Steven Staples presents recommendations to House of Commons Finance Committee

On October 20, 2011,  Steven Staples went before the House of Commons Standing Committee on Finance to recommend changes in defence spending.

Download the brief. Pre-Budget Submission 2011 – Rideau Institute

 

Below is a transcript of his presentation:

My name is Steven Staples. I’m the President for the Rideau Institute, an independent research, advocacy, and consulting group with a demonstrated expertise in defence policy.

J’aimerai vous remercier pour cette opportunité de présenter mes recommendations aux réformes des dépenses du Ministère de la Défence Nationale afin de contribuer dans l’accomplicement d’un budget balancé.

(I want to thank you for the opportunity to present three recommendations for spending reform in the Department of National Defence to assist the committee in achieving its goal of balancing the budget.)

The first recommendation is for the Government of Canada to reduce National Defence departmental spending, with the goal of returning to pre-September 2001 levels. Secondly, we recommend a review of planned equipment spending to ensure that projects still meet Canada’s national defence policy priorities. Finally, Department of National Defence equipment spending oversight should be increased by establishing a parliamentary committee or subcommittee to be responsible for Major Crown Projects.

In response to the events of September 11^th, 2001, Canada, along with others, undertook an extensive program of defence procurement, weapons acquisition, and operational expansion. We’ve estimated that $69 billion, adjusted for inflation, has been added to overall national security spending since the terrorist attacks on the United States. A decade later, the Canadian military mission in Afghanistan is winding down, the country’s international obligations have shifted, and the global financial crisis has developed into the primary threat to the livelihood of Canadians.

Despite these changes, however, Department of Defence spending will reach $22.2 billion in 2010/2011, a level 19% higher than at the end of the Cold War and 40% higher than the year before the attacks of 2001. In other areas, the government has responded to the financial crisis by developing plans to balance the budget, reducing public sector spending, and requiring departments to demonstrate need for new spending programs. In the field of defence, the government plans to divert an additional $1 billion to capital spending within the next two years, with particular emphasis on equipment procurement. These levels of spending are unsustainable in the future, and have been set without adequate demonstration that the benefits to the security of Canadians will outstrip the economic costs.

That brings us to the need for a comprehensive review of planned equipment spending. The ambitious build-up of the last decade has allowed military equipment programs to proceed without always ensuring that the new materiel is essential to defence, or that these billion-dollar procurements are acquired in an open and transparent manner. The selection of the F-35 stealth fighter for the Next Generation Fighter Capability project provides a prime example of the drawbacks of the current spending scheme. The F-35 program, which includes no contract, contains zero offsets, and includes no guaranteed cost, is the product of a non-competitive contract system that appears to be driven by private interests rather than Canadian security considerations.

The long-term success of improvements to the equipment procurement process and of efforts towards a return to pre-2001 spending levels in the Department of Defence depend on increasing parliamentary oversight of these spending programs. The Parliamentary Budget Office, the Office of the Auditor General of Canada, and other fiscal monitoring agencies have repeatedly cautioned against the continual increase in defence spending programs, to little avail. A mechanism to systematically inform parliamentarians of developments in Major Crown Projects, such as a subcommittee on Major Crown Projects of the Standing Committee on Government Operation and Estimates, would be the best tool to provide greater oversight and curtail overambitious capital equipment projects.

Supporters of a continued defence build-up will argue that military spending cannot be considered discretionary, and that a return to 2001-level defence funding will entail a reduction in the security of Canadians. This argument ignores the changing realities of the Canadian security situation, ten years after 9/11, as well the threat to economic security that unchecked defence spending poses to Canadian taxpayers. A responsible, transparent, and more democratically accountable attitude towards military spending, with the goal of returning to pre-September 11^th spending levels, is the best means of ensuring long-term defence sustainability.

Thank you.