- Reaction score
- 1
- Points
- 230
Stephen Thorne
Canadian Press
Monday, March 14, 2005
OTTAWA (CP) - The initial exultation over military spending promises in last month's federal budget is giving way to sober second thought by some in the defence community.
Upon closer scrutiny, the government's promise of $12.8 billion in new spending over five years may not be all it's cracked up to be, say observers.
For at least the next three years, spending - adjusted for inflation - will still be well below peak levels in the late 1980s and early 1990s.
And there are no guarantees the minority Liberal government will be around to keep the promises, or that the economy that must support the spending increases will hold up.
Experts also note that much of the anticipated money is tied to a defence policy statement that hasn't been released yet.
"We have no idea when this thing will come out and the government may not want to bring it out as long as it has a minority in Parliament," said David Rudd of the Canadian Institute for Strategic Studies.
"Secondly, there were a number of things that probably should have been approved right up front. In other words, there was no need to wait until that review came out."
But wait they will - for new aircraft, new ships and other badly needed equipment that will be at least a decade in coming, provided the anticipated policy statement requires them.
Most of the new funding won't appear until fiscal years four and five. By that time, the total defence budget is supposed to stabilize at about $20 billion, up from $13.3 billion this year.
One-time increases in defence spending over the next two years have been pegged at $500 million and $600 million, most of which is targeted specifically for infrastructure upgrades.
But figures adjusted for inflation indicate this and next year's budgets are only equivalent to or less than adjusted spending last year, when planes were grounded and ships tied up for lack of resources to operate them.
A look at defence spending from 1986 to the present suggests the military is still far below the peak 1988-89 level of $16.1 billion adjusted to 2005 dollars.
Keith MacDonald, a retired fighter pilot, told the Conference of Defence Associations recent annual meeting that the budget was "smoke and mirrors."
Andrew Cohen, author of the book While Canada Slept: How We Lost Our Place in the World, says he's skeptical about the government's promises.
"I'm not convinced . . . that the money will really be there in the long term for all that we have to do, especially for the military," Cohen said.
"I worry that the new money will not be delivered in four or five years, which is an eternity in politics. The government can renege easily on long-term commitments."
Rudd said the pessimism, or caution, is largely based on past experience.
"Hopes have been dashed before," he said. "And there is an opportunity there for the government to backtrack."
While there are no guarantees that wildcards like oil prices, interest rates, the Canadian dollar or other factors won't derail the entire process, there is also reason for optimism in a largely disillusioned defence community.
Some insiders argue the promises represent a minimum the military can expect from any government, while others note the review process will streamline the military structure and make it more cost-effective.
Don Drummond, chief economist at TD Bank and a former senior Finance Department official, says government's long-term fiscal projections are always a bit of a gamble but they are usually reasonably conservative.
The last time such long-term budget projections were done, under the Conservatives in the 1980s, the government came out ahead, said Drummond.
"They do have substantial amounts of reserves built in," he said. "It would have to take quite a hit in interest rates and-or the economy to push it back into deficit, given the buffers that are there.
"Probably the economy could do a lot worse over a five-year period but, probably 50-50, it could do a lot better as well. Any four-or five-year plan, you have to view it as uncertain."
© The Canadian Press 2005
Source
Canadian Press
Monday, March 14, 2005
OTTAWA (CP) - The initial exultation over military spending promises in last month's federal budget is giving way to sober second thought by some in the defence community.
Upon closer scrutiny, the government's promise of $12.8 billion in new spending over five years may not be all it's cracked up to be, say observers.
For at least the next three years, spending - adjusted for inflation - will still be well below peak levels in the late 1980s and early 1990s.
And there are no guarantees the minority Liberal government will be around to keep the promises, or that the economy that must support the spending increases will hold up.
Experts also note that much of the anticipated money is tied to a defence policy statement that hasn't been released yet.
"We have no idea when this thing will come out and the government may not want to bring it out as long as it has a minority in Parliament," said David Rudd of the Canadian Institute for Strategic Studies.
"Secondly, there were a number of things that probably should have been approved right up front. In other words, there was no need to wait until that review came out."
But wait they will - for new aircraft, new ships and other badly needed equipment that will be at least a decade in coming, provided the anticipated policy statement requires them.
Most of the new funding won't appear until fiscal years four and five. By that time, the total defence budget is supposed to stabilize at about $20 billion, up from $13.3 billion this year.
One-time increases in defence spending over the next two years have been pegged at $500 million and $600 million, most of which is targeted specifically for infrastructure upgrades.
But figures adjusted for inflation indicate this and next year's budgets are only equivalent to or less than adjusted spending last year, when planes were grounded and ships tied up for lack of resources to operate them.
A look at defence spending from 1986 to the present suggests the military is still far below the peak 1988-89 level of $16.1 billion adjusted to 2005 dollars.
Keith MacDonald, a retired fighter pilot, told the Conference of Defence Associations recent annual meeting that the budget was "smoke and mirrors."
Andrew Cohen, author of the book While Canada Slept: How We Lost Our Place in the World, says he's skeptical about the government's promises.
"I'm not convinced . . . that the money will really be there in the long term for all that we have to do, especially for the military," Cohen said.
"I worry that the new money will not be delivered in four or five years, which is an eternity in politics. The government can renege easily on long-term commitments."
Rudd said the pessimism, or caution, is largely based on past experience.
"Hopes have been dashed before," he said. "And there is an opportunity there for the government to backtrack."
While there are no guarantees that wildcards like oil prices, interest rates, the Canadian dollar or other factors won't derail the entire process, there is also reason for optimism in a largely disillusioned defence community.
Some insiders argue the promises represent a minimum the military can expect from any government, while others note the review process will streamline the military structure and make it more cost-effective.
Don Drummond, chief economist at TD Bank and a former senior Finance Department official, says government's long-term fiscal projections are always a bit of a gamble but they are usually reasonably conservative.
The last time such long-term budget projections were done, under the Conservatives in the 1980s, the government came out ahead, said Drummond.
"They do have substantial amounts of reserves built in," he said. "It would have to take quite a hit in interest rates and-or the economy to push it back into deficit, given the buffers that are there.
"Probably the economy could do a lot worse over a five-year period but, probably 50-50, it could do a lot better as well. Any four-or five-year plan, you have to view it as uncertain."
© The Canadian Press 2005
Source
