Then-defence minister Peter MacKay was warned in a briefing note last November that a policy of always buying military equipment and services from Canadian companies would likely short-change Canada’s men and women in uniform.
The warning came after Canada’s arms industry association released a report that found the sector generated $12.6 billion in economic activity, and every billion dollars invested by the government into the industry generated $710 million in GDP and created 18,000 jobs.
The Canadian Association of Defence and Security Industries has since used that report to lobby for more attention from the federal government, including advocating for a policy of buying more military equipment and services from domestic companies.
CADSI president Tim Page said Tuesday the report was a first attempt to get a handle on and draw attention to the importance of the defence industry to Canada’s economy.
“Hopefully as the government makes future decisions around defence procurement,” he said, “it will have one eye on the equipment needed by the men and women in uniform to do the jobs asked of them by the government, and one eye on the economic impact that that defence spending can have on the Canadian economy and value-added jobs.”
Those efforts appear to have paid off as the Conservative government has given strong indications it accepts the industry’s argument, with then-public works minister Rona Ambrose revealing in May that “value for Canada” will be a top consideration in military purchasing.
In their briefing to MacKay, officials noted the importance of using defence spending to both meet the military’s needs “while at the same time delivering maximum benefit to industry and the Canadian economy.”
Yet they also warned industry was trying to tilt the field too far to their advantage, and if military purchases were required to go to Canadian companies, “the Department (of National Defence) would, all things being equal, likely obtain less equipment and services.”
Former military procurement chief Dan Ross, who oversaw the writing of the briefing note, said the briefing highlights the Defence Department’s concerns that industry’s drive toward a “Buy Canadian” strategy will come at the military’s expense.
“Many of the CADSI members, they equate a defence industrial strategy with guaranteeing them business,” he said.
“But you will pay more. It’s not a myth or a maybe. You will pay more, and the cost of supporting will be more. You will lack that competitive edge to get the best possible stuff … at the best price and the lowest support costs.”
That echoes warnings from some defence analysts who have noted that budgets for many key projects such as new ships, armoured vehicles and aircraft were set in 2008 — before any thought of trying to support industry was envisioned.
The officials also poked holes in the assertion that Canada’s arms industry generates $12.6 billion in economic activity for the country, even though it has become a key rationale for the government’s decision to make the sector a focus of its economic action plan.
Numerous government ministers have cited the figure since the CADSI report was released, most recently Trade Minister Ed Fast during an event in London, Ont., on Tuesday.
The defence officials noted that only 90 companies out of 2,000 had responded to the study, which CADSI commissioned accounting firm KPMG to undertake.
“Despite this weak response rate, the results were nevertheless relied upon to estimate total industry revenues and generate other key figures presented in the study,” reads the briefing note.
They also questioned whether government investments in other sectors would generate a better bang for the buck than money sunk into the arms industry.
“There is no comparative analysis between the impact of Government spending on the defence and security sector against other segments of the Canadian economy,” the briefing note reads, “some of which, such as the aerospace sector, may yield even greater benefit per dollar invested by the Government.”
Page conceded the number of companies surveyed was small, but said the data used to was drawn from multiple sources, including government, and not just individual firms.
“Our job was to try and elevate the federal government’s understanding of the importance of our sector at a time when we didn’t think enough attention was being given to the economic impact of defence spending in this country,” he said. “I’m glad it has spurred some thinking around town.”
A spokeswoman for Defence Minister Robert Nicholson stood by the Conservative government’s move towards using defence spending for industrial benefits.
“Having a robust and resilient defence industry in Canada is important to deliver the capabilities that our men and women need to do the jobs we ask of them,” Julie Di Mambro said in a statement. “Military procurement plays a major role in the Canadian economy.”
Original Article
Source: canada.com
Author: Lee Berthiaume
No comments:
Post a Comment