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Canada to Maintain Current Military Spending (or 2%? NATOMG)


Military SpendingCanadian military spending is in the spotlight again, but this time by the international community (maybe we’ll talk F-35’s later). The government is being heavily scrutinized for continued cuts to defence spending in the wake of recent and sustained military tensions between the NATO allies and Russia. A lot of the controversy involves NATO spending targets: 2% of the country’s Gross Domestic Product (GDP). So let’s run a few numbers:

In 2013 Canada’s GDP was $1,821 Billion. 2% of the GDP in 2013 would give the Department of National Defence (DND) a yearly budget of approximately $36.4 Billion. That’s the kind of money that makes generals and admirals salivate (to say nothing of the number of Timbits it would buy at the popular Canadian coffee shop Tim Hortons), but that level of spending hasn’t been part of the Canadian consciousness since the Cold War. DND’s budget for 2013 was planned at approximately $18.3 Billion, or just over 1% of the GDP (Note: this was prior to cuts from the government’s 2012 budget re-plan, which reduced military spending in the short term in favour of deferred spending in the future). This breakdown is all well and good, but what does it really mean? To most of us non-financial types the distinction of 1% may be lost, but raw numbers show the reality: $18 Billion per year.

When most people think of increased military spending, they get visions of tanks and planes, guns and ammo, futuristic exoskeletons and DARPA mad-science projects, but the truth is far less Spielberg: DND Spending

As we can see, “Equipment Acquisition and Disposal” accounts for ~16% of the annual budget. If the current “mix” of spending is maintained (i.e. 16% of the budget going to Acquisitions) and Canada adhered to the NATO defence spending guidelines, there would be an approximate increase of $2.9 Billion per year for new Acquisitions (and yes, disposals; maybe we would finally be able to burn those antiquated Canadian Ranger Lee Enfields). This means an injection of nearly $3 Billion into a stagnating Canadian military procurement system (the last major procurement announcement in my memory was the LAV III upgrades in 2012, though feel free to correct me if I’m mistaken). That 1% could just be what we 99%ers need to revitalize an industry exhausted from broken acquisition promises and mismanaged procurements.

This money could be used to sustain the Canadian shipbuilding capability, expand on an aviation sector which depends on American investment, and even to provide much needed sustenance to a battered Canadian technology sector. In short, this money could be used to provide the tanks, planes, guns, and ammo that our Forces require in order to be effective 21st century combatants. And in the end, who knows, there may even be enough money left over for Rob Nicholson to procure his staff some Timbits.


Canada, Germany derail NATO bid to raise military spending targets

Trading Economics: Canada GDP

National Defence and the Canadian Armed Forces: Department of National Defence – Reports on Plans and Priorities 2013-14



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