Canada’s Defence Needs More than Budgets

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HERE'S MY TAKE

No offence intended but I will attempt a defence of increasing defence budgets for reasons other than defence.

If that sentence sounds like a muddled mess, welcome to the defence file. While the anti-NATO protest in Montreal last week received more attention than the items on the official NATO meeting agenda, those matters are not without significance. Prime Minister Trudeau used his speech to profile Canada’s new defence policy which includes an increase in defence spending to the 2% NATO target by 2032, even though many analysts are skeptical the plan will work.

In 2014, NATO countries, including Canada, renewed their commitment of 2% of their GDP directed to defence spending (originally agreed to in 2006). That occasion was Russia’s invasion of the Crimean Peninsula which is part of Ukraine. There were also escalating tensions in Gaza and the rise of ISIS as a proficient killing machine was crushing any optimism left over from the Arab Spring. In 2014, Canada’s defence budget was below 1% of GDP, down from the 1.13% we were spending in 2006.

Canada continues to rank near the bottom (28^th out of 32 in official NATO reports) in defence spending which currently sits at 1.37% of GDP. (We will ignore the pedantic debate about what is included in defence spending.) Meeting the 2% target would mean spending $82 billion per year, which is a lot of money. Current spending is about $41 billion. However, in the context of the collective $1.47 trillion per year by NATO countries, even at 2% of GDP Canada’s contribution wouldn’t make too much difference in tipping the balance in favour of NATO in international conflicts.

So, if Canada’s defence spending doesn’t make that much of a difference in the global balance of power, why is it such a big deal? It’s one thing to have the “guns vs. butter” debate when our guns make a difference. But if everyone else has bigger guns, shouldn’t we just save the dollars for the domestic and social needs of our population? Sending scarce tax dollars to fight foreign battles isn’t a big vote-getter and while polls suggest Canadians are more concerned about our military preparedness than in previous years, defence spending is rarely a ballot issue save for a very small segment of the population. 

In real life, defence spending isn’t just a decision about how much we will spend defending our borders or helping others defend theirs. Defence economics is big money, and the lure of building a domestic defence industry capacity to stimulate the economy is always a subtext. Building tanks, planes, and warships can be a lucrative business. If our defence spending is domestic, the wages we pay, whether it is to the factory workers who make guns or to the soldiers who use them, would buy a lot of butter.

The traditional arguments of “we need a military to defend ourselves” and “military spending produces good jobs for Canadians” are both familiar and valid. However, we’ve come to a place where a third line of argumentation deserves attention. In the lead-up to last week’s summit, a bipartisan pair of American senators prompted headlines when they noted that Canada’s plan to meet NATO’s 2% target by 2032 would “get a big guffaw out of (Donald Trump)” and is not adequate to have Canada taken seriously.

Interestingly, most conversations about military spending these days segue quickly to border and immigration issues. What starts as a wonky multilateral discussion translates into global headlines with trade implications after President-elect Trump’s promise this week to put a 25% tariff on Canada, Mexico, and China on day one of his presidency as part of his crackdown on illegal immigration and drug smuggling.

I’m not sure it’s wise to closely link the Trump tariff threat to defence spending; it seems clear that spending more on defence is unlikely to be a very significant chip in that much larger negotiation. However, our defence budget seems to be a precondition for successful talks. Quite apart from the valid defence and economic considerations that accompany debates about Canadian military spending, the real international conversation is now about Canada’s global credibility.

I’ve heard the quip several times over the years that on the international stage, Canada is like the guest who joins expensive dinners but always manages to be in the washroom at precisely the time the bill is delivered to the table. It was never very polite but we’ve gotten away with that tactic for a long time. But now as the world is changing, we’ve little choice but to pay our share, if for no other reason than maintaining credibility and respect as an adult in the room.

This is the context for Monday’s proposal by the Business Council of Canada that Canada fast forward our defence commitments to 3% of GDP. The arguments they raise are traditional defence and economic arguments. (Granted, as a business group, many council members would also benefit from the spending.) They note that Canada risks failing to build our defence industrial base at a time when the international order is being reshaped. So, they call for “a dedicated planning, decision-making, and coordination unit within the Privy Council Office under the National Security Council.” At a granular level, all of those arguments make sense.

But in this case, the defence for defence spending goes beyond the economic or security details. It starts with the simple affirmation that when adult decisions are made, only adults are usually taken seriously at the table. If Canada wants to be a meaningful participant in a global conversation with significant implications for our future, whether we like it or not, we need to be an adult and pick up our share of the tab. There’s no defence for not doing so.

