The Liberal government is looking to cut almost $1 billion from the annual budget of the Department of National Defence (DND) — a demand the country's top military commander says is prompting some "difficult" conversations within the military.
Chief of the Defence Staff Gen. Wayne Eyre and Deputy Minister of Defence Bill Matthews testified before the House of Commons defence committee late Thursday, where they acknowledged in more detail the ramifications of the federal government's spending reduction plan.
Earlier this month, Eyre and Matthews released a joint internal statement warning that the department would be expected to contribute to the federal government's overall plan to reduce spending.
Chief of the Defence Staff Gen. Wayne Eyre told MPs there's 'no way' to take $1 billion out of the defence budget without 'an impact.' (Sean Kilpatrick/The Canadian Press)
"There's no way that you can take almost a billion dollars out of the defence budget and not have an impact," Eyre told the four-party committee. "This is something that we're wrestling with now."
DND's main estimates for 2023-24 say the department's budget for this year is expected to be $26.5 billion
On Thursday, Eyre described how earlier in the day he'd had a "very difficult session" with the commanders of the various services. He said that meeting was intended "to explain this to our people" at a time when the international situation is becoming increasingly precarious — partly due to Russia's invasion of Ukraine.
Word of the planned cuts, which have not been specified, comes just weeks after the Liberal government agreed with other NATO allies on a pledge to make the alliance's defence spending benchmark of two per cent of gross domestic product an "enduring commitment."
Living up to that pledge would require a substantial increase in the defence appropriation.
Cuts could undermine Canada's NATO commitment
According to NATO's latest annual report, Canada spent an estimated 1.3 per cent of its GDP on the military last year — well below the target. Coming out of the alliance's summit in Vilnius, Lithuania, the Liberal government faced a storm of bad press and increased pressure from allies to step up its financial commitment.
How the planned cuts will affect Canada's commitment to NATO is unclear. Germany also recently walked back its pledge to meet the two per cent target.
Matthews told the defence committee Thursday that the process of identifying proposed cuts is underway and will lead to a spending reduction of "nearly, I think ... $900 million and change, [which will] ramp up over four years."
While he insisted the cuts will be prioritized so that "they have the least amount of impact possible," he acknowledged that "there will be impact."
Matthews said the spending reductions will be aimed at "minimizing impact on military readiness."
Conservative defence critic James Bezan demanded assurances on that point.
"What's going to give here on a billion dollars this year?" he asked. "And how are we going to deal with the threat environment that we're in if we're going to continue to cut rather than invest in our Canadian Armed Forces?"
Defence Minister Bill Blair has suggested the cuts could come out of equipment spending. (Sean Kilpatrick/The Canadian Press)
Defence Minister Bill Blair tacitly acknowledged the cuts during an appearance in front of the same committee, before Eyre and Matthews testified.
"The fiscal environment in Canada right now requires that when we are spending Canadian taxpayers dollars, that we do it carefully and thoughtfully. I've always looked upon the expenditure of tax dollars as an investment in creating public value for Canadians," Blair told MPs.
Treasury Board President Anita Anand, the former defence minister, told other federal cabinet ministers in August they will be required to cut $15.4 billion in government spending and that they had until Oct. 2 to present their ideas.
At the time, Anand said the Liberal government wanted to ensure money was spent wisely while delivering on key government promises such as dental and child care.
Blair suggested to the defence committee that some of the savings could be attained by putting off planned equipment spending.
"We do know that we have to look very carefully at the expenditures," he said.
"It may actually require some of the investments that we know we have to make, [that] we may have to make over a longer period of time in response to the current fiscal situation."