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Richard Shimooka: Canada’s military is being left behind

Commentary

Looking back, one of the most difficult periods for the Canadian Armed Forces in recent history was the late 1970s and early ’80s. Successive governments had cut into the military’s budget, downsizing and reorienting the forces while also delaying modernization. By the 1980s the CF faced obsolescence in the face of significant advances by Warsaw Pact forces. 

But while downsizing had cut the military’s standing forces, it still retained a capable administrative system with enough institutional memory to execute the new programs. By 1990, the military had replaced a number of its key systems with platforms (like the CF-18, CP-140, and the Leopard 1) with other major ones, like the Halifax Class frigates and the North West Warning system that was on the cusp of delivery. 

On the surface, Canada today looks like it is in a similar situation to the 1980s, and may even seem to be on the same trajectory if 2017’s Strong Secure, Engaged is executed as envisaged. Unfortunately, looks are deceiving. The reality is far worse now than it was then.

Many of the same systems we acquired in the 1980s are now far beyond their rust-out date and are not anticipated to be replaced for another decade or more due to failing program execution. While defence spending has increased over the past eight years, much of it has gone to operational accounts due to growing international commitments. This has masked the growing dilapidated state of the military’s capital base.

In other words, our system of procurement is fundamentally broken. Deliveries of major capabilities can now be counted in decades where years should be the norm. The Remotely Piloted Air System (RPAS) program, which will deliver a medium-altitude unmanned aerial vehicle, is about to enter its 17th year of existence without delivering a platform. By comparison, many of our allies, such as the U.K., Germany, and France have brought equivalent systems into service in under four years.

These failures have occurred at an inopportune moment, as the international security environment has deteriorated rapidly in the wake of Russia’s invasion of Ukraine and China’s destabilizing efforts in the Indo-Pacific. Our allies have increased spending and launched broad modernization of their forces, whereas Canada’s efforts have largely stalled by comparison. 

The system of acquisition is fundamentally misaligned from the focus of delivering critical defence goods to our soldiers. Over the past four decades the system has become progressively slower and less able to meet our national defence needs due to several factors. First has been the increase in non-defence objectives in procurement, most notably delivering economic and social benefits to Canadian society through these purchases. Second, a number of perceived failures, such as the initial cancellation of the F-35 acquisition in 2012, resulted in ill-considered reforms. It added layer upon layer of unnecessary processes, diluting individual accountability, and increasing costs and delays in programs.

While our present situation is suboptimal, the real cause for concern is the CAF of the future (which in reality, is already here). Reflecting the rapid and fundamental evolutions our societies are experiencing due to the confluence of new technologies, warfare is undergoing a similar shift. What I outlined earlier reflects a 20th-century approach to war fighting and procurement. Canada must move into the 21st century. 

A core consideration is the information dominance strategy. In the United States this exists under the Joint All-Domain Command and Control approach, or JADC2. Simply put, this doctrine seeks to aggregate and integrate information from all available sensors, then analyze and disseminate it to units that can affect action. Canada’s major allies, including Australia, Germany, and the U.K. are implementing similar approaches and have already drastically affected force structures and doctrines among all of their services. On a granular level, a platform’s connectivity and integration to existing networks and command and control systems are often as important as its physical attributes.

Canada has not adjusted to this new reality. While Strong, Secure, Engaged did contain verbiage that acknowledged joint intelligence surveillance and reconnaissance’s utility for the battlefield, the Canadian Armed Forces has lagged far behind its allies in this area. For example, when we look at RPAS, the misalignment of focus is clear. The procurement was largely focused on its physical capabilities while minimal consideration was given to how the platform would play in a broader networked environment. It would be akin to buying a top-of-the-line smartphone and only using it to make phone calls. 

In many ways this shift, when it comes, will be a fundamental one for the department and the government. Its implications will be profound and widespread, affecting not only military operations but how we procure systems. For some systems, such as software-enabled capabilities, how we develop them will directly affect their military utility. It requires procurement approaches that are flexible and innovative, delivering capabilities rapidly to our soldiers in order to face unanticipated new threats. 

If there is one point to start, we need to develop a strategy and doctrine that clearly identifies the importance of this emerging revolution in warfare. While, ideally, this should have occurred in the Defence Policy Update, even some level of guidance would be a start. By identifying these first principles, the military, the Department of National Defence, and the government as a whole can start the process of aligning its thinking around this problem. That is the crucial initial step that must be taken before further reforms can follow.

The 21st-century battlefield is already here. It’s time our leaders seriously engaged with what that means. We must enable the military to field the systems it needs to operate and succeed there. Nothing less than our security and global standing are at stake.

