As PBO says NATO target plan is off, here’s why it matters to the military

Canada’s defence spending shortfalls are having a real impact on the Canadian Armed Forces, a former military leader says, and revelations about “significant” errors in the government’s plan to increase that spending means those issues may continue longer than promised.

Retired general Tom Lawson, who served as chief of the defence staff from 2012 to 2015, says pressure may have to come not just from Canada’s international allies but also from Canadians themselves in order to effect real change to how the government invests in its military and defence.

Failing to do so can affect overall combat readiness in the future, he adds — which could impact the U.S.-Canada relationship in particular.

“When you look at the military that I was in charge of 10 years ago and the military that exists today, the things that are very similar is that … we don’t maintain our bases and we don’t maintain our equipment,” Lawson told Mercedes Stephenson in an interview that aired Sunday on The West Block.

“When you (address) all those things … the people in uniform are happy, running effectively and efficiently on the bases, and providing good, capable arms and options for Canadian decision-makers in the future.”

With Canada being called upon more to provide support in continental and global defence, Lawson said allowing combat readiness to deteriorate presents a “real risk,” both politically and from a security standpoint.

A report from Parliamentary Budget Officer Yves Giroux last week said if Ottawa wants to meet NATO’s military spending target of two per cent of GDP by 2032 as promised, it will have to almost double defence spending to $81.9 billion.

The report also found the current forecast that says Canada will spend 1.76 per cent of GDP on defence by 2030 was based on “erroneous” economic growth projections that assume the country would be in a four-year recession. According to the watchdog’s own analysis, the projected defence spending reaches only 1.58 per cent of GDP by the end of the decade.

“(The Department of National Defence) used GDP numbers that are much lower than one would expect, and that are starkly different than those used by the Department of Finance, so that was very unusual and surprising for us,” Giroux told Stephenson.

He added the defence department stood by their numbers when Giroux’s office flagged the discrepancy, which also took them aback.

“It’s obviously a mistake to forecast a recession in Canada for four straight years in a row.”

Defence Minister Bill Blair told reporters the spending projections were based on NATO figures that rely on the Organisation for Economic Co-operation and Development. But Giroux said his office could not find those numbers to match the ones provided by the government.

Canada currently spends 1.37 per cent of GDP on defence, amounting to $41 billion for 2024-25.

Lawson said he wasn’t surprised the government’s forecasts appeared to be so far off, but noted the real issue is that making the necessary investments could help address the military’s maintenance woes.

The government last year asked the Department of National Defence to cut roughly $1 billion from its budget, which Lawson called “horrific.”

A report by the CBC this year said almost half of Canada’s military equipment is unavailable and unserviceable, and that only 58 per cent of the armed forces would be able to respond to a deployment call.

“If you could take us to 1.6, 1.7 (per cent) right now, now you’ve dealt with the bases, the ships that are falling down on deployment overseas, the 50 per cent reliability and serviceability of our aircraft,” Lawson said. “And all of that money is staying in Canada.

“That leaves another (0.3 per cent) to invest in areas that Canada needs investment in.”

The government has promised to invest $8 billion over five years for new equipment and other defence needs, which is on top of past spending boosts in areas like NORAD modernization.

Among the investments Ottawa has promised is a new fleet of submarines which will be part of a larger focus on Arctic security.

While Lawson said submarines are a “fantastic investment,” he said money also needs to go toward new naval destroyers and to creating a “permanent capability” in the Arctic, including northern bases, which the defence policy update acknowledges.

Giroux said the government would have to boost spending by $6.5 billion more per year to get to 1.76 per cent by 2030.

As for getting to $82 billion and two per cent two years later, Giroux said that will be “very difficult to achieve” while also meeting the government’s fiscal anchors, including avoiding a ballooning deficit.

“That would probably mean reducing spending in other areas or increasing taxes,” he said.

Canadians wondering how the government or any other party will try to boost defence spending to meet the NATO target while keeping the country’s finances sound may have to wait until the next election, Lawson said.

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