Combat cutbacks: Conservatives target the military budget

John Geddes takes a close look at the Conservative brand and defence spending

Combat cutbacks: Conservatives target the military budget

Peter Power/The Globe and Mail

Back when Canada’s military was deploying waves of combat troops to Afghanistan, top officers would often talk about the demanding “operational tempo.” In those days, the tempo of political events designed to highlight enthusiastic Conservative support for the troops was pretty brisk, too. Soon after winning power in 2006, Prime Minister Stephen Harper stood before soldiers mustered on the air field in Kandahar to pledge that “cutting and running is not my way.” In 2008, Harper used a Halifax drill hall as the backdrop for unveiling his 20-year, $490-billion Canada First Defence Strategy, promising, among other things, new ships, helicopters, planes and armoured vehicles. In 2010, Defence Minister Peter MacKay climbed into a model of a Lockheed Martin F-35 in Ottawa to announce the government’s commitment to buy 65 of the advanced fighter jets.

But the once heady atmosphere around Canada’s expanding military has turned subdued and anxious. The troops withdrew from combat in Kandahar in 2011, and their follow-up mission to train the Afghan army is slated to wrap up next year, with Afghanistan’s stability still in grave doubt. The buoyant years of rapidly ramping up spending ended when the 2012 budget imposed three years of cuts; another squeeze is among the most anticipated items in the 2013 budget expected late this month. As for all that new hardware, not only is the widely criticized F-35 buy being reconsidered, much of the program to upgrade equipment is plagued by delays and questions about the real costs.

Asked by Maclean’s how the Tories hope to maintain their image as unswervingly pro-military, MacKay suggested the investments of those former years outweigh the current and coming restraint. “I would put it this way—we’ve put a lot in the bag,” he said.

Indeed, the Harper government hiked annual Department of National Defence spending to $22.8 billion for 2011-12, up from $15 billion when it took office in 2005-06. As the additional billions flowed, backing the forces became a pillar of Conservative election messaging. Along with spending heavily, the Tories made strategic symbolic moves, notably by bringing back the word “royal”— as in Royal Canadian Air Force—four decades after the adjective binding Canada’s military heritage to British tradition was erased by the Liberal government of the day.

Even that nostalgia play, though, might not inoculate the Conservatives against criticism. David Perry, a doctoral fellow at Carleton University’s Centre for Security and Defence Studies, has analyzed the cuts and says they are already biting deeper than is widely understood. And he says the next round of decisions about where to find even more savings is bound to put new stress on military and bureaucratic planners.

Perry’s fine-grained analysis starts by setting aside the major parts of defence spending that are, at least in theory, protected from cuts. Last year’s fiscal plan called for more than $1 billion a year to be cut from the defence department’s overall budget of more than $20 billion by 2014-15. That doesn’t seem so tough. But the Conservatives pledged to do that while keeping up the troop strength of the Canadian Forces, at about 68,000 regular members and 27,000 in the reserves, and also protecting most planned capital spending. According to Perry, that means about $12 billion a year was deemed uncuttable—leaving all the reductions to be found somehow in the remaining $8 billion that is spent on the civilian workforce and on military “operations, maintenance and readiness.”

How hard is it to achieve those savings? The clearest indication so far came from Lt.-Gen. Peter Devlin, the commander of the army, in surprising testimony he gave late last year before a Senate committee. Devlin said his land force’s operating budget has been shrunk by an eye-popping 22 per cent—a figure that doesn’t show up anywhere in publicly available defence documents. “As you would expect,” Devlin said with classic officer-class understatement, “that has an effect on people, infrastructure and training.” And he took pains to counter any suggestion that the army should be eliminating desk jobs to save field assets, stressing that administrative and head-office functions occupy only four per cent of his workforce.

But that’s just the army itself. Tough questions about National Defence’s multi-layered Ottawa operations could dominate the next round of debate about cuts. The department employs about 20,000 in the capital, from senior brass down through ordinary bureaucrats. Last June 15, Harper wrote to MacKay, in a private letter reported on by the Canadian Press and later obtained by Maclean’s, instructing him to find savings in administration. The Prime Minister’s letter said that only about 44 per cent of the defence budget is attributable to “the ready force,” and the rest to management, institutional support and services. Harper called that “a serious imbalance in our current defence organization.” He instructed MacKay to “present detailed proposals that critically examine corporate and institutional overhead with a view to avoiding budgetary reductions that impact on operational capabilities, the part-time reserves, training within Canada, and the promotion and protection of our national sovereignty.”

Harper’s letter echoed the thrust of Lt.-Gen. Andrew Leslie’s 2011 “transformation” report. Leslie, who has since retired, conducted an extensive study of defence spending and concluded that the department must “ruthlessly focus” on reducing its spending on outside consultants and private contractors, with the aim of redistributing resources to military units. He delivered his report two years ago. Yet the latest figures available show that the defence department’s spending on professional services and consultants continued to climb to $3.25 billion in 2011-12 from $2.77 billion in 2009-10. And that increase came after a period when head-office growth outstripped the expansion of the fighting forces. According to Leslie’s report, headquarters personnel numbers grew 40 per cent from 2004 to 2010, while the regular forces grew by just 11 per cent.

As the military struggles to absorb cuts in its operations, high-profile procurements are coming under more intense scrutiny. Doubts are growing about the defence department’s capacity to simultaneously manage all the major projects called for in the Conservatives’ ambitious 2008 strategy. As well, Perry argues that the credibility of the blueprint for re-equipping the forces is undermined by inadequate funding. “There isn’t actually enough money in the capital program both to buy everything that’s on the list and then to maintain it once it’s in service,” he says. That view gained a prominent piece of supporting evidence recently, when Kevin Page, the parliamentary budget officer whose tenure as a spending watchdog ends this month, released a detailed report that looks closely at just one multi-billion-dollar project—the planned acquisition of new naval supply ships.

The project goes back to 2004, when the then-Liberal government earmarked $2.1 billion to design, develop and acquire three new supply vessels. By 2009, the Conservatives realized that wasn’t nearly enough, and scaled down that project to buying just two ships, while boosting its budget to $2.6 billion. However, Page’s report, released late last month, estimated a more realistic cost for two ships of $3.3 billion. Worse, he said that, given the uncertainties surrounding this sort of military purchase, the U.S. government’s “best practice” policy suggests Ottawa should more prudently budget at least $4.1 billion for the supply ships—or about 60 per cent more than the amount currently budgeted. Why the huge gap? Page said his “best guess” is that the government is sticking with a low number to avoid confronting hard truths. “You make the requirements fit within the budget constraint,” he said.

Controversy about administrative overhead costs, complaints that cuts are already hampering troop training and readiness, doubts about the credibility of procurement plans—it’s a messy combination. Despite any misgivings, though, prominent Conservatives continue to tout their pro-military bona fides in the run-up to the 2013 budget. In a key speech to Conservatives in Ottawa earlier this month, Immigration Minister Jason Kenney capped a summing-up of what the party stands for—from law and order to entrepreneurship—by touting “pride in our Canadian armed forces and our history of military sacrifice and glory.” With the glory and sacrifice of the Kandahar mission fading into memory, the military’s new chapter is dominated by cost-cutting and recrimination. For the Harper government, saving money might turn out to be easier than safeguarding such a critical part of their political brand.