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Federal spending: Only one in 10 dollars going to defence budget

By John Williamson
web posted May 7, 2007

Federal spending has increased dramatically since the Conservative Party won election in January 2006.  Some Tory partisans argue the rapid rise is the result of one-time expenditures in equipment for the armed forces after years of Liberal neglect.  It is not, they insist, irresponsible spending by a party trying to purchase a majority government. 

Are they correct?  Is a rising defence budget really responsible for spending going through the roof?

To date, the government has announced approximately $11-billion in military capital commitments as part of Prime Minister Stephen Harper's undertaking to "equip and strengthen" the Canadian Armed Forces.  However, Ottawa has only budgeted to spend half this amount.

Canadian soldier in Afghanistan
A Canadian soldier in Afghanistan...where the money isn't going

The government's "Canada First Defence Strategy" includes procurement of new armoured patrol vehicles, support ships, helicopters and the acquisition of tanks.  The Conservative's first budget, tabled in May 2006, proposed a plan to spend $5.3-billion over five years to modernize the Armed Forces.  But the government allocated just $400-million to be spent in the 2006 fiscal year.

The second budget, tabled in March 2007, accelerated the implementation of the $5.3-billion defence plan by pledging to spend $3.1-billion over three years.  According to the 2007 Budget, $900-million more will be spent this year, $1-billion in fiscal 2008, and $1.2-billion in fiscal 2009.  The remainder of the $11-billion capital commitments will be spent in future years, most likely beginning in 2010.

During the last year of Liberal government rule, the Department of National Defence (DND) spent $14.7-billion in the 2005 fiscal year.  The amount represented 8.4 per cent of Ottawa's total program spending.  

As a result of the Conservative's heightened military emphasis, the military budget increased to $15.2-billion in fiscal 2006.  And Ottawa's spending estimates indicate the DND budget will rise to $16.9-billion this year (fiscal 2007).  The bottom line is defence spending has increased by $2.2-billion under the Conservative government in its first two years in office. 

Without a doubt, the federal government is spending more to re-equip and prepare the military for overseas engagements.  This will strengthen Canada's military punch.  But these expenditures do not adequately explain Ottawa's overall spending growth, which is fast rising.  Defence spending is up, but so are other federal expenditures.  Consider the numbers:

In fiscal 2006 -- the first year under the Conservative's watch -- spending ballooned by $13.8-billion, rising from $175.2-billion when the Grits were removed from office to $189.0-billion under the Tories.  This is the second biggest jump since the books were first balanced ten years ago.  (Sadly it means several Liberal budgets were more prudent than Finance Minister Jim Flaherty's fiscal framework.)  For the current fiscal year, which began on April 1, spending is set to jump another $10.6-billion and level off at just under $200-billion.  The military accounts for only a fraction of overall government spending growth.

The total two year spending increase under Minister Flaherty is an eye-popping $24.4-billion.  This is a 13.9 per cent increase in federal receipts.  Of the $24.4-billion increase, only $2.2-billion can be attributed to Ottawa's military budget.  In other words, for every $10 spent in fiscal 2006 and 2007 less than one dollar is going to fund new defence hardware purchases.

In fact, the military share of overall program spending actually dropped from 8.4 per cent to 8.0 per cent last year because non-defence spending increased at a faster rate.  This year it will be 8.5 per cent, which is only slightly higher than the percentage under the Liberals. 

The rapid rise in spending has little to do with reinvigorating the armed forces after "years of neglect."  In reality, expenditure increases in Ottawa are not limited to a handful of priority areas, like the military.  Rather spending is up across-the-board because the Conservative government neglected to cut spending in its non-priority areas, like corporate welfare, and overly-hyped "fiscal imbalances" with the provinces. 

It is incorrect for government MPs and Conservatives to argue the large increase in military spending is driving Ottawa's recent spending spree.  It is simply not the case when you look at how much has actually been budgeted, rather than what has been committed in future years. ESR

John Williamson is the federal director of the Canadian Taxpayers Federation.


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