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GOLDSTEIN: PM delays billions in military spending while touring NATO

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While Prime Minister Justin Trudeau was touring Europe expressing solidarity with Canada’s NATO partners last week, a new study by the Parliamentary Budget Officer said his government has postponed billions of dollars in capital spending to replace aging military equipment promised in 2017.

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Yves Giroux said the Trudeau government has so far “underspent” $10 billion of the $164 billion it promised for 348 projects, including replacing outdated warships, jet fighters and military vehicles from 2017-18 to 2036-37.

It took Giroux four years to get the full list of the projects and more funding delays are expected during the 20-year project.

In Trudeau’s 2021 election platform, he said spending under his “strong, secure, engaged” (SSE) defence spending policy over two decades would enable Canada to play a stronger role in international military alliances such as NATO.

But as often happens with promises, what’s delivered is less than what’s pledged.

According to Giroux: “Between 2017-18 to 2020-21, there was a cumulative shortfall of almost $10 billion between what the department of national defence spent on capital and what was originally planned under SSE … suggesting significant delays in military procurements. ”

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He said the Trudeau government failed to meet its planned capital expenditures on the military every year since it announced them in 2017.

The government has been backloading these expenditures (called “lapsed” spending) to the final years of its funding pledge ending in 2036-37 — meaning at least four elections from now.

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Giroux warned this “increased spending in later years is subject to greater discounting from inflation and further compounded by expected increases in defence procurement inflation.”

Because the Trudeau government has backloaded so many of its military capital projects to the latter years of his 2017 funding pledge — in 2027-28 annual spending will be $16.3 billion or 30% higher than originally budgeted — some may never see the light of day, or require more money to complete.

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Giroux noted, “lapses in spending do not necessarily result in a decrease in planned long-term spending.”

The SSE policy “acknowledged the potential need to occasionally adjust, or re-profile, accrual funding because of inevitable changes in project scope, delays in project schedules and changes to cost estimates.”

The government claims 73% of the current projects “are in the implementation phase, near completion or completed.

“We continue to deliver on major procurement projects, including new ships, new aircraft and new vehicles for the Canadian Armed Forces” and are “committed to increasing spending by 70% over 10 years.”

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Timelines for military spending tend to be longer than for other capital projects because of the long lead time it takes to build new warships and aircraft and because demands on the military may shift over time.

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But it was rich for Trudeau to be gallivanting around Europe hinting Canada may increase its military spending because of Russian President Vladimir Putin’s invasion of Ukraine when his government is already $10 billion below the capital spending level he promised in 2017.

Only 1.39% of Canada’s annual GDP goes to defence, far below the NATO standard of 2% agreed to by its 30 member countries.

Last year the U.S. spent 3.52%, U.K. 2.29%, France 2.01%, Germany 1.53%.

Even with Trudeau’s promised $553 billion increase in military spending by 2036-37 ($164 billion for capital projects), this will only raise Canada’s military spending to 1.5% of GDP.

Canada hasn’t met its NATO spending target for decades of Liberal and Conservative governments.

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