WHAT I’M READING

Bad Policy, Bad Politics

While the argument that “tax relief of whatever form” has value in an economy in which affordability is a problem, I have yet to meet anyone who believes that a two-month-long GST break constitutes effective public policy. The short-term policy – and it is short-term because it’s not financially sustainable long-term without other revenue – will cost the public purse a couple of billion. That’s money that could probably have been better used elsewhere. (The accompanying proposal to send $250 cheques to most Canadians in April will require separate legislation.) The objective is transparently political with hopes of improving Liberal polling fortunes. Much of official Ottawa is skeptical about the policy’s effectiveness on that score. As one Liberal insider told me this week, “I am used to having to make choices in which good policy is bad politics or vice versa. You should congratulate us for the accomplishment of aligning bad policy and bad politics with the same initiative.”

Trade Wars

President-elect Trump’s announcement on Monday that Canada, Mexico, and China will be subject to a 25% tariff the day he is inaugurated prompted lots of headlines and reactions around the world. I have no special insight regarding the extent to which this is just a negotiation tactic. (Mind you, the threat is working as a negotiation tactic as there seems to be an immediate policy response on a number of long-standing files in threatened countries.) Likewise, I don’t know how seriously to take Trump’s claim that this is about migration and opioids or whether this is part of the Trump economic plan in which tariffs will offset the billions of dollars in foregone revenue from his proposed tax cuts. As Heather Exner-Pirot points out in this piece, Canada is not without some leverage.

Does Canada Live Up to its Values?

When it comes to immigration, Mark Carney says the country “didn’t live up to” its values in recent years. Speaking at a Cardus event in Ottawa with our senior fellow Fr. Raymond de Souza, the former Bank of Canada governor rejected the idea that Canadians’ pro-immigration consensus had crumbled. But he does think the recent government decision to curtail immigration was necessary because we’d brought in more folks that we could reasonably house and employ. Of course, if the Canadian value was humour, both Mr. Carney and Fr. Raymond lived up to it, as noted by Politico. (More on this in Take it To-Go!)

Crime Wave

The US has a higher murder rate than Canada does, but on every other type of crime, Canada now leads. That ignominious distinction comes from a Fraser Institute report that concludes “rates of property and violent crime in Canada are now higher than south of the border.” And it seems Canadians have noticed. The Toronto Sun cites an Angus Reid Institute survey from September that suggests 60% of us believe crime is up in our communities – though the proportion who reported being victims of crime has been stable since 2018 at 13%.

Emptying Hospital Beds

Joanna Baron provides a chilling read in The Hub as she warns the UK’s MPs to see Canada’s experience with euthanasia as an example not to follow. “MAID converts a human being, suffering in all of their end-of-life indignities and physical needs, into a simple and neat solution, moreover an empty bed,” Baron writes. “These calculations, though harsh, are unavoidable in a rationed public care system.” Another warning comes from Ramesh Ponnuru at The Washington Post, who again uses Canada as a cautionary tale and cites Cardus’s work with Alexander Raikin. Meanwhile, The Telegraph is reporting on the abuses of euthanasia seen in Ontario and helpfully concludes with remarks from Cardus Health Program Director Rebecca Vachon.

MEANINGFUL METRICS

Incorporating AI

TAKE IT TO-GO

Golden Honorifics

Cardus hosted a conversation between Senior Fellow Fr. Raymond de Souza and the chair of Brookfield Asset Management Mark Carney. Mind you, those titles aren’t really how either of these gentlemen have gained their profile. I suspect that’s why Thursday’s edition of Politico’s Ottawa Playbook covered the event as a banker and a clergyman trading notes. If protocol were strictly followed, it seems Reverend Father DeSouza and former Bank Governor Carney might be in order. (I don’t get the sense that just because Carney served as governor of both the Bank of Canada and the Bank of England that Governor, Governor applies as Doctor, Doctor does to a few friends who have two PhDs.) There was laughter on-stage as Mr. Carney’s role as Special Envoy on Climate Action and Finance came up. It was noted that having “special” in the title meant no pay involved (unless $1 per year counts as pay) which, of course, does give special meaning to the word special.

The title of the informative fireside chat was “Can We Afford Our Values?” despite the fact that the Cardus event space has neither fire nor fireplace. De Souza anointed Carney as a “finance titan” which has a certain ring to it, although Carney’s anecdotes about the gold reserves held in the basements of central banks, which tourist guides mistakenly describe, can lead us down a path with further nuggets of comedy gold. But given that there is a bullion of them, I don’t want to devalue the conversation by two gentlemen of reputation by pressing the point. Besides, if I finished off a “take-it-to-go” by making off with the gold reserves held by central banks, the honorific that I might receive would probably just be a prisoner number.

I’ll leave it there for this week. Looking forward to being back in your inbox next Saturday morning with some reflections on the events of the first week of December. ‘Til then.