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Study on Issues Related to the Government’s Current Defence Policy Review

Hon. Art Eggleton:

Honourable senators, I rise to speak to the tenth report of the Standing Senate Committee on National Security and Defence. First I want to congratulate the committee on their endeavours. They’ve done an extensive study with a wide-ranging set of recommendations for us to consider.

I support, or at least do not object, to most of the 16 recommendations going forward for government consideration in the report, which is entitled Military underfunded: The walk must match the talk.

I particularly single out recommendation number one:

That the Government of Canada make the necessary defence investments to ensure that the Canadian Armed Forces are fully equipped and trained to effectively carry out Canada’s key defence priorities: the protection of Canadian sovereignty, including the Arctic; the defence of North America under NORAD; and full participation of NATO as well as the United Nations and other multilateral international operations.

I strongly support that recommendation.

But it is recommendation number two that I do not support. It reads:

That the government present a budget plan to Parliament within 180 days to increase defence spending to 1.5 per cent of GDP by 2023 and 2 per cent of GDP by 2028.

In my five years serving as Minister of National Defence in the Chrétien cabinet, I never came to appreciate that 2 per cent of GDP, gross domestic product, was the appropriate way to measure capabilities and contributions to meeting the goals such as those covered in that first recommendation of the report. Why not, for example, measure per capita expenditures, in which case Canada ranks ninth out of 28 member states or a percentage of the federal government expenditures, in which case Canada ranks sixth? In either case, we rank above the NATO average if you exclude the United States, which is really in a league of its own spending, more than double on defence than all the other NATO countries combined.

As far as the 2 per cent number is concerned, we’ve actually moved up the rankings with the recalculation of defence spending announced in last week’s government defence review. Canada now reports a defence expenditure of 1.19 per cent of GDP for 2016-17. As such, we would now rank sixteenth in the latest NATO Secretary-General’s report, up from twenty-third position, without spending a dime.

Honourable senators, let me put this in some context by reading a quote from a report entitled NATO Defence Spending: the Irrationality of the 2 %. This was a paper written by Simon Lunn who served as Secretary-General of the NATO Parliamentary Assembly from 1997 to 2007 and Nicholas Williams, who is a long-serving member of NATO’s international staff, most recently serving as head of operations for Afghanistan and Iraq. They write:

That 2 per cent takes no account of the ebbs and flows of economic fortunes; is vulnerable to changing circumstances and domestic pressure, both in terms of the security requirements and the economic base; encourages creative accounting to satisfy targets; and provides zero guidance concerning what precisely what capabilities are needed to counter the threats and challenges that NATO faces.

Honourable senators, 2 per cent of GDP is an input number. Shouldn’t we be measuring outputs? Shouldn’t we be measuring outcomes? The important measurement should be based on our capabilities and contributions, as Lunn and Williams suggest in their report.

Now, the capabilities of our Armed Forces personnel are some of the best in the world. As was noted in last week’s defence review, our greatest asset is our men and women in uniform. They are motivated, highly skilled and dedicated to the Canadian Forces and their roles within it. Our allies around the world recognize this. As the U.S. Defence Secretary General Mattis recently stated, “The distinction with which our men and women in uniform serve in Afghanistan compelled him to say, one, hug and kiss every one of you guys coming off the plane.”

While we can respect that our men and women in uniform will serve with the utmost skill, it is up to government to provide them with the right equipment to get the job done.

At the 2014 NATO Summit in Wales, members agreed that they should work towards spending 20 per cent or more of their defence budgets on new equipment.

In the most recent NATO report, Canada ranked eleventh in this measure, at 18 per cent. Last week’s defence review, entitled Strong, Secure, Engaged, committed the government to raising our investment to 19 per cent of defence expenditure by next year, 22 per cent by 2021, and 32 per cent by 2024-25. This commitment reflects real investment in our Armed Forces, one that is not tied to GDP but reflects actual military expenditures.

Honourable senators, I recall that when I was defence minister, we had just ordered roughly 200 Coyote armoured patrol vehicles. This was state-of-the-art reconnaissance equipment at the time, and we deployed some of them to the Balkans as part of our peace support mission there. At the time, Lieutenant-General William Leach, Chief of the Land Staff, stated that not only were the Coyotes proving their worth, but they were causing our allies to hold us there; they were trying to hold us there to keep that kind of capability because it worked well with their capabilities.

That brings me to the question of interoperability. It is investments like these that allow us to work with our allies and make significant contributions to multilateral missions. Our capabilities are further strengthened by this interoperability. We don’t need all the equipment in the world — we work with our allies — but what’s important is the interoperability with them.

Canada is no laggard when it comes to joint military exercises, and our Armed Forces have few peers when it comes to our ability to work in concert with our allies.

For example, since 2014, Canada has sent troops and equipment to Eastern Europe to train with our NATO allies in the region. This interoperability is also reflected in our upcoming NATO mission in Latvia, which leads to my second point: our contributions.

Canada has been tasked to lead the NATO enhanced force battle group in Latvia, one of four such groups created to counter Russian belligerence in the area. Four hundred and fifty Canadian troops will be stationed there, and they will lead troops from several other countries.

This mission is but one of a long list of Canadian contributions to peace support and assisting our allies in conflicts around the world. The most obvious example was our role in the Afghanistan mission. This was NATO’s largest mission to date, and the only time Article 5 has been invoked. Interestingly, it was invoked on behalf of our ally the United States of America, after the 2001 attack.

