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Richard Shimooka: Canada’s inadequate defence research funding is more than just a security risk

Commentary

Innovation policy has emerged as a hot topic in recent years, especially in regard to economic prosperity and great power conflict. One of the largest avenues of government research funding has traditionally been the defence sector, but its benefits can extend far beyond supporting the military and even the country’s security: it can be a powerful driver of economic development, research, and development in this sector largely aims at maturing new technologies from basic theoretical principles into proven capabilities that are successfully deployed in an operational setting. 

There is a temptation among some political elements to view defence research as being essentially the same as spending on defence itself and that Ottawa should minimize its expenditures to focus on domestic priorities. The potential spinoff benefits aside, this is exceptionally foolish and akin to putting one’s head in the sand. Technological investment should also be seen as a way to provide early warning and understanding of emerging security threats. These may not even be purely military in nature—for example, maintaining expertise in biological warfare had important benefits during the COVID-19 response, such as improving personal protective equipment design. Even if the government does not choose to acquire capabilities to address a specific area, it can do so based on a fulsome understanding of the issues involved, or potentially develop a quicker response.

Frequently, direct government investments into high technology sectors are seen through the lens of opportunity costs—how the money could be better spent elsewhere to provide more benefit. This has certainly come to the fore recently in the investment of the Volkswagen manufacturing plant, where each job may have cost over $4.3M CAD in government subsidies.

 Even more problematic is that these sorts of investments do not really improve Canada’s economic or technological competitiveness. For example, there is unlikely any intellectual property transfer for these deals to domestic firms, thus these plants should be seen more as a rental agreement for high-technology manufacturing jobs. This was made apparent by the recent threats by Stellantis to withdraw their proposed EV plant if Canada did not increase their subsidies. 

But defence research investments tend to generate long-term economic benefits that outstrip their investment. In 2015, Ben Bernanke, former U.S. reserve Chairman, suggested that for every dollar that is invested by the U.S. government in defence research, it adds an additional $0.20 to $0.30 of private sector R&D due to the civilian spinoffs. There is a multiplier effect that can be harnessed for the public benefit, though it is often not immediately apparent—the maturation of a technological concept may take years, if at all.

However, when they do emerge, they can have immense effects, as the frequently mentioned examples of the internet or GPS illustrate. In Canada, the Defence Research Board and its successor, Defence Research and Development Canada (DRDC), have experienced noteworthy successes. The DRB and the National Research Council funding were critical for establishing the foundations of Canada’s computer and nuclear industries, as well as advancements in telecommunications and remote sensing. 

In Canada, spending on R&D has slowly declined as a part of GDP, from 2.0 percent to 1.5 between 2000 to 2021. The government’s proportion has declined more precipitously, from 6.9 percent of total R&D in that time to 4.5 of the national total. In major economies like the United States, France, and Germany, the percentage has increased as their private and public sectors are making tangible efforts to transition to a knowledge-based economy. 

Moreover, traditional models of development and investment will not suffice to address the existing and emerging defence technological environment. During the Cold War, governments were a key player in technological development. In 1986, defence R&D accounted for 32 percent of all defence spending. Now it is 12 percent. In real terms, areas with commercial viability enjoy sustainable private investment that dwarfs military spending: worldwide R&D spending on computing, software, internet and electronics accounted for approximately $340 billion dollars, compared to $20 billion for aerospace and defence in 2017. 

Finally, the range of technologies relevant to defence has broadened. For example, two new domains of warfare have matured significantly over the past three decades: cyber warfare and space, which invite further investment. Given the range of potential threats and technologies it’s easy to see that no matter the investment being spent, the potential research needs will far outstrip the resources being allocated. Thus a system of effective prioritization of needs is essential for future success. This will require clear government leadership, in part through a careful assessment of the current scientific and threat landscape. 

 This is further complicated by the nature of technological development writ large, given the private sector’s preeminent role in innovation. On the whole, defence technologies no longer live in their own silos, from which the civilians benefit once they fill to the top and spill over into broader society as finished systems. Rather civilian R&D is as, if not more, of an important source of development than those funded by the military. The nature of this research has become much more decentralized as cutting-edge research, even in defence, often takes place across a number of allies.

Work in some commercially profitable areas, like AI, occurs completely divorced from any government funding at all. Firms such as Google own their own vertical silo. Instead, a properly resourced and implemented defence investment system can buttress civilian innovation pathways and potentially accelerate Canadian technological leadership in certain areas. Furthermore, ensuring Canadian participation in bilateral and multinational frameworks for defence technology development, like AUKUS pillar 2, will be critical for ensuring that Canadian research remains relevant to the cutting edge of their various fields. 

Another facet that bears examination is the process by which investment is made is by no means efficient or effective. From its astounding heights from 1945 to 1980, the defence innovation system has fallen into significant disrepair. Perhaps the most critical failure is the inability of Canada to effectively harvest the promising technologies it develops into finished systems. While there are areas of “basic” research that Canada maintains a healthy level of expertise in, a key failing has been later down the line. 

Many countries refer to a “valley of death” where promising new defence technologies are unable to be effectively incorporated into new systems. Canada’s valley looks more like a chasm, where very few promising technologies are ever being accepted into service.

The inability to incorporate  Canadian-developed technologies into the CAF severely cripples the viability of the domestic defence industry, and, by extension, the efficacy of Canada’s defence research investments. The primary programs that are supposed to facilitate this process, such as the Build in Canada Investment Programs (BCIP) and the Innovation for Defence Excellence and Security (IDEAS), have not been effective at delivering technologies for widespread service. The factors behind this are manifold and include contradictory bureaucratic policies, the lack of funding that would allow the CAF to experiment, and a general skepticism for domestic systems. The lack of a strong market to sell these goods to is a key failure. 

