Latest PBO Update on DND Capital Spending

By Dr. Dan Middlemiss, 14 March 2022

Canada’s Parliamentary Budget Officer (PBO) just released a 2022 update on DND’s planned spending under Canada’s current defence policy – Strong, Secure, Engaged (SSE 2017).1 Here are the main findings:

1. DND continues to underspend on its capital projects (e.g. major equipment) compared to SSE projections. The cumulative shortfall now is almost $10 billion;

2. Delays are pushing planned SSE spending further into the future;

3. Because of consumer and defence-specific inflation, the planned capital spending amounts may have to be increased due to the reduced purchasing power of the defence dollar occasioned by these continuing delays.

To sum up. DND currently cannot spend what the government has allocated for new capital equipment, in part due to persistent delays in Canada’s sclerotic defence procurement system, and because of unforeseen factors like the Covid pandemic. These delays are likely to continue. Finally, planned defence spending will likely have to increase in future years because inflation will erode the purchasing power of the Canadian dollar. Not a very reassuring picture.

Notes:

  1. Canada, Office of the Parliamentary Budget Officer, “Planned Capital Spending Under ‘Strong, Secure, Engaged’ – Canada’s Defence Policy: 2022 Update”. (11 March 2022). Accessed at: https://www.pbo-dpb.gc.ca/en/blog/news/RP-2122-033-S--planned-capital-spending-under-strong-secure-engaged-canada-defence-policy-2022-update
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