This article was adapted from remarks given as testimony before the Standing Committee on National Defence. A recording of the remarks can be viewed here.

Steve Lafleur: Liberals are making their move on housing. Conservatives need to go bigger

Commentary

Housing policy has taken federal politics by storm. Until recently, housing policy was largely thought of as a municipal issue. As the housing crisis has spilled out of Toronto and Vancouver into surrounding communities, then much of the rest of the country, it’s become not just an issue, but the issue for the provinces and now the federal government. 

Sitting governments got caught flat-footed by this shift. Everyone knew housing was bad, but up until a few years ago, the idea of provincial governments intervening in local zoning issues was taboo for all but the most ardent YIMBYs. The notion of federal intervention was even more so. So senior levels of government have been flailing around, trying to figure out something—anything—and preferably without annoying existing homeowners. 

It started out with easy but ineffective solutions. Taxes on foreign buyers, subsidies for first-time buyers. Scapegoating and feel-goodery weren’t enough, though. Housing prices kept on climbing as bewildered governments looked for more easy levers to pull. They ran out of those a few years ago, so started to come up with bespoke policies like the First Time Homebuyers Savings Account.Recently governments in Ontario, B.C., and Nova Scotia, among others, have started taking concrete actions to boost housing construction. But it hasn’t been enough.

Political parties and analysts from across the spectrum agree that we need to double housing starts. That takes more than a duplex here and there. That means allowing multiplexes in most places, and apartments in a lot of places, rather than a few designated areas. Municipal governments have been unwilling to take these steps since they represent existing and not prospective future residents. This is why upper levels of government need to step in.

The Conservative Party, to their credit, was ahead of the Liberals and New Democrats on this. Erin O’Toole’s team had one big, very good idea: if the feds are going to pay for local infrastructure, they should put strings on those transfers. If you want money for public transit, allow more housing. It’s a blunt tool, but one that could actually move the needle. 

While Erin O’Toole’s time in politics has come and gone, his successor saw the appeal of this approach. Pierre Poilievre, after all, likes to present himself as a commonsense guy who will cut through the nonsense and get stuff done. The idea of using fiscal transfers as a stick to bonk uncooperative municipalities over the head with is a perfect fit for his style. So he’s not only kept the policy, he’s made it one of his signature issues. 

The Trudeau government has been trying to maintain a more cooperative approach. The prime minister has accused the Conservative Party of wanting to bully municipalities—a characterization I’m sure Mr. Poilievre loves. Their solution was to reach for a carrot rather than a stick. The Housing Accelerator Fund (HAF) is their solution. Rather than withholding existing funds, the HAF will grant municipalities new funding if they meet housing targets. 

While superficially the two policies look very different, they’re actually not. Withholding typical infrastructure funding versus determining not to grant funding through a new program is, for all intents and purposes, the same approach. Each requires good behaviour in exchange for funding. One is just more polite than the other and comes with an application form. 

My hope was that Liberals would recognize that they can use their carrot like a stick to brandish at non-cooperative municipalities. As a mushy moderate neoliberal who doesn’t much care who forms governments (so long as they’re not literal fascists or communists), I want good public policy from all parties. In fact, I want them competing to outdo each other on housing policy. Recent developments suggest that this may be happening. 

The past week reminded me of the opening scene of Stanley Kubrick’s classic 2001: A Space Odyssey. It’s the dawn of man. A group of hominins is driven away from its watering hole by a hostile clan. Some science fiction-y stuff happens that I won’t try to explain, then later one of the hominins is digging through a pile of bones and realizes that he can use them to smash things! You know what they did? They took back their watering hole! 

That might not at first sound exactly like what happened this week, but it’s also not entirely different. The Conservative Party wants to win government. They found a weapon with which to take it: housing policy. They looked like they were set to own the housing policy file uncontested—until the new housing minister found his weapon. Not in a pile of bones, but in a pile of paperwork. 

Why the HAF matters

The HAF carrot looks a lot like a stick if you look at it the right way. After all, there’s no reason they can’t lean on municipalities to do more after they’ve received their underwhelming submissions. That’s exactly what new housing minister Sean Fraser appears to be doing. He’s wielding the carrot-stick. Sometimes a bone isn’t just a bone. Sometimes a carrot isn’t just a carrot. 

This isn’t just theoretical. The recently announced agreement with London, Ontario might have sounded underwhelming. The agreement is expected to lead to an additional 2000 housing units over three years. London’s ten-year housing target is 47,000 units. In other words, 4700 annually. According to a recent report, they’re running about half that rate. So let’s say 2350. Since 2000 doesn’t divide nicely by three, let’s just round the new commitment down to 650 units annually (an increase of about 27 percent). That’s 3000 units annually, or about 64 percent of their target. 

