By David Pugliese
In mid-September Defence Minister Harjit Sajjan said the Liberal government was looking to speed up military procurements as a way to jump-start job creation. The plan would be to fast-track parts of the government’s defence policy, Strong, Secure, Engaged, to help fuel the economic recovery in the wake of the COVID-19 pandemic.
But when Esprit de Corps asked for the names of some of the projects that the Minister would like to see fast-tracked, Sajjan could only reply: “We are committed to our fully funded Defence Policy; Strong, Secure, and Engaged. Procuring the women and men of the Canadian Armed Forces the equipment they need to do the important work we ask of them is one of our Government’s top priorities.”
That response was a not a good sign for those interested in a robust Canadian Armed Forces and a strong defence industry capability. Sources tell Esprit de Corps there is no list of projects to be fast-tracked, at least at this point.
In addition, the Sept. 23 Throne Speech, which outlined the Liberal government’s priorities for the future, had not one reference to defence or foreign affairs.
So far, Sajjan is trying to put a positive spin on the current situation for the Canadian Forces and Department of National Defence. He has claimed the Liberals have no intention of cutting back on its defence policy which calls for tens of billions of dollars to be spent on buying new equipment.
“We’re going do a very thorough analysis, just like we did in the past, make a good case about it and then make a decision of where we want to go,” he told the Canadian Press news service Sept. 15. “But absolutely, the SSE funding is secure. We’re continuing on with SSE investments.”
Whether that is true remains to be seen.
Christyn Cianfarani, president of the Canadian Association of Defence and Security Industries or CADSI, says the country’s defence industry can play an important role in the federal government’s economic recovery plan.
Canada’s defence industry actually fared better than other economic sectors during the pandemic, she told Esprit de Corps. There were no significant layoffs and most firms have been able to continue operations and production. “It actually does tell you that it does function in a crisis situation,” Cianfarani said. “Because it was there so many of the companies were able to pivot their commercial lines of business where they weren’t getting work and to do things that supported the pandemic (response).”
She pointed out that CAE started producing ventilators when its work with the commercial airline industry dwindled because of the pandemic. “The defence side stayed stable,” added Cianfarani.
CADSI also noted that foreign sales, which account for 60 percent of Canadian defence industry revenue, have not yet been adversely affected by the pandemic and the associated global recession.
The association has recommended a series of measure to the federal government that would help the industry and let it contribute to economic recovery. Cianfarani said there are already billions of dollars earmarked for Canadian Armed Forces procurement so the government should use that to create what she termed high-paying defence jobs. According to CADSI some 60,000 jobs are tied to Canada’s defence industrial base.
Among CADSI’s recommendations is to accelerate equipment project approvals, favour Canadian firms and supply chains as much as possible and use National Security Exemptions to buy capabilities that can already be provided by Canadian industry. In addition, the association recommends the federal government aggressively apply industrial regional benefits to all defence procurement projects between $20 million and $100 million, as well as favour Canadian-based cyber firms for associated purchases as the government moves its employees to more remote work.
Cianfarani noted that having Canadians gainfully employed and earning a good pay cheque in a defence and security-related job is better than having workers laid off and collecting employment insurance.
Another potential area of revenue and job creation, according to CADSI, is the $2 billion in defence-related contracts for foreign sales which are backlogged in the government’s approval process. The backlog has been building for at least a year and eliminating this backlog will allow these contracts to proceed.
Whether the federal government follows such advice is not yet clear. The Liberal government’s Throne Speech on Sept. 23 focused on COVID-19 emergency measures to support businesses and health care as well as longer term goals of a national child care strategy and improving education. There was also talk about green initiatives such as planting of trees, modernizing police training and tackling systemic racism.
Interestingly, the Liberals made no mention of its efforts to have Canada play more of a role in overseas operations led by the United Nations or other alliances.
Prime Minister Justin Trudeau’s government has promised a campaign to create one million jobs, noting that there will be “direct investments in the social sector and infrastructure, immediate training to quickly skill up workers, and incentives for employers to hire and retain workers.” Part of the Liberal government recover plan includes a promise to funnel $10 billion into infrastructure programs.
The funding would come from the Canada Infrastructure Bank and the initiatives are expected to create 60,000 jobs, according to the Liberal government. The initiative will include funding for clean power and connecting approximately 750,000 homes and small businesses to broadband in underserved communities; $2 billion to invest in large-scale building retrofits to increase energy efficiency and help make communities more sustainable; $1.5 billion for agriculture irrigation projects to help the agriculture sector enhance production, strengthen Canada’s food security, and expand export opportunities; and $1.5 billion to accelerate the adoption of zero-emission buses and charging infrastructure.
