Column / Don Newman

On the Friday of the last weekend in March it seemed so simple and positive. US President Joe Biden was in Ottawa, where he and Prime Minister Justin Trudeau were all smiles as they recommitted to strengthen North American defences and Canada agreed to speed up its end of the bargain.

The following Tuesday, the hard reality of doing that hit home. In the papers published with the federal budget that day there was no speed-up of defence spending in the years going forward. No acceleration of the $36 billion already announced to modernize the North American Aerospace Defence (NORAD) alliance and meet a host of other defence commitments already identified over the next nine years. Instead, the budget showed no additional spending for defence in in the immediate future.

The budget documents were clearly prepared well before the Biden visit. Future money on defence and everything else the government does will be covered in the estimates published annually to reflect how federal spending is actually being directed. But changing the rate of any spending, short of unseen emergencies, is virtually impossible. It takes a pandemic and then an economic meltdown after to dramatically change Ottawa spending — and of course that is what we have just been going through and that fundamentally changed government spending.

Pre-pandemic, the federal deficit had reached around $30 Billion annually. At the height of the COVID crisis, with all the government spending to keep the country afloat, it was more than $200 billion. But with that emergency spending now wound down, the budget for the current fiscal year that has just now begun estimates the deficit at $40 billion but with no timeline as to when the national accounts might be balanced again. The fiscal update presented last fall by the federal government had predicted a small surplus in fiscal year 2027-28. Now this budget predicts the deficit will still be with us by then, to the tune of $14 billion.

That will make it harder for the government to find the $39 billion it has now committed to spend for a fleet of 88 F-35 state-of-the-art fighter jets if has agree to purchase from Lockheed Martin in the United States. The first jets will be delivered in 2026, the last in 2040, so they won’t all have to be paid for at once.

But as things now stand, while Ottawa is paying for the planes, it will also be paying for ships. Already badly behind schedule, the government has given the go- ahead to start construction of the first of fifteen surface combatant ships for the Royal Canadian Navy. The ships — all the same design — are destined to replace 12 frigates and three destroyers that have been the workhorses of the navy for years but now are either beyond or reaching their retirement dates.

The plan was unveiled by the Harper government in 2008. Designated the National Shipbuilding Procurement Strategy, the cost for the15 ships was estimated at $26 billion. Now, 14 years later and without a keel in the water, the estimated cost has skyrocketed to approximately $80 Billion. The viability of the program is now being questioned, but the fact is that the Navy will have to acquire either these or other ships to replace the frigates and destroyers. Whatever route they go it won’t be cheap.

When it first came to office, the Trudeau government launched a defence review that produced a strategy and equipment procurement framework titled “Secure, Strong and Engaged.” Now it is working on a new defence framework, which could be ready later this year. Times have changed since the last review was published in 2017. Russia has attacked Ukraine and triggered a war in the heart of Europe. China is increasingly belligerent in the Pacific generally and with Taiwan in particular. The Arctic is melting and more military assets will have to be committed there.

In fact, as part of its recommendations for ships going forward, the Navy has proposed a fleet of nuclear-powered submarines that can operate worldwide and also under the Polar ice cap. What is the projected cost for such a fleet? Sixty billion dollars. But this is defence procurement, and the initial figure is just an opening bid. Based on the surface combatants or the F-35s, the actual cost of nuclear powered submarines will be a major multiple of the original estimate.

It was clear the instant the budget was released that defence spending requirements were under-represented. By how much, no one is quite sure. A lot will depend on geopolitical developments world wide, but not entirely. To have military equipment ready for when it’s needed, the Government will have to start spending and building it now. On defence at least, Budget 2023 was out of date the moment it was introduced.

When Joe Biden visited Justin Trudeau in late March, the prime minister had something to smile about. But for him and his successors, paying the bills for the Canadian share of all the defence spending in the years ahead will be another matter.  

Contributing Writer and Columnist Don Newman, an Officer of the Order of Canada and Lifetime Member of the Parliamentary Press Gallery, is Executive Bice President of Rubicon Strategy, based in Ottawa.