By the time we withdrew our forces in 2014, Canada had sent more than 40,000 men and women to that mission, with 158 sacrificing their lives. For five of these years, the Canadian Forces were stationed primarily in Kandahar, considered one of the most dangerous regions in that country.

Before Afghanistan, in the early 1990s, our Canadian Forces were in the Balkans, sending a sizeable contingent as part of the NATO-led Intervention Force and Stabilisation Force in Bosnia-Herzegovina. In fact, Canadian Forces were there before the NATO mission as part of the UN Protection Force, from 1992 to 1995. Canada’s contribution in this conflict outweighed our size and demonstrated that we are willing to use every asset at our disposal when it comes to our responsibility to protect innocent people in these regions.

It is these and other contributions to the defining conflicts of our time by which armed force should be measured — not something as flawed as the financial yardstick that is tied to GDP.

Gross domestic product, honourable senators, can go up or down, or it can be stagnant. If we have robust economic growth over the next decade, getting to 2 per cent will become even more expensive and challenging as GDP rises. If we unfortunately experience a recession, then our percentage of GDP for military expenditure can increase without spending a dollar more. What sense does that make in terms of measuring capabilities and contributions?

In fact, there is a chart on page 17 of the committee’s report showing an expenditure of approximately $1.65 billion in 1960, when we were at 4.2 per cent as a percentage of GDP. That $1.65 billion, when accounting for inflation, would be $13.89 billion in today’s dollars. However, the 2016-17 expenditure is even higher, at $18.64 billion. But as a percentage of GDP, it has gone down from 4.2 per cent to around 1 per cent. In other words, we are spending more now than we did when we met the 2 per cent or better target, adjusting for inflation, but our economy has been growing much faster over this period of time.

For Canada to meet the 2 per cent of GDP level would require more than doubling our defence expenditure. That would necessitate either substantial tax increases and/or a significant reduction in other government programs and services, including social support measures. Honourable senators, that is both unrealistic and unacceptable, I suggest.

Canadian governments, both Liberal and Conservative, have generally avoided the 2 per cent GDP proposition. It is not a NATO requirement to begin with. In fact, in no part of the declaration signed by all the members at the 2014 NATO Summit is the 2 per cent referred to as compulsory, rather, it is referred to as a consideration.

During that summit, a senior Canadian government official said — and this is at the time of the Conservative government, by the way:

We are open to increasing military spending when and where it makes sense and in response to particular needs. But the notion of setting a target does not make sense.

Regarding the 2 per cent figure specifically, a spokesman for Prime Minister Stephen Harper said:

. . . it is an aspirational target and will be acknowledged as such in the summit statement.

More recently, defence analyst David Perry, of the Canadian Global Affairs Institute, has argued that there is validity to the government’s argument that spending alone isn’t a good measure of a country’s contribution to NATO.

I agree with all of the various contributions we’ve been making.

In that regard, take Greece, for example — a wonderful country, with wonderful people, but we all know of its major economic problems. Yet, they are one of only five NATO countries out of the 28 that meet the 2 per cent threshold. They spend 2.36 per cent of GDP on defence. However, that has less to do, I assure you, with their military capabilities than it does with their depressed economy. Their economy is eight times less than that of Canada’s.

Another issue with the 2 per cent mark is what goes into these calculations. France, for example, includes military pensions that account for 24 per cent of their allocation. In the past, Canada has not taken into account some of the spending our NATO allies include in their reporting.

At a recent meeting of the House of Commons Standing Committee on Foreign Affairs and International Development, Dr. Christopher Sands of Johns Hopkins University addressed the 2 per cent measure. He said:

Our European allies have a tendency to throw in all sorts of things to try to make their figures look like they’re closer to 2 per cent — veterans benefits, contributions to diplomacy. . . .

The problem is that Canada is too darn honest.

Honourable senators, we should at least be comparing apples to apples, not apples to oranges. If we are going to make such comparisons, NATO must ensure that all countries are reporting the same set of expenditures before releasing these numbers.

With the release of last week’s defence policy, the government adopted a formula more in line with other NATO members when it took into account spending that our allies typically include, such as military pensions. So our percentage of GDP for 2016-17 immediately jumped from 0.9 to 1.19 per cent, without spending a dollar more. That is still below the 2 per cent threshold, but in an instant it moved us from twenty-third place in NATO to sixteenth.

Did our military capabilities change with this recalculation? Is our contribution to NATO suddenly greater? No, of course not. This is why the 2 per cent measure is flawed, and it will remain unrealistic if it involves doubling our defence expenditures.

What is more important is what we get for what we spend. Our capabilities and contributions are amongst the best, as we have shown time and time again, particularly with our motivated, highly skilled and dedicated men and women who serve in the forces. Yes, we can and should spend more to the goals mentioned in Recommendation No. 1, but not with the 2 per cent of GDP in Recommendation No. 2. It is time to measure outputs, outcomes and results rather than a percentage.

The Hon. the Speaker pro tempore: Senator Eggleton, your time is up.

Senator Eggleton: May I have one minute to read my amendment?

The Hon. the Speaker pro tempore: Are colleagues in agreement?

Hon. Senators: Agreed.

Motion in Amendment

Hon. Art Eggleton: Therefore, honourable senators, I move:

That the tenth report of the Standing Senate Committee on National Security and Defence be not now adopted, but that it be amended by deleting the second recommendation.