The minister responsible for the federal treasury has said it makes no sense to pump large sums of money into the Ministry of Defence until it has the capacity to spend the money given to it.
Anita Anand, chair of the federal Treasury Board and former defence minister, weighed in on the debate over Canada’s apparent inability to meet the NATO standard of dedicating two per cent of gross domestic product to military spending.
Her remarks came Tuesday, a day before NATO Secretary-General Jens Stoltenberg’s visit to Ottawa, where he is due to meet privately with Prime Minister Justin Trudeau.
Canada is under increasing pressure from allies and domestic critics to publicly lay out a path toward meeting spending targets for members of the Western military alliance.
The Ministry of Defence (DND) has not been able to disburse the full annual budget it receives from the Union exchequer for many years, a fact Anand highlighted while defending the government’s reluctance to come up with a plan to achieve the 2 per cent target.
“I want to highlight to the media that it is quite superficial to only talk about 2 per cent without looking at how the money will be used in the short and long term,” Anand told reporters at a Cabinet meeting on Tuesday.
“If we understand that procurement takes time and requires expertise, we will understand that we need more public servants who can do procurement and we need multiple procurements running at the same time in order to get procurement done and spend the money.”
“And if the money isn’t going out the door, why would we continue to pad the books with extra money?”
The report warns that staffing shortages are contributing to rising costs.
The recent defense policy update promises to hire more civilian employees into the Ministry of Defence to oversee major procurement projects through the ministry’s system.
The latest federal budget earmarked $149 million over four years for the effort, but the money won’t be disbursed until next year.
The dilemma Anand described is well known in Ottawa: A shortage of skilled procurement staff needed to comply with federal regulations and military requirements has been the subject of at least two major independent investigations in the past decade.
In 2016, the Liberal government was presented with a PricewaterhouseCoopers investigation report, a copy of which was leaked to The Canadian Press at the time, which found that both Public Services and Procurement and the Department of National Defence lacked the in-house staff and expertise needed to understand technical issues, leading to increased project costs.
A year earlier, a major study by the Defence Associations Conference Institute and the Macdonald-Laurier Institute had explained how Liberal governments in the 1990s cut the number of defence procurement staff and subsequent Conservative governments failed to reverse those cuts.
In the early 1990s, the federal government employed 9,000 people responsible for purchasing military equipment. By 2009, that number had grown to more than 4,300, and those employees were responsible for twice as many projects.
“Acquisition personnel are woefully ill-equipped to manage this significantly increased workload,” said a 2015 review by Dave Perry (now of the Canadian Institute of Global Affairs) and retired Col. George Petrolekas.
The Liberal Party has not restructured the Defense Department’s procurement department since returning to power in 2015.
The Ministry of Defence had just 4,200 posts in its materiel division, 30% of which were vacant, according to an internal report for 2023, when Anand was defence minister. The report, published online, warned that “the shortage of trained manpower puts the Ministry at risk of not being able to meet its defence policy imperatives.”
Stoltenberg’s visit comes the same week that NATO released new figures showing Canada is currently one of the few member states that does not meet the two per cent threshold.
A bipartisan group of U.S. senators has written a letter to Prime Minister Justin Trudeau protesting Canada’s failure to meet NATO defense spending targets.
Canada is expected to spend 1.37 percent of its GDP on defense this year, according to data released Monday ahead of Secretary-General Stoltenberg’s visit to Washington.
Ahead of the Secretary-General’s visit, Defence Secretary Bill Blair acknowledged that defence spending was likely to be raised when Stoltenberg dined with the Prime Minister.
“I think it’s inevitable that we’ll get down to 2 per cent,” Blair told CBC News on Tuesday. “The prime minister will discuss this with the secretary. I’ve discussed this with NATO officials. Canada makes a very important and significant contribution. We’re going to do what’s necessary.”