There has been much speculation in recent days about how the Department of National Defence fared in the recent federal budget. While the budget cutback is steeper than some had hoped, it could have been worse. DND will see its operating funds cut by $1.12 billion a year, or 7.4%, by 2014/2015. The department will make the largest contribution to the deficit reduction plan in absolute terms but its cutback is proportional to its share of overall spending. So despite the Harper government’s vocal support for the military, it received no favouritism in this round of fiscal restructuring.
The 2012 Budget is not DND’s only fiscal problem, however. The department’s contribution to the previous round of strategic reviews, $1 billion, comes into effect at the same time as the new deficit reduction measures. So the combined hit to the defence balance sheet is actually $2.1 billion a year, or 11% of its base budget. As a result, defence spending peaked in 2011/2012 and will decline for the next three years.
These cutbacks present a major problem because the current defence policy, the Canada First Defence Strategy, was unaffordable to begin with. Many will find this difficult to accept considering how much defence spending has risen in recent years, but this was officially acknowledged by the Report on Transformation authored by LGen. Andrew Leslie last summer. His team was originally appointed to come up with novel ways that the department could restructure itself to deliver on the government’s policy, despite inadequate resources. While defence funding rose substantially since 2005, so did the government’s level of ambition for the military. And now that funding is being cut by 2 billion dollars.
While the size of the reduction means it will be painful, the way the cuts are being allocated will make their impact more significant. Both military personnel numbers and capital equipment purchases escaped the budget knife. The Canadian Forces will retain 68,000 regular forces and 27,000 reservists and the government will continue to replace key equipment, but on a slower schedule. Since this retains the military’s key capabilities for the future, it is good news.
The downside of this choice is that it removes more than half of the department’s spending from the possible cut. Unless job losses in the defence civilian workforce are severe and almost all full-time reservists’ contracts are converted to part-time status, the bulk of this cut will fall on the military’s operations and maintenance budget, the money that maintains equipment, buys spare parts, and pays for training. In effect, this will not be an 11% cut to DND; it will be a 20% cut to the military’s operations and maintenance budget.
The government clearly stated in Budget 2012 that it would prefer to achieve these savings by making the department more efficient and effective. Clearly, there are things that DND can do to improve its efficiencies. Leslie’s team found roughly $700 million worth of them. But even if every dollar of those efficiencies are found, DND will still need to cut about another $1 billion from the only remaining source: readiness.
By focusing its reductions in this area, the decision makers have clearly opted to reduce the deployability of the military today in favour of preserving its capabilities for the future. The Canadian Forces will have 68,000 regulars and 27,000 reservists in uniform and billions of dollars of equipment, but a greatly reduced ability to conduct operations. Fuel budgets will get smaller, less ammunition will be ordered, and repairs will happen less frequently. This means planes will not fly as much, soldiers will train less regularly, and ships will spend less time at sea. As a result, when a future government asks the Canadian Forces to deploy, they will be less prepared to do so than they are today. In other words, the military will soon be doing less with less.
David Perry is a PhD Candidate with Carleton University. For more on the impact of cuts to the Department of National Defence see the report released by the Canadian Defence & Foreign Affairs Institute titled “Defence After the Recession”.
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