New defence minister must make tough decisions

New Defence Minister Rob Nicholson will have to make some hard choices, and soon, regarding his department and the Canadian Forces if he is going to free up the money to modernize Canada's navy and air capabilities, former commodore Kelly Williams writes.
Crew from the Canadian frigate HMCS St. John's salute while part of an international naval review in Halifax in 2010. Canada's aging frigates and destroyers are to be replaced under a proposed $25 billion program. (Reuters)

As one of Canada's longest serving defence ministers, Peter MacKay had been at the wheel for just over six years.

He successfully navigated defence through some of the most difficult and challenging waters in recent memory, such as ending the Afghanistan mission. And he has not only been a steadfast supporter of the troops, but an effective spokesman on their behalf.

Just as important, he was very much out front on the promise of fleet renewal for the army, navy and air force as spelled out in the Harper government's 2008 Canada First Defence Strategy.

Kelly E. Williams is a retired commodore and former Director General Strategy for DND/CF and Assistant Chief of Maritime Staff. He is currently the Vice-President Maritime Affairs with the Navy League of Canada and Senior Director Strategy with General Dynamics Canada

As a result, he was on record heaping accolades on the government's "single largest increase in defence spending in history," while simultaneously overseeing the implementation of a series of successive budget cuts that would, ironically, also amount to the largest reductions to defence to date.

Peter MacKay would likely characterize his time at defence as gut wrenching, yet rewarding. From a broader institutional perspective it would be tumultuous, frustrating and unfinished. 

MacKay is right to claim success on his handling of operations and his commitment to the troops. He was less successful in leveraging his ministerial influence to prepare defence for the shifting budgetary sands beneath its feet. 

Fair or unfair, the new minister, Rob Nicholson, inherits the shadow of budget reduction and reform that surround the defence portfolio. He is going to have to figure out how to square that circle.

Three issues require his immediate attention.

First, he needs to assume a leading role in delivering on reform for the department and the Canadian Armed Forces.

Second, he will need to assume a leading role and voice in defence procurement.

Finally, he needs to recognize that Canada's defence and security priorities are changing because of the opening of the Arctic and emerging security concerns across Asia-Pacific.

Defence reform

If the department is forthcoming, he will quickly learn that within the prevailing fiscal and organizational context, the Canada First Defence Strategy is neither affordable nor executable.

He should therefore anticipate a klaxon call from a number of corners that to correct this significant money gap he should launch yet another review of defence policy.

This would be unfortunate and unhelpful. It would introduce further delays that will detract from a needed institutional focus on implementation and delivery of what is already on the table.

Before any consideration is given to a policy reset, the new minister should insist on a fundamental review of how National Defence is structured and managed, with a clear focus on where money is being spent, set against what priorities.

This would not simply be an exercise in looking for further efficiencies and effectiveness. It would be about making the choices needed to deliver an affordable and sustainable defence program.

What has been missing up to this point is a willingness to make those kinds of tough decisions.

Such a review, reporting directly to the minister, could be completed within six months.

There will be those who suggest that the problem is too complex for that kind of timetable.

The results and recommendations contained in the Management, Command and Control Re-engineering Team review in 1996, the Strategic Review in 2010, Canadian Forces Transformation Team report in 2011, the Deficit Reduction Action Program in 2011 and the recently launched Defence Reform Team initiative provide a useful starting point.

Further, the approach and success delivered by Britain's six-month review of its ministry of defence suggest that such an outcome could easily be assured here as well.

In the absence of this kind of review, and resulting decisions that could free up money for reallocation, the government's major policy achievements with the National Ship Procurement Strategy will undoubtedly stall.

The promised delivery of an operationally effective and capable fleet of six to eight Arctic offshore patrol ships, two to three joint support ships, and 15 major surface combatants will not be achieved, and the promised delivery of jobs for Canadians will be left unfulfilled.

Defence procurement

The minister will need to assume a leading role and voice in defence procurement.

Delivering on the Canada First Defence Strategy requires a single point of oversight.

Instead, what is emerging is the blurring of authority and accountability.

Set against a risk intolerant environment, there are too many voices at the table, and there is no clear champion to lead defence acquisition.

This situation is not only becoming politically untenable, but the delays being introduced have begun to place the men and women of the Canadian Armed Forces at risk.

These delays are also resulting in massive amounts of unspent money at the end of each of the past five years.

The government's approach to budgeting for defence procurements means that money for major projects is earmarked at the beginning of the process rather than once a decision is made on what is to be purchased.

That has meant that budgets are anchored in time with two per cent added annually to adjust for inflation while the procurement process unfolds.

The problem, though, is that defence-related inflation is growing by as much as seven per cent a year, according to some economists.

This means that while this unspent money might be subsequently re-profiled back into the department's budget at some time in the future, it would return with drastically deflated purchasing power.

For projects like the Canadian Surface Combatant, which was announced and budgeted in 2008 to replace aging frigates and destroyers, the impact of further delay is that the project is losing up to $1 million a day ($365 million a year) in buying power due to defence-specific inflation.

Put another way, for every two years this project is delayed, the navy's new fleet is reduced by a frigate.

The Arctic imperative

Finally, the minister must recognize that the 21st century is a new maritime era in which the eyes of the world are beginning to focus on Canada's Arctic (in pursuit of its untapped natural resources) as well as on the emerging economic potential and security concerns across Asia-Pacific.

For the first time in our history our preference for focusing on the "away game" is being swept aside by the need to fully understand and begin to prepare for the "home game" involving Canada's Arctic.

This demands that our economic and defence/security priorities be addressed first and foremost in the three oceans that connect Canada to the world.

With this in mind, delays that atrophy buying power, which subsequently have an impact on the size of the fleet, must be set aside.

If not, they would seriously diminish our national capacity to assert our sovereignty and independence in our Arctic and off our coasts.

The prime minister understands the decisions that will be required. He said as much in letter he sent to former minister MacKay last year demanding that "every effort be made to ensure that each dollar currently devoted to defence is targeted towards enhancing our operational capabilities."

The new minister's focus on these three issues will not only deliver on the Canada First Defence Strategy it will also serve to untie the Gordian knot associated with navy fleet renewal.