Defence policy: less than it seems?


How do you get to $490 billion in defence spending over 20 years? Apparently you start where you are and you increase at just over the rate of inflation, every year:

From the text:

To address the problem, the Government increased
defence funding through Budget 2006 by $5.3 bil-
lion over five years, including a baseline increase of
$1.8 billion starting in 2010–11. In doing so, it estab-
lished a firm foundation for the future and raised the
baseline on which future efforts to rebuild the
Canadian Forces will be anchored.
Moving forward from this strong footing, the
Government, in Budget 2008, augmented the auto-
matic annual rise in Defence funding from 1.5
percent to 2 percent starting in fiscal year 2011-12.
Over the next 20 years, this increase is expected to
expand the Defence budget from approximately
$18 billion in 2008-09, to over $30 billion by
2027-28, as shown in Charts 1 and 2. This figure
reflects the new investments made by the
Government as outlined in this document. Overall,
the Government will spend close to $490 billion on
defence over the next 20 years (see Charts 3 and 3a
for further details).
With this funding framework, National Defence
will be able for the first time to plan for the future
on the basis of stable and predictable funding, which
will allow it to strategically allocate resources and
build the capabilities necessary to meet the country’s
defence needs. Furthermore, in addition to this new
formula, the Government is committed to separately
fund incremental costs for major operations.
This commitment to long-term funding and to the
detailed procurement strategy it supports will also
provide major new opportunities for Canadian
industry and produce significant economic benefits
for Canadians. It will provide good jobs and new
opportunities for tens of thousands of Canadians
who work in defence industries and communities
with military bases. It will also allow Canadian
companies to align their long-term manufacturing,
support, and research and development programs to
better meet procurement requirements. This com-
prehensive plan will be implemented in concert
with a new long-term procurement strategy
designed to benefit Canadian industry while build-
ing commercial capacity in relevant knowledge and
technology industries.

One thing is for sure. It would not have killed this government to release its policy on the day it announced it, nor to hold a technical briefing after the policy details had been released, instead of before. There remain a lot of questions, and one gets the sneaking suspicion that’s precisely how the prime minister wants it.

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Defence policy: less than it seems?

  1. Rumor has it (a buddy in the dept of finance) that the 2% bumps are above inflation. However, that doesn’t necessarily mean above defence-sector inflation, which tends to be quite a bit higher than average inflationary rates. What’s more surprising is that capital spending will still stay below 25% of the total defence budget. Keeping capital expenditures at approx. 25% of the total budget ensures that defence forces have sufficient funds to re-equip themselves over the long-term. Also, don’t expect these funding increases to silence the critics. Canadian defence spending will likely fall as a percentage of GDP over the next twenty years, despite the CFDDS’s budget increases.

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