Federal Budget 2016: Veterans Emerge As Winners, But Military Equipment Purchases Delayed

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OTTAWA — The promised re-equipping of the Canadian military has essentially been postponed until after the next election in a maiden federal Liberal budget that shifts billions of dollars in capital spending to 2020 — or later.

The Trudeau government's new fiscal plan shoves $3.7 billion in planned defence purchases — ships, planes and vehicles — off into the future, but Finance Minister Bill Morneau insists the move does not represent a cut to military funding.

Morneau said the Liberals need a year to figure out Canada's defence priorities.

harjit sajjan
Minister of National Defence Minister Harjit Sajjan delivers a keynote speech to members of the Conference of Defence Associations in Ottawa, Thursday February 18, 2016. (Photo: Adrian Wyld/CP)

"In order to make sure we have the funds available at the time when they need those funds, we've reprofiled some in the fiscal framework," he told a news conference prior to tabling the budget in the House of Commons.

"So, when we need the money, the money will be in the fiscal framework. So, we believe that is the appropriate action to take to ensure our military has the appropriate equipment, the planes and the ships they need."

A big day for Canada's ex-soldiers

Instead, it was the veterans community that emerged Tuesday as one of the biggest winners in the Liberal spending spree.

Canada's ex-soldiers will see enriched disability awards, expanded access to permanent impairment allowances and a more generous income replacement program for the wounded — measures totalling $5.6 billion over six years, starting this year.

The budget also retreads a previous commitment to reopen nine regional Veterans Affairs offices shuttered by the previous Conservative government, but does not say precisely when that will happen.

The Liberals promised each of those measures during the fall election campaign.

Same move as Conservatives

What was unexpected was the decision to defer big-ticket procurement spending — a serious issue for a military facing serious rust-out issues.

The Conservatives did the same thing in two previous budgets. The cumulative total of postponed defence purchases has now reached $10.4 billion, said defence analyst Dave Perry of the Canadian Global Affairs Institute.

For the previous government, the postponement had a lot to do with the balancing the budget, said Perry. To be fair to the Liberals, they need to figure out their defence priorities and fix the broken procurement system, he noted.

"This is reflecting in budgetary terms that they can't buy things," Perry said.

"I don't know if this government really had much of a choice. They walked in and these projects were not going to move."

The political significance, Perry said, is that National Defence will be expecting its money at time when the Liberals will likely have to get serious about cutting the deficit, which is projected this year at $29.4 billion, falling to $14.4 billion by 2020-21.

"They're literally going to have an issue five years from now because that's when the bill arrives," said Perry, who noted that the military is at the point where it needs concrete guarantees that the money will be spent.

"I think if I was National Defence, I would hope you'd already have the money in the bank, instead of having to rely on a promise of some year, some time in the future they'll be able to acquire this stuff."

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Although not mentioned in the budget, finance officials say the previous Liberal commitment to maintain annual increases of three per cent to the defence operating budget to offset inflation will stand.

Federal budget documents, released ahead of Tuesday's fiscal plan, suggested that baseline defence funding overall will drop by as much as $400 million when compared with the current budget year, but finance officials say the allocation is routinely topped up throughout the year in supplementary requests.

The budget earmarks $200 million for infrastructure repairs and upgrades at military bases, including reserve armouries.

Just over $586 million has been set aside for promoting international peace and security over three years.

Of that, $450 million goes towards the foreign affairs-run global peace and security fund and $106 million for international police peacekeeping and peace operations programs.

But finance officials say that money is simply being renewed and is not new.

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