Defence spending increase won't boost deficit, Finance Department says

Finance officials insist the new defence policy — which boosts military spending by billions — won’t have a significant impact on future projected deficits, but more details may have to wait until the fall fiscal update.

Plan to boost defence spending by 70% won't 'materially change' fiscal outlook, officials say

Defence Minister Harjit Sajjan, left, announced the government's long-awaited vision for expanding the Canadian Armed Forces on Wednesday. The new policy will see defence spending increase by $13.9 billion annually by the end of the decade. (Adrian Wyld/Canadian Press)

Finance officials say Canada's new defence policy — which boosts military spending by billions of dollars — won't have a significant impact on future projected deficits.

The multi-year plan released Wednesday calls for defence spending to increase by 70 per cent over the next decade, to reach $32.7 billion annually by 2026-27.

None of that additional spending was detailed in this year's budget, but finance officials say it was accounted for in their long-term planning assumptions.

"The defence policy review is something that we have been working on with Minister [Harjit] Sajjan and DND for some time. As such, we were aware of what the associated costs would be," a Finance Department spokesperson said in a statement.

"While [Wednesday's] announcement provides more details, it doesn't materially change the government's fiscal outlook."

Finance Minister Bill Morneau brushed past reporters on Wednesday when asked about funding of the defence policy.

"You can talk to my colleague," he said, referring to Sajjan, who faced tough questions about how the government will pay for the defence plan while already projecting at least a half-decade of deficits.

The Finance Department statement mirrors assurances Sajjan and other ministers gave reporters at the formal announcement on Wednesday, where he said the government conducted "a thorough process to making sure that our government will be able to commit to this [spending increase]."

Details in fall update

A senior finance official, speaking on background, said the new spending will lead to some changes to the fiscal outlook, but insisted those changes will be minor. The full details will be outlined in the fall fiscal update, the official said.

In his most recent budget, Morneau projected deficits for the next five years that will gradually decline to $18.8 billion in 2021-22.

Finance Minister Bill Morneau, who delivered his latest budget in March, may have more to say about longer term defence spending in the fall fiscal outlook. (Chris Wattie/Reuters)

NDP defence critic Randall Garrison said the review lacks the substance required for Canada to play a leadership role in the world.

"To do that, we would need to both increase our defence spending and at the same time, dollar for dollar, increase our aid spending," he said. "We find none of that. All we have is promises for future increases."

Past governments have also promised to boost defence spending — most notably the Conservatives in 2008. But as much as $2.1 billion of the pledged increases were cut to help balance the federal budget.

The Liberals, who campaigned on a willingness to run deficits to boost spending, say they have taken steps to make sure that doesn't happen again.

"We as a government and future governments owe it to the Canadian Armed Forces that we fully fund the Canadian Armed Forces on a long-term footing," Sajjan said at Wednesday's announcement.

Sajjan says defence spending increase accounted for 1:09

During an event to promote the new policy at a military base in Trenton, Ont. on Thursday, Sajjan said the review looked at long-term needs and costs, including a yearly projection. 

"So this has all been accounted for. Our government and any future governments, the Canadian public can hold them to account," he said.

Where's the money?

Conservative defence critic James Bezan raised more questions in the House Thursday about how the new policy will be funded, calling it "a book of empty promises."

"Where is the money going to come from?" he asked.

Jean Rioux, Sajjan's parliamentary secretary, responded by praising the defence minister for developing the policy and passionately promoting it.

"In the years to come, thanks to this policy, a major change is coming. The Canadian Armed Forces will be fully funded," he said.

About the Author

David Cochrane is a senior reporter in CBC's Parliamentary bureau. He previously wrote for CBC Newfoundland and Labrador.

With files from Murray Brewster


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