Despite the dismal economic climate and an impending $50 billion deficit, the Canadian government is intent on increasing current levels of defence spending.
Speaking to an audience of industry and military representatives at a security and defence trade show, Defence Minister Peter MacKay assured attendees “the funding will be there…it’s locked in.” Much of the increased investment is anticipated to be headed to Afghanistan, to reinforce the Canadian military’s NATO commitment.
Reiterating the government’s long-term defence strategy to increase the current $19 billion annual defence budget to $30 billion by 2027, MacKay noted this increase would include $60 billion for new equipment. The minister touted the economic stimulus this spending would provide, despite sending over $1.5 billion worth of contracts to American defence behemoths, such as Boeing and Lockeed Martin. MacKay also urged industry representatives to fulfill their role in “persuading Canadians that military spending was good for the country’s economic health.”
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MacKay touts $60B for new military equipment
‘The funding will be there,’ defence minister tells industry
By Mike Blanchfield, Canwest News Service May 28, 2009
The global economic downturn won’t prevent the Canadian Forces from spending $60 billion on new equipment, Defence Minister Peter MacKay told the defence industry elite on Wednesday.
As he reiterated the Conservative government’s ambitious spending plans for new military hardware — planes, ships and armoured vehicles — MacKay touted military contracts as a major stimulus for jobs in Canadian communities in hard economic times.
MacKay said he took Finance Minister Jim Flaherty to Afghanistan to underscore the need to keep to military spending commitments.
“The funding will be there, I assure you. It’s locked in,” MacKay told an audience of hundreds of industry and military representatives attending Canada’s largest security and defence trade show.
“So far, Mr. Flaherty is behind us all the way, which is why I took him to Afghanistan. I wanted for him to see first hand where much of this investment was going. … All of that equipment is what is literally saving lives in Afghanistan today.”
Flaherty went with MacKay to Afghanistan last August, before the full effect of the current recession took hold.
Earlier this week, the finance minister said Canada’s deficit this year would soar to $50 billion, beyond the $34 billion in his February budget.
Despite the downturn, MacKay told the group that their industry had a major role to play in persuading Canadians that military spending was good for the country’s economic health.
“We need to speak up about how defence procurement is bringing great benefits to Canadian companies and communities all across Canada,” MacKay said.
“Canadians and their communities will benefit from the high-value employment opportunities that your industry generates. The Canadian economy as a whole will be buoyed by the sustainable economic benefits that accrue through domestic and global opportunities in and beyond defence and security.”
MacKay said the government’s long-term defence strategy would increase this year’s $19-billion annual defence budget to $30 billion by 2027. Over time, it will mean close to $490 billion in defence spending, including $60 billion on new equipment.
MacKay reiterated his government’s commitment to its Industrial Regional Benefits program, which seeks to spend one dollar on Canadian-based contractors for every dollar given to a foreign company.
It means U.S. defence giants such as Boeing and Lockeed Martin, who have received more than $1.5 billion in contracts in the past 18 months must spend that much money in Canada, he said.
Those regional spin-offs are usually achieved through spare parts, manufacturing operations and long-term maintenance contracts, among other things.
MacKay also urged the industry to “lower the temperature” in what is a heated competitive process, saying there were plenty of contracts to go around.
“When it comes to shipbuilding, for example, there is enough shipbuilding contracts for every shipbuilding company in every port in the country over the coming years,” he said, noting that the government planned to buy 40 to 50 new ships, including coast guard vessels and icebreakers.
MacKay was attempting to assuage concern within an industry that, at times, has turned on the government for what is widely regarded as a painfully slow procurement process.
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