Canadian Military Budget Projections for Military Equipment

By Jeff G. Gilmour

The purpose here is to show the projected costs of capital equipment for DND over a 20- to 25-year lifespan based on the existing proposed budget for that department. Many of the required items noted in the 2023 National Defence Policy “North, Strong and Free” have no budget costs attached to them. The ones that have, I’ve flagged.

            Ottawa announced recently that the operating budget for DND will amount to $73B over a 20-year cycle and of that, $8.1B will roll out in the next five years. Even so, Canada will only be spending 1.76 percent of GDP by 2029-30.

            The current procurement system for the military is in a state of flux. This has led to the delay of equipment renewal needed for the three services, resulting in problems of force readiness and operational concerns due to a lack of critical equipment upgrades.

            Even with extended timelines, on the basis of DND’s budget noted above, the question remains: how financially realistic is it to acquire all the proposed military equipment referred to in either the National Defence Policy or the 2010 National Shipbuilding Strategy (NSS).

Under the 2010 NSS, 66 ships were proposed to be built for both the RCN and the Canadian Coast Guard. Even not including one major project where the costs were not known, the projected costs equaled $136.3B. One of these important projects was the construction of 15 Canadian Surface Combatants (CSC) ships at the Irving Shipbuilding yard in Halifax. Defence Minister BiIl Blair recently announced the new ships will be known as River-class destroyers with the first  ship operational in the 2030s with a 25-year construction phase and the last ship to be completed in the 2050s. The Parliamentary Budget Officer (PBO) projected the cost of this project as $84B. On the basis of delays in the project and the 25-year duration of the project, it is likely the costs will be closer to $100B.

What other projects and costs are there?

1. The government purchased 88 F-35A aircraft from Lockheed Martin in 2023 for an estimated cost of $19B.

2. The 2022 federal budget noted that upgrading the North American Aerospace Defence Command (NORAD) is estimated to cost $11B.

3. Replacement of 9 Airbus aircraft for the RCAF at a cost of $3.6B.

4. Purchase of 16 Poseidon P-8A aircraft for the RCAF at a cost of $10.4B      

5. Purchase of 11 drones for the RCAF in 2023 which cost $2.49B

In addition, there is equipment that has been proposed but is yet to be purchased.

1. Replacement of the 4 Victoria Class submarines?

2. Purchase of new light armoured vehicles and tanks?

3. Purchase of ground-banded air defence system?

4. Purchase of early warning aircraft and tactical helicopters?

5. Purchase and installation of marine sensors and detection systems?

6. Satellite ground stations, over the horizon radar and port facilities in the Arctic?

The total bill for this proposed DND equipment comes to $182.4B based on existing costs. This does not include the equipment list in the above paragraph. It is difficult to imagine, based on DND’s existing budget, how it will be financially possible for the department to complete current or proposed equipment contracts, even with timelines extended out to 25 years. Canadian governments have for decades, left the replacement of vital equipment for all three services too late, while at the same time not substantially increasing the budget of the department. Canada is now faced with increased urgency to meet its national and international defence commitments. An open and honest assessment of budget and equipment priorities is essential. Cost-effectiveness must be a primary consideration. That may include a deviation from traditional procurement methods, including domestic and regional development considerations and a willingness to look off-shore for purchases.

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