January 14, 2022 | Local, Aerospace, Naval, Land, C4ISR, Security
Economic Benefits of Defence Spending
Neither the December 2021 economic and fiscal update nor the 2021 budget contained much new spending for defence beyond some very targeted incremental funding to deal with more recent issues not covered in the 2017 defence policy. These issues include NORAD’s renewal, increased support to the NATO alliance and funding for operations and resources to address sexual misconduct and gender-based violence. This should not be surprising to those who follow defence issues. The 2021 budget emphasizes that the 2017 defence policy, Strong Secure Engaged, “set out a vision for a long-term, fully-funded plan to renew and re-equip the Canadian military, built around people.” Perhaps more important for DND’s longer term funding requirements are the projected deficits in the budget, beginning at $354 billion in FY20-21 and reducing to $30 billion in FY 2025-26. Historically, when governments in Canada face large deficits and start reducing costs, the largest discretionary spending category – defence – invariably takes a hit. Based on the government’s desire to focus on getting Canadians back to work by promoting innovation and small business, it is worth discussing whether continuing defence spending at the levels planned in Strong, Secure, Engaged will help achieve those goals.