Steven Staples to Finance Committee: “Canada’s future is in Bombardier’s passenger jets, not Lockheed Martin’s fighter jets”

The Rideau Institute presented pre-budget consultation recommendations to the House of Commons Finance Committe on October 24, 2012. The full minutes and transcripts of the committee meeting are available online.

Steven Staples (President, Rideau Institute):

Good afternoon, honourable members of the committee and guests. Thank you for inviting me back to present our pre-budget consultation recommendations. My name is Steve Staples. I am the president of the Rideau Institute.

The Rideau Institute is a non-profit, non-partisan research, advocacy, and consulting group founded in 2006 with an expertise in Canadian defence and foreign policy, and we do not receive funding from the government or from firms. We are funded from donations from individuals and from consulting services we provide to non-profits and trade unions. I, myself, have been working in the field of defence spending and disarmament for about 20 years.

Our pre-budget submission has three main points for the government: first, to further reduce defence expenditures with a goal of returning to pre-9/11/2001 levels over time; second, to improve parliamentary and therefore public oversight of the military procurement processes; and third, to invest in Canadian industry by providing targeted support to areas of the economy where Canada is a world leader.

Defence spending today in Canada, even with the modest reductions made recently, remains at historically high levels. The dramatic buildup of defence budgets in the last decade, sometimes exceeding 10% a year, has left defence spending roughly 40% higher than before the 9/11 terrorist attacks. I’ve provided a chart from 2011 that documents in adjusted dollars where the budget is in real spending. We are sixth highest in NATO right now. In adjusted dollars, our defence spending is higher than at any point since the Cold War with the Soviet Union. I’ve also included that chart in the packages. However, the security situation has changed. We have a budget deficit and economic challenges at home. Our Afghanistan combat mission is over, and Osama bin Laden is dead.

Despite this, the government continues to commit to expensive procurement programs such as the F-35 and the shipbuilding program. It’s evident from the analysis provided by the Parliamentary Budget Officer and the Auditor General that the costs of these programs have not been properly assessed by the Department of National Defence, and are not likely affordable, even with the increased spending commitments within the Canada First defence strategy. The National Defence budget must be brought into line.

As well, improved parliamentary oversight over major crown projects would increase transparency in defence procurement and accountability of the government and military contractors. A dedicated parliamentary committee for major crown projects would provide Canadians with additional confidence that public dollars are being used wisely, fairly, and efficiently.

For instance, on the F-35 stealth fighters, the public has been greatly confused by statements made by the government on costs that are frankly unpredictable, contracts that don’t exist, and job opportunities that are little more than a hope and a prayer.

Establishing a parliamentary committee or a subcommittee responsible for major crown projects would help avoid the mistakes and complications that have arisen in many of the department’s projects and help cut through some of the spin from the defence contractors and ministers.

Finally, defence procurement strategies have not reflected the government’s goal of economic recovery and growth in key areas of the economy. The lack of a competitive process in sole-sourcing contracts has not guaranteed the industrial regional benefits that are essential for Canadian employment in these projects. For instance, there are no requirements for investment and job creation in the F-35 program, and I ask, what about the equally large shipbuilding program now? Where are the guarantees for jobs and investment there? Investments should be made where they stand the greatest chance of long-term benefit.

Media reports have suggested that the government is interested in a defence industrial strategy. This just doesn’t make sense. With defence budgets declining globally, respected financial analysts such as PwC point to the commercial market as the best bet. Canada’s future is in Bombardier’s passenger jets, not Lockheed Martin’s fighter jets.

Thank you, and I look forward to any questions you may have.

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