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Canadian Military Spending

Speaking at a conference in September, the American Ambassador to Canada, Paul Celluci, told a group of businesspeople that Canada needed to increase its military spending. The Americans, he told the crowd, reportedly with a straight face, could not win the war on terrorism alone. He reiterated his comments in subsequent interviews and speaking engagements.

Canada has, in fact, increased its military spending in the aftermath of September 11. Spending by the Department of National Defence (DND) rose by 3.5 percent over the previous year, to just under $13 billion. Furthermore, military spending has been increasing at least for the last 20 years. According to calculations done by Project Ploughshares, real military spending (adjusted for inflation) increased by 26 per cent between 1980-81 (during the Cold War) and 2001-02.

However, while overall military spending has increased, the number of men and women serving in the Canadian forces has decreased at approximately the same rate. In essence, what this represents is a fundamental shift in Canadian military spending from personnel to equipment. In 1980-81, the amount per soldier spent on equipment and other capital expenses was around $18,000 (adjusted for inflation) whereas today, it is just over $38,000.

Canada buys military equipment (everything from weapons to uniforms to tanks to submarines) from a number of different sources, including some domestic suppliers. Great Britain and the U.S. are Canada's two main military suppliers, with American suppliers' importance all but guaranteed to increase as the Canadian military pursues a path towards "inter-operability". American companies, in turn, purchase many of the component parts for fighter jets and planes from the Canadian aerospace industry.

In February of this year, the Canadian government joined the American-led Joint Strike Fighter (JSF) program. A joint program of the U.S. Navy, Marines and Air Force, JSF is designed to assess and replace aging military equipment over the next decade. As a "Level Three" international partner in the JSF program, Canada has committed to spend more than $150 million U.S. This includes a $100 million U.S. commitment from the Department of National Defence and $50 million from Technology Partnerships Canada, an Industry Canada program which acts as a funnel for government monies into the pockets of large industries. Part of this money will be spent on an extensive evaluation of equipment capabilities.

Also under the program, and the reason why the Canadian aerospace industry lobbied so effectively for Canada to commit to it, Canadian companies can compete against other JSF partners for JSF contracts, worth billions of dollars, to supply parts to American military equipment companies. At the same time, the U.S. will be divesting itself of obsolete ships, aircraft and will therefore be looking for markets for used, but still functioning, equipment. What better place to look than some of its JSF partners, especially those who are more politically acceptable partners, like Canada, as opposed to traditional client-states like Indonesia, Egypt, Turkey, Israel, Saudi Arabia and Pakistan? It will come as no surprise if Canadian military spending continues to increase as part of the Liberal government's post-September 11 strategy, with the bulk of new spending on American-made goods.