Canadian Armed Forces in Latvia in 2022/CAF photo

Philippe Lagassé

August 1, 2023

Canada announced an important defence procurement last week. As part of the Strategic Tanker Transport Capability Project (STTC), Canada is acquiring nine Airbus A330 aircraft (four new, five used) to provide air-to-air refuelling, strategic airlift for troops and evacuations, and VIP transport. Designated the C-330 Husky, this fleet will replace Canada’s five CC-150 Polaris aircraft. This increase from five to nine aircraft increases the military’s capabilities, and since the A330 is a multi-mission aircraft, the new fleet with provide greater flexibility. Despite all the troubles that surround Canadian defence procurement, STTC is a good example of important acquisitions that happen without much attention or appreciation.

The STTC announcement was made on Anita Anand’s last day as Minister of National Defence. Anand is now President of the Treasury Board, following Prime Minister Justin Trudeau’s July cabinet shuffle. Anand’s departure from the Department of National Defence (DND) was greeted with a mix of surprise and disappointment by defence observers – surprise because there are many complex files that need consistent management and oversight, and disappointment because she showed a determination to manage and oversee them. STTC, for example, is one of many, many projects that were part of Canada’s 2017 defence policy, Strong, Secure, Engaged (SSE), and the more recent NORAD modernization (NORAD Mod) project. Not all of them have gone, or will go, as smoothly as the Husky, and a strong minister will be needed to see them through. The new Minister of National Defence, Bill Blair, may be up to the task, but any new appointment brings uncertainty and risk.

A deeper worry is resurfacing in defence circles, though: the recent willingness to invest heavily in the military may be fading. Defence ministers inevitably come and go, as do governments and prime ministers. What ultimately matters is whether there is sustained political will to spend what is necessary to match Canada’s defence policy ambitions. When that will is absent, DND and the Canadian Armed Forces (CAF) must rely on various kludges to hold things together and keep the armed forces deployable. Suffice to say, that political will has been sporadic for about forty years, resulting in a military that gets the job done and doesn’t fail –at least from a political perspective—but that suffers from structural weaknesses that require major investments to address.

Strong, Secure, Engaged was the start of one of these major investments, as is the NORAD Mod. The government’s promised Defence Policy Update (DPU) was meant to keep this momentum going and fill important gaps that will remain in spite of SSE and NORAD Mod. According to sources who spoke with Postmedia defence reporter David Pugliese, however, Anand may have been shuffled because her proposal for the DPU was deemed too expensive. It that is the case, it would appear that the government is souring on still more defence investments, however necessary they may be.

This apparent defence spending fatigue should not come as a surprise. The investments included in SSE and NORAD Mod were enabled by the Liberal government’s willingness to have budget deficits and allow the debt to grow, not because the government was particularly wedded to a stronger military. Put simply, defence spending greatly increased after 2017 because the Liberals were comfortable with more public spending generally. With the next election promising to feature the economy and fiscal management as key questions, the Liberals’ willingness to keep spending is uncertain at best.

The reputational effects of being a defence laggard may be real, as Canada’s exclusion from the AUKUS submarine and defence technology agreement suggests, but it is hard for someone in the Prime Minister’s Office to see how they affect Canada between now and the next election.

The Conservatives, meanwhile, will probably be looking to cut spending. They may try to spare the military when doing so, but there are few signs that they will make the trade-offs necessary to increase the defence budget while reducing overall spending. Few Canadians would accept decreased social spending or higher taxes as a means of spending more on the military, a reality a fresh Conservative government would appreciate, notwithstanding any ideological inclination to bolster the CAF.

Proponents of higher defence spending will insist that Canada’s international reputation is at stake if the government does not spend more on the military. Rebukes from our main allies, the Secretary General of the North Atlantic Treaty Organization (NATO), and editorials in the Wall Street Journal and the Economist suggest that Canada can no longer be a free rider. Unless Canada meets the NATO spending commitment of 2% of GDP on defence soon, critics warn, there will be consequences.

The problem, though, is that our allies have sternly warned Canada about defence spending for decades, with no easily discernible impact. The reputational effects of being a defence laggard may be real, as Canada’s exclusion from the AUKUS submarine and defence technology agreement suggests, but it is hard for someone in the Prime Minister’s Office to see how they affect Canada between now and the next election. Canada has been signing trade deals with its major allies, nobody is seriously threatening to take away our seat at the table at various international meetings, and allied leaders are well aware that domestic electoral politics trumps multilateral organizational politics. Unless allied leaders explicitly tie Canada’s low defence spending to a sanction of some sort, Canadian governments will struggle to make the military a priority, particularly in minority parliaments.

Looking further out, there is good news for those concerned about Canada’s international reputation. Trudeau, along with other NATO leaders, embraced the 2% target again on July 11^th in Vilnius, and Canada’s current military recapitalization program could well force Ottawa to spend 2% of GDP on defence in the coming decades. As noted, STTC is replacing five planes with a fleet of nine aircraft. That means more capability, but also more personnel to operate and maintain the planes, and additional dollars to upgrade them later. If Canada replaces its current fleet of four submarines with eight or more new boats, these types of costs will increase as well, to say nothing of the investments that will be needed to keep Canada’s new warships and fighter aircraft at an operational advantage against adversaries such as China. Unless some of these new capabilities are scaled back or cancelled, it is hard to see the defence budget going anywhere but up as a portion of GDP in the 2030s and 2040s.

We should not be too surprised, however, if defence spending stays below 2% of GDP for the rest of this decade. In that context, any minister of National Defence will have their work cut out for them. A lot of new equipment will be entering into service soon, but the demand for still more money will be intense, as will allied pressure on Canada. The political will to keep increasing military spending, though, may be waning.

Philippe Lagassé is associate professor and Barton Chair at the Norman Paterson School of International Affairs.