the Department of National Defence.

He highlighted that the military has played a crucial role in the government’s response to the pandemic, including the Canadian Armed Forces being deployed to long-term care facilities. That deployment didn’t address the long-known systemic issues of underfunding and understaffing that requires a deeper commitment from government.

Sajjan added: “If you want to talk about our economy, defence investments that we make also are part of the economic stimulus as well.”

That is also a questionable argument given research by the Costs of War Project found that while $1 million spent on “defence” creates 6.9 direct and indirect jobs, the same amount invested in solar power creates 9.5 jobs, in health care 14.3 jobs, and in elementary and secondary education 19.2 jobs.

DND budget likely to increase despite debt

It would appear Defence Minister Sajjan’s keep spending argument is supported by Finance Minister Chrystia Freeland.

The Department of National Defence is the Canadian government’s largest department with a budget of $21.9 billion accounting for 7.3 per cent of total government spending and about 1.3 per cent of Canada’s Gross Domestic Product.

That spending is expected to increase to $32.7 billion in 2026-27.

The federal deficit (annual shortfall) is projected to be $328.5 billion this year with the (accumulated) debt expected to top $1.2 billion.

Despite this, on October 28 Freeland stated: “Now, for Canadians of a certain vintage — and I freely admit to being one of them — the idea of increasing government debt holds particular terrors. But it is a poor general who fights the last war. And the reality is that, today, the prevailing global economic environment is changed entirely.”

The following week the Parliamentary Budget Office had released a Fiscal Sustainability Report 2020 update. That report found that the federal government can still permanently increase spending – through new programs or tax cuts – by $19 billion without pushing its debt beyond pre-pandemic levels over the long term.

Recent major expenditures on missiles and more

The Canadian military continues to spend in a big way despite the financial situation.

For example, in June the U.S. government cleared the way for Canada to buy more than $1 billion of new missiles and related equipment for the current fleet of CF-18 fighter jets. The companies involved include Raytheon, General Dynamics and Boeing.

And on November 5, the U.S. government posted that the Canadian government is spending about $650 million to buy missiles and launchers for the 15 to-be-built Lockheed Martin/BAE Systems Type 26 Canadian Surface Combatant warships for the Royal Canadian Navy. Raytheon Missiles and Defense will build the missiles for the ships.

In 2008, the government estimated the warship project would cost roughly $26 billion. The cost is now estimated to be about $60 billion.

The House of Commons Standing Committee on Government Operations and Estimates has requested that Parliamentary Budget Officer Yves Giroux examine the costs of the project. That report was to be presented to the committee by October 22 but has been delayed.

And the government seemingly remains committed to spending $19 billion on the purchase of 88 new fighter jets in 2022.

Beyond the purchase cost, the government doesn’t seem reluctant to spend possibly another $48.6 billion over the coming years on the operations, sustainment, disposal and contingency acquisition costs of the new warplanes.

Challenging military spending

Defence Department deputy minister Jody Thomas has stated she has received no indication from the government that it intends to cut military spending despite the deficit.

At some point prior to the end of this year, Finance Minister Freeland is expected to table a fiscal and economic update. The speculation is this will happen in the final week of November or the first week of December. Following that, it’s customary that the next federal budget would be presented in March 2021.

The next three months will be a crucial time to make the argument that spending public dollars on the tools of war takes needed resources away from the public good.