10 décembre 2019 | Local, Aérospatial, Naval, Terrestre, C4ISR, Sécurité

Canada is rich - and cheap


Eugene Lang is an adjunct professor at the School of Policy Studies, Queen's University, and a fellow at the Canadian Global Affairs Institute.

“It's Canada, they have money,” Donald Trump said at last week's NATO summit.

Most of what the U.S. President says is either exaggerated or false, but occasionally he sums up in a sentence what everyone knows to be true.

After admonishing Prime Minister Justin Trudeau at the summit for Canada's failure to meet, or strive toward, the North Atlantic Treaty Organization's defence-spending target of 2 per cent of Gross Domestic Product (GDP), Mr. Trump pointed out an inconvenient truth. The President was saying Canada is rich and cheap.

But just how rich is Canada?

Among the Group of Seven -- a group of the richest countries in the world -- Canada enjoys the third-highest per-capita income and, since 2016, has led the G7 in economic growth. Canada also has the lowest net-debt-to-GDP ratio among those same seven countries, and the second-lowest national-government-deficit-to-GDP ratio. Which means, in essence, that Canada is the third-richest country in the G7 and the best in class with government finances.

Successive governments in Ottawa have spent 20 years boasting about this strong national balance sheet to Canadians at every turn, and telling anyone abroad who would listen. This is why Mr. Trump knows that Canada does indeed have money. We are rich, at least compared with most other countries.

But are we cheap?

Canada spends about 1.3 per cent of GDP on national defence, tying us for fourth with Italy within the G7. Yet, Ottawa has never fully accepted the validity of the defence-spending-to-GDP measure. Both the Harper government – which signed the Wales Declaration, enshrining the 2-per-cent NATO target – and the Trudeau government have claimed input measures such as the GDP ratio don't tell the full story, and that output indicators are more meaningful. The defence output measure that is best understood is the extent to which a country's military is engaged in operations internationally. On that score, Canada looks terrible. We have fewer troops deployed abroad today on NATO, United Nations and other multilateral missions than in decades.

To be sure, having influence internationally and carrying your fair share of global responsibility entails much more than the size or engagement of your military. Official Development Assistance (ODA), or foreign aid, is another important measure in this connection.

Canada also ranks fourth among G7 countries in ODA as a percentage of gross national income (GNI). However, Ottawa is spending only 0.28 per cent, up slightly from 0.26 per cent last year, the lowest level this century. Fifty years ago, a World Bank Commission report, titled Partners in Development, recommended developed countries spend 0.7 per cent of GNI on aid. That Commission was chaired by Lester Pearson, former prime minister of Canada, recipient of the Nobel Peace Prize and a Canadian icon. Over the years, various Canadian governments have paid homage to Mr. Pearson's vision. Yet in the five decades since his report was published, Canada has rarely reached half of the Pearson target in any given year.

Whether Ottawa likes or doesn't like input or output measures, or GDP or GNI ratios, doesn't really matter in the world of international politics. For better or worse, these are the indicators that are used to compare and assess the degree to which countries are living up to their obligations and responsibilities internationally. Imperfect as they are, these are measures of burden sharing. They are the statistics countries look at when considering whether Canada or any other country is pulling its weight globally.

And on these measures, Canada looks middling at best, and bad at worst, by both international comparative standards. At the same time, we are among the world leaders in economic growth among developed countries, and we have held the gold medal in public finances for years. Rich and cheap, as it were.

That was the essence of Mr. Trump's criticism of Canada this week at the NATO Summit. And foreign governments the world over know it to be true.


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    By NEIL MOSS MAY. 13, 2020 'When you are trying to fix a fiscal problem, inevitably national defence is part of the way governments have tended to try and fix that,' says defence procurement expert David Perry. In the midst of critical procurements that will set the framework for the Canadian military for years to come, questions remain on how the COVID-19 pandemic will affect the oft-delayed projects. 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He added that the impact will also depend on where the facilities are located, as the Irving shipyard in Nova Scotia faced a three-week shutdown, opposed to the Seaspan shipyards in B.C., which has continued relatively normal operations. A spokesperson for the Department of National Defence told The Hill Times that progress is still being made “where possible” on current and future equipment for the Canadian Forces. “While our focus must be on responding to the COVID-19 pandemic, we remain committed to the National Shipbuilding Strategy and other defence projects under Strong, Secure, Engaged,” the spokesperson said in an email. “We continue to meet regularly with PSPC [Public Services and Procurement Canada] to address the delivery of ongoing and future major procurement projects, and to assess and address the impact of the pandemic on these projects. However, given that the extent of COVID-19, or how long this situation will last, cannot be assessed at this time, it is not yet possible to determine the impact this situation will have on our projects,” the statement read, adding that the focus remains on continuing essential services, which include “domestic operations and search and rescue.” Former Air Force pilot Alan Stephenson said that there is “no doubt” that there will be “a huge impact” to defence procurement caused by the pandemic, pointing to the government's ballooning spending. Mr. Stephenson, a retired colonel who is now a senior associate at David Pratt and Associates, said the problem with the fighter jet procurement is being compounded by successive governments' use of military spending to solve other problems. “Now we find ourselves with ... fighters that will be over 50 years old,” he said. “And we'll be flying [the CF-18s] into the future.” “COVID has changed the game,” Mr. Stephenson said, adding that the focus on the Liberals' 2017 defence policy, Strong, Secure, Engaged, will still be present, but there will be fiscal questions of its feasibility. “Hard decisions are going to have to be made,” he said, as the government will balance military requirements with economic needs. Mr. Perry said historically when the government has needed to slash spending, it has looked at the military. “When you are trying to fix a fiscal problem, inevitably national defence is part of the way governments have tended to try and fix that,” he said, adding that given the size of the defence budget, it is “virtually impossible” to address an economic situation without making some fiscal changes at the Department of National Defence. But he said that historical pattern may not continue as it's a different kind of fiscal problem for the government. “In a dynamic where you have real big impacts on consumer confidence and there's also, I think, fairly serious concerns about the availability of financing and liquidity in the civilian economy, potentially there's more of a room for DND and the Government of Canada writ large to be part of the economic solution here and not just part of the fiscal problem,” Mr. Perry said. 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For the Canadian Surface Combatant procurement, the first ship isn't projected to be completed until the mid-2020s and the final delivery date for the entire fleet is in the late 2040s. He said while there may be minor delays in the short term, it shouldn't have much impact on when the ships are delivered in the end. But he said there is still much unknown about how the pandemic has affected the procurement process. Charles Davies, a retired colonel in the Armed Forces who spent time as the senior director responsible for procurement and equipment management policy at the Department of National Defence, also said the long timeline on projects should reduce the impact of any delay. “In the inherently long gestation periods of the major programs, the net impact should be limited,” he said. Mr. Davies, a CDA Institute fellow, said now can be a time for the government to look to make key investments in capabilities that will be needed in the future to defend its borders while at the same time keeping the economy afloat. He said unlike in the mid-1990s during the budget cuts under then-prime minister Jean Chrétien, Canada is not in the geopolitical position to allow its defence budget to dissipate. “We're in a different world now,” he said, citing the “strategic environment” with more aggressive behaviour being seen from the Chinese and Russian governments. https://www.hilltimes.com/2020/05/13/hard-decisions-are-going-to-have-to-be-made-can-vital-defence-procurements-survive-in-a-post-pandemic-world/247826

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