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Military implications in latest federal budget
Posted on Apr 20, 2021

There were no major military capital projects in the federal government’s latest budget, tabled in the House of Commons April 19 by Finance Minister Chrystia Freeland. Nor had any been expected.

The only reference to capital projects involves Public Services and Procurement Canada. PSPC will get $70.8 million over 10 years, starting in 2021-2022, to ensure “timely” project deliveries to the Canadian Armed Forces and the Canadian Coast Guard. A further $1.1 million this year alone will augment PSPC’s Cost and Profit Assurance Program, which the government says saves millions of dollars annually through its auditing and oversight of defence contracts.

However, the government used the budget to revive a policy that could affect its Future Fighter Capability Project (FFCP) to replace the Royal Canadian Air Force’s pensionable fleet of Boeing CF-188 Hornets.

On page 292 of the main budget document, the government points out that in December 2017, it had said that bid evaluations would include “an assessment of the bidders' impact on Canada's economic interests.” It warned that any bidder that harmed “Canada’s economic interests […] would be disadvantaged” and that the policy would apply to major Canadian Armed Forces and Canadian Coast Guard procurements.

The policy was the government’s response to Boeing having lodging a formal trade complaint about the C-Series passenger jets developed by Montreal-based Bombardier and now part of the Airbus family. Boeing alleged that the C-Series program had been subsidized unfairly by Ottawa, and the Prime Minister countered by saying Canada won't do business with a company that is suing us. The resulting spat sidelined a deal for the RCAF to acquire F/A-18 Super Hornets.

Boeing remains one of three contenders for the $19-billion FFCP, which is expected to yield a contract for 88 aircraft next year. The others are the Lockheed Martin F-35 Lightning II and the Saab Gripen. Airbus pulled its Eurofighter Typhoon out of contention in 2019.

In reviving the procurement condition, the budget states that bidders “found to have prejudiced Canada's economic interests through trade challenges will have points deducted from their procurement bid score at a level proportional to the severity of the economic impact.”

This, the government reiterates, “will protect Canada's economic interests and make sure the government does business with trusted partners who value doing business with Canada."

Setting aside major procurement programs in an era constrained by having to focus huge resources on tackling COVID-19 and prepare for a post-pandemic economic recovery from the worst national economic downturn since the 1930s Great Depression, the government did set out a range of relatively minor defence items.

These include $267 million over the next five years to modernize critical information systems within the Department of National Defence. These systems are used to manage assets, finances and human resources, and the budget says the funding will “improve administrative efficiency and departmental planning” while cutting costs “and ensuring the Canadian Armed Forces have access to the equipment they need when and where it is required.”

There is additional funding for the North American Aerospace Defence Command (NORAD) and the North Atlantic Treaty Organization (NATO) as outlined on page 289 of the 724-page main budget document.

Some $163.4 million over the next five years, including $111.1 million in remaining amortized payments, is designed to support NORAD modernization, potentially a source of relatively minor contracts for defence suppliers.

“Since NORAD was established in 1958, the threats facing the continent have evolved significantly,” the document states. This includes the already evident impact of climate change in the Arctic and the implications for defence planning and strategies. “This investment would lay the groundwork for NORAD’s future, including through research and development of cutting-edge technologies that can detect and defend against threats.”

Coupled with $88.8 million over the next five years to sustain existing continental and Arctic defence capabilities, “these early measures will position Canada to move forward hand-in-hand with the United States on modernizing NORAD and to maintain continental defence and deterrence capabilities. It will also support jobs and businesses in Canada’s North.”

As for NATO, where Canada and other allies have been pressed by the U.S. to contribute more cash, the plans to provide $541.2 million over the next five years to earmark an additional six Royal Canadian Air Force fighters and a Royal Canadian Navy frigate to NATO’s readiness capability. As well, up to $305.9 million is promised over the same period to increase Canada’s financial contribution to the alliance.

Physical and mental health funding also is scheduled for modest budget increases, including $134.3 million over the next five years to ensure personnel have “timely access to health care.” The annual follow-on in 2025-2026 is projected to be $28.2 million.

The ongoing challenges of addressing sexual misconduct and gender-based violence in the military will receive $77 million in new funding over the next five years. Among other things, it would underwrite the cost of independent legal services for victims and enable personnel to access services “without making a formal complaint” which current policy means going through the chain of command. The "chain of command" complaint process has become an explosive issue as complainants continue to go public, shining a light on this contentious process that can be perceived as a career-stopper.

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