Flow of defence funding constricted, even when there’s money: DND figures

The biggest problem, they say, is the government always tries to use a limited amount of money to meet three objectives at the same time: buy military equipment; encourage competition; and create jobs.

“Any one of these objectives would be difficult to achieve on their own,” said Sahir Khan, executive vice-president of the University of Ottawa’s Institute of Fiscal Studies and Democracy.

“But the reality is that the fiscal envelope was never large enough to simultaneously accommodate all of the objectives.”

National Defence’s numbers provide a year-by-year breakdown of the government’s decision over the past two years to delay more than $12 billion in planned military equipment purchases during the next two decades.

The figures, obtained by The Canadian Press, are particularly stark in the short-term.

This year alone, National Defence plans to shell out less than half the $2.7 billion on major new equipment it had originally expected to spend.

Some of the $12 billion that has been “reprofiled,” as the government calls the delayed spending, will start to flow again in 2021-22, but the bulk isn’t expected to materialize until after 2036.

Government and military officials say the decision to reprofile the money is separate from the underfunding issue that Sajjan highlighted in a major speech on Wednesday.

The government has given National Defence a set amount of money or fiscal space for major military procurement projects over the next few decades.

That number doesn’t change just because a project is delayed, the officials said, meaning the money can’t be spent on other things because it will still be needed when the project is ready to go.

The problem Sajjan was addressing, the officials said, is that National Defence doesn’t have enough money over the long term to buy everything it needs, including 18 projects deemed critical to the military’s future.

Those include upgrades and life extensions to two military helicopter fleets, air defences for infantry units, and engineering and logistical vehicles for the army, all of which are currently unfunded.

But analysts say the reprofiling and delays point to the fact that even if the Liberals promise more money for defence, the procurement system needs to be fixed.

Sajjan stressed in his speech that the new defence policy would be fully costed, and the very fact the government has drawn up Canada’s first real defence policy in decades has been welcomed.

But National Defence continues to struggle with a significant shortage of procurement staff, while the entire system remains focused on not only buying new equipment but creating jobs and competition.

Several analysts noted that the last time the military procurement system really worked was a decade ago, when the government rushed to buy tanks, helicopters and transport aircraft for Afghanistan.

“But once you start to use your defence dollars for non-defence purposes, that’s when you run into difficulties,” said Kim Richard Nossal, a military procurement expert at Queen’s University.

Some experts have estimated that Canada pays an extra 30 per cent on military procurement projects by trying to marry their three different objectives.

The question, Khan said, is whether the Liberals are willing to spend more money to achieve those concurrent objectives, or make the politically-sensitive decision to put military need ahead of jobs.

“Either funding or desired outcomes will have to be significantly adjusted,” he said, “or we will find ourselves having the same discussion interminably.”

— Follow @leeberthiaume on Twitter

Lee Berthiaume, The Canadian Press

by Canadian Press

Flow of defence funding constricted, even when there’s money: DND figures

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