Now let’s apply the Conservative plan to London. We’ll start with the same 2350 units and add 15 percent. That’s roughly 353 additional units. That gets us to 2703 units in year one. Now let’s add 15 percent for year two. Through the magic of compound interest, that gives us a higher annual increase (roughly 405 units). Now we’re at 3108 annual units. By year 3, it’s delivering 3573 units. After three years, the CPC plan would hypothetically deliver 9,384 units compared to 9000 from the Liberal plan. The CPC has an edge here, particularly with continued annual 15 percent increases, though both approaches appear to fall well short of London’s targets.

It is, however, possible that the CPC plan would be more effective in certain cities, but less effective overall. For instance, the Conservative plan would apply to 22 cities, while even small municipalities are eligible for the HAF. This gives the LPC leverage over more municipalities. This is crucial, given that growth will have to accelerate in small cities too.

There’s also the question of permanency. The CPC is attempting to label the Liberal plan as bureaucratic. After all, simply imposing targets is more straightforward than dictating terms. However, the challenge is that even if municipalities find ways to meet those targets for a few years, they could be upended by a change of government. Or by a recession, for that matter. It seems doubtful the federal government would withhold infrastructure money if homebuilding declines for reasons outside the hands of municipalities. The Liberal approach, by contrast, has been to get municipalities to agree to liberalize their zoning policies. In other words, they’re permanently hobbling the zoning gatekeepers.Of course, London could be seen as a one-off thing. Who knows how successful the old carrot-stick will be with bigger municipalities. Municipalities like Calgary, where even Conservative MPs aren’t in agreement over whether they want more or fewer housing gatekeepers. Surely, Calgary City Council isn’t going to bow before the carrot stick, right? Wrong. The mayor of Calgary put out a statement on Twitter, pleading with her colleagues to move forward with a stalled plan to upzone the city to avoid losing out on federal funding. Sure enough, the NIMBYs at Calgary city hall relented. The carrot-stick is no joke!

Removing the HST is a big deal

Then there’s the second, more publicized recent policy change: the decision to remove the HST from purpose-built rental units. This, to put it mildly, is a big deal—especially right now. 

Canada’s general housing policy problem is that it isn’t legal to build enough units in enough places. There’s a second, more temporary problem: tightening financial conditions. The rapid increase in interest rates to combat inflation, paired with a very tight labour market, has made building much more expensive. It’s led many builders to consider pausing projects while they wait for costs to come down. Removing the HST can in many cases make the math work. While there are reasonable debates about the tax treatment of housing in general, if we want to prevent a slowdown in housing construction—let alone increase housing starts—we need to ensure that housing development isn’t collateral damage from our inflation fight. 

Curiously, while the Liberals plan a clean HST cut for purpose-built rentals, the Conservative Party’s position is that it should only be applied to buildings where the average rental price is below market rate. This is a baffling position. If the Liberals want to cut taxes, surely Conservatives should agree. Particularly when those taxes are levied on something we all agree we need more of. Whatever happened to supply-side economics?

It’s possible that, all told, CPC policy could result in more housing construction than the Liberal plan. That would require more in-depth analysis than you’ll find in a column. But the fact that this isn’t immediately obvious is a problem. It’s hard to be the party of more housing when your plan isn’t an obvious improvement.

Now that the housing minister seems to be walking around, waving his carrot-stick at municipalities and slashing taxes, Poilievre and co. need to find a more intimidating approach. If you’re going to be the bullies, be the bullies!

One last practical consideration. Running around saying we should increase home building by 15 percent might not be such a great idea if Sean Fraser spends the next two years cutting deals with cities that he can credibly claim will result in a greater than 15 percent increase in home construction—which is the case in London. This is more of a marketing concern than a policy concern, but it seems weird to set targets below your opponent’s. If, instead, Poilievre’s plan was explicitly to double housing starts, in line with the broad expert consensus, he can claim to have the more ambitious plan (which, ironically, would be made more feasible by Liberal policy reforms). 

Of course, it’s possible that none of this matters. Sometimes governments die of old age. And maybe messaging matters more than policy. But if Conservatives want to keep owning the housing file, which seems to have propelled them into potential majority government territory, they need to swing harder. 

Conservatives need to realize that the landscape has changed. For a long time they’ve had the upper hand on the housing file. They, along with their provincial counterparts in Ontario, were the ones who seemed interested in even trying to achieve the cross-partisan consensus of doubling housing starts. Now that the Liberals have woken up, the Conservatives can’t count on cruising along based on platitudes. It’s time to think big or go home.