No funds were earmarked for the aerospace, defence or security sectors.
Although CADSI has made its representations to the federal government, individual defence firms have been relatively quiet in outlining what role, if any, they could play in Canada’s economic recovery. Not so with other industries, which have launched advertising campaigns to push the federal government to direct funding their way.
The defence industry is also facing a challenge from activist groups who are campaigning against tying up federal money in military purchases, particularly the proposed acquisition of new fighter jets. The first protests were launched July 24 one week before the bids were due for the fighter jets. Protesters showed up at the offices of 22 MPs. A second protest was held Oct. 2. Demonstrations were staged outside the officers of 25 MPs including Conservative leader Erin O’Toole, Defence Minister Harjit Sajjan and others. The aim of the campaign is to redirect funding for military equipment into a national childcare program as well as other programs to assist women.
In the Canadian Forces view, the need for new capabilities and equipment is not going to go away. In fact, such as need will significantly increase, military officers say. On Aug. 11, Brig. Gen. Colin Keiver, director general air and space force development, outlined to industry executives that the Royal Canadian Air Forces has 17 large projects it needs to get underway. Those range from the acquisition of the new fighter jets to replace the CF-18s to the acquisition of space capabilities to improve situational awareness and targeting, the purchase of new command and control and communications systems, the replacement of the air-to-air tankers and the acquisition of a fleet of medium altitude remotely piloted systems. The RCAF’s 17 large projects account for $46.4 billion, according to Keiver. That makes up just less than half of the future funding proposed the Liberal government’s 2017 defence policy paper Strong, Secure, Engaged.
The Royal Canadian Navy’s share of that is also expected to be substantial. As Commodore Chris Robinson, director general naval force development, pointed out Sept. 28 in a CADSI presentation, the Royal Canadian Navy is undertaking an unprecedented peace time naval fleet recapitalization while simultaneously preparing for the expansion of missions in the Arctic ocean. Where this all leaves the Canadian Army in the future – and what its share of the funding pie will be – is an open question.
The Liberals, who could be heading into an election in the coming year, want results that can quickly put Canadians back to work. That most likely means shovel-ready infrastructure projects. With bases and facilities across the country the Department of National Defence could provide the government with some of the projects they want. Sources inside National Defence Headquarters in Ottawa say each of the military services have been scanning their infrastructure needs to see if they can fast-track some of those.
In a December 2019 response to a query from a Conservative MP, the DND presented to Parliament a list of 117 defence procurement projects that are currently delayed. Interestingly, 64 of the projects were for infrastructure at bases and facilities.
Cianfarani noted pushing ahead on infrastructure projects can provide much needed employment for workers and a lifeline to businesses. Much of the base infrastructure is also supported by smaller firms, who do everything from maintenance to plowing snow, she added.
The DND has recently issued news releases on infrastructure projects but that was clearly a public relations strategy to support the Liberal government as some of the contracts have finished or are so far in the future that job creation won’t come for a number of years. For example, on Oct. 13 the DND issued a news release announcing that the construction of an integrated logistics section at CFB Kingston had been completed. But that was done back in June. The $48.5-million project generated about 180 jobs during construction but there was no word if employees were kept on at various companies after the construction was finished.
Sajjan’s reassurances that there won’t be cuts to defence spending might also be short-lived.
With the federal deficit currently estimated to be near $400 billion, the Liberal government has suggested spending will be reduced once the pandemic is over. “Absolutely, once we are through this pandemic, it is going to be extremely
important to be fiscally responsible and sustainable,” Trudeau told parliamentarians.
Parliamentary Budget Office Yves Giroux has also warned current spending for emergency relief programs to deal with the pandemic can only go on for so long. If spending isn’t curtailed then taxes will have to be increased, he said. That is something no government looks forward to, particularly if they are facing an election.
There is also the issue of whether Sajjan will stay on as Defence Minister long enough to keep his promise of no major spending cuts. There have been suggestions that a new Defence Minister might be put in place in the coming year.
For now, Treasury Board President Jean-Yves Duclos says spending overall can’t be reduced without harming the economy and pushing Canada towards a depression. He was mainly talking about the various emergency relief programs in place. But the Liberal government has signaled that also means public service jobs (including military personnel) and department spending are fine for now.
How long that continues is an open question.