While this article has laid out a fairly pessimistic reality for Canada’s defence research landscape, it should not be discouraging. The foundations of the country’s R&D sector are strong and increasing funding and altering policies will build on this existing structure. Adding to the defence research budget can have much broader benefits for Canadian society. Improving this sector should be a priority for this government considering the potential windfall it may accrue. 

Thomas Jarmyn: The Johnston Report was inadequate. Here’s how to properly investigate foreign interference in Canada

Commentary

In light of the NDP motion that calls on David Johnston to step down in his role as special rapporteur on foreign interference, there are growing questions about what an alternative process might look like, including the scope, mandate, and possible commissioners.

My answers to these questions are based upon military experience, almost thirty years as a lawyer, three years as counsel to the minister of public safety responsible for national security matters, and three and a half years as head of an administrative tribunal.

Let me first highlight some of the weaknesses in Mr. Johnston’s initial report:

  • The report concludes that there “should not and need not be a separate Public Inquiry” because the leaked materials could not be examined in public given the sensitivity of the intelligence. The easy response to this is to consider the inquiries of Justices Rouleau (POEC), O’Connor (Arar), and Major (Air India). Each inquiry considered sensitive information and provided useful redacted summaries that supported their final conclusions.
  • The report appears to have been prepared based upon documents and briefings that were proffered by the government and its agencies. The report does not appear to have been based upon an investigatory or inquisitorial model. Rather it seems that Mr. Johnston consumed the information that was offered on the government’s menu.
  • Striking as well is that neither Mr. Johnston nor his Counsel, Sheila Block, have any considerable experience in national security matters nor experience in government handling national security files. The effect of this is a willingness to take at face-value assertions regarding the handling and dissemination of intelligence. Either the Public Service has permitted a significant degradation in the processes used to disseminate intelligence today from those used in 2010-2013 or the difficulties described to Mr. Johnston were greatly exaggerated.
  • Mr. Johnston did not have the power to follow the evidence. Without the power of subpoena and the ability to compel documents, he was left to rely upon what was given to him. There is no assurance he received the full picture. In fact, from the absence of discussions with the Elections Commissioner or the RCMP, it is apparent that he did not.

What would a better solution have been?

Any solution must address two issues of concern:

  1. What foreign interference has taken place and what are its impacts?
  2. What should Canada do about it?

Those questions need not be answered in the same venue. Answering the first question would require investigation into the operations of several agencies. It is also the question that is most likely to require consideration of intelligence information.

Consideration of how Canada should respond to foreign interference operations is going to be less about intelligence and more about hard choices that have to be made. Canada’s response will affect diaspora communities, have economic impacts, affect public funding of research, and how political parties operate (to name a few of the issues).

However, both questions may be addressed under the Inquiries Act. The first step would be to appoint a commissioner to conduct a departmental investigation under s. 6 of the Inquiries Act. The same individual would be appointed with respect to the:

  • Privy Council Office
  • Public Safety Canada
  • Global Affairs Canada
  • RCMP
  • CSIS
  • Elections Canada

The commissioner’s mandate would be to assess the scope of foreign interference in Canadian governance. Without limiting the scope of this mandate this would include:

  • Selection of candidates at any level of government,
  • Influence of nomination and election results at any level of government,
  • Operation of unauthorized foreign government agencies or outposts in Canada.

The ideal commissioner would be a current or retired judge of the Federal Court of Canada who has experience in proceedings related to national security. This will ensure the commissioner is aware of the strengths and weaknesses of intelligence and is experienced in evaluating and testing that information. The commissioner would be entitled to counsel in the matter. Given the need to have this work done in a short time frame and to ensure experience counsel the commissioner’s counsel should be drawn from the “List of Persons Who May Act as Special Advocates.

The benefit of appointing someone in this manner is that the commissioner has broad powers under ss. 7 to 10 to obtain evidence. The commissioner could compel witnesses to appear; a witness who lies subject to perjury proceedings; and a person under summons who fails to appear is committing a summary offence. The commissioner also has the right of entry into any premises and to compel production of any document necessary to fulfill the mandate.

The commissioner would be mandated to author a report setting out the nature of foreign interference in Canada. There would be both a public and classified version of that report. The report would also include recommendations to improve governmental response to foreign interference. The expectation would be to have the report written within six months of commencement.

The second stage would be to appoint a Public Inquiry under s. 2 of the Inquiries Act. Expertise in the matter of national security is not as critical here. Although if there was only going to be a single commissioner a background in such matters would be important. The question to be answered by the s. 2 inquiry would be “How should Canada respond to foreign interference efforts?” The inquiry would have access to both the public and classified versions of the departmental inquiry. 

At this stage, the public inquiry would be less a matter of past intelligence and more a weighing of consequences of choices. The inquiry would hear from non-government actors about the consequences of foreign interference within their communities or sectors of the country (some of this would likely be in camera in order to protect witnesses). It would seek feedback regarding the consequences of proposed responses and evaluate responses against the history of foreign interference in our society. Finally, it would make recommendations regarding responses, both legislative and policy, to address the problem of foreign interference.

Some will ask “How is this process different from the one put in place by the present government?” Run by someone with experience in the national security field and the power to follow the documents and information rather than relying upon what is given to him by the government, this process is far more likely to arrive at the truth. The power to compel evidence will protect witnesses and whistleblowers from allegations they have breached the Security of Information Act as well as protect them from spurious defamation suits designed to intimidate witnesses.

This two-stage process has the advantage of gathering all of the information necessary to define the problem of foreign interference in Canada. It would have that information evaluated by an individual with expertise in the field. That evaluation would then be turned over to a public process that would seek broader input as to how best to respond.