Cuts continue while DND drifts: 1996-97 military spending.

The latest round of reductions in Canada's military budget will, if carried out, almost completely remove the massive military budget buildup that took place during the 1980s. The government continues to miss the opportunity for much more significant military spending cuts, however, by its failure to adopt a true post-Cold War defence policy that creates a smaller, but much more focused Canadian military.

Finance Minister Paul Martin's third budget, announced on March 6th, calls for the Department of National Defence (DND) to spend a total of $10.963-billion in 1996-97, down from $11.717-billion in 1995-96. Allowing for inflation, DND will spend about 8 per cent less during 1996-97 than it spent during 1995-96. Nonetheless, DND's 1996-97 budget will remain 20 per cent higher (after inflation) than it was in 1980-81 when the last budget buildup of the Cold War began.

Finance Minister Martin also spelled out the government's plans for future cuts in military spending. According to the budget projections for fiscal years 1997-98 and 1998-99, DND's budget is scheduled to drop by an additional 15 per cent or so (the exact drop will depend on the rate of inflation over the period). If this occurs, DND's budget will fall to about $9.3-billion in 1998-99. This level will still be roughly 2 per cent higher than DND's 1980-81 budget.

By comparison, the rest of the world's military spending (which could be considered a crude measure of the level of military "threat" facing Canada and other countries) has already dropped far below its 1980 level. As of 1993, worldwide military spending had fallen 14 per cent below its real dollar level in 1980, while military spending by the countries that are not part of NATO had fallen a full 36 per cent below its 1980 level. (1) (See Figure 1.)

Deeper cuts possible

There is no reason for DND to continue spending as much or more than it was spending in 1980. Project Ploughshares estimates that a more specialized Canadian Forces could perform the essential military functions that Canada requires with a budget as small as $7.5-8.0-billion per year.

The main explanation for the government's seemping inability to make deeper cuts in military spending is its failure to live up to its Red Book promise to "[reorient] Canadian defence policy and procurement practices to emphasize the key priority of peacekeeping." (2) Instead, the government took the position in its 1994 White Paper that Canada needs to maintain "multi-purpose, combat-capable sea, land and air forces." (3) This means, in effect, that DND is still attempting to maintain the full variety of its Cold War-era combat capabilities, whether needed or not.

As a result, DND's capital spending has declined very little. It remains 77 per cent higher than it was in 1980-81, and only 11 per cent lower than it averaged during the final five years of the Cold War. DND's capital spending per soldier will be higher this year than it was at any point during the 1980s. Some cuts in capital spending are planned, but even after those cuts are implemented it appears that DND expects to be able to dedicate a larger percentage of its budget to capital expenditures than it did during the 1980-81 to 1994-95 period.

The effort to acquire Britain's four surplus Upholder-class submarines (a project that may still be alive) is a clear example of DND's determination to maintain non-essential capabilities. Canada has no overriding requirement for submarines, and the cost of acquiring (whether through purchase or some form of disguised "lease"), basing, operating, modifying to Canadian standards, and eventually upgrading these vessels would be certain to run into billions of dollars. The Canadian Forces cannot afford to sink that kind of money into non-essentials, and neither can Canadian taxpayers.

As long as DND continues to waste money attempting to maintain non-essential capabilities, Canada's required military capabilities will not receive sufficient support, and savings that could have been used both to meet those needs and to support essential non-military security programs such as development assistance will not be realized.

A student of the Canadian government's security spending priorities would never guess that a fundamental rethinking of Canadian security policy took place in the early 1990s. Clearly, the student would conclude, the highest priority in Canadian security policy is to continue the attempt (however unsuccessful) to equip Canada's armed forces for the full range of high-intensity warfare in the air, on land, and at sea. The statistics certainly bear out that interpretation. As noted in the sidebar, both the DND budget and the Official Development Assistance budget have declined in absolute dollars since 1988-89. In relative terms, however, Canadian governments have been spending the post-Cold War period beating ploughshares into swords, rather than swords into ploughshares.

(1) World Military Expenditures and Arms Transfers 1993-1994, US Arms Control and Disarmament Agency, 1995, and earlier editions.

(2) Creating Opportunity: The Liberal Plan for Canada, Liberal Party of Canada, 1993.

(3) 1994 Defence White Paper, Department of National Defence, 1994, p. 49.