\n
<\/p>\n
Prime Minister Mark Carney says the federal government is on track to meet the North Atlantic Treaty Organization \u2019s target for defence spending of five per cent gross domestic product by 2035, but turning that into sustained economic growth may be a different challenge, according to defence industry watchers. <\/p>\n
He said his government is \u201cworking towards\u201d spending 3.5 per cent of gross domestic product on major defence investments. This includes a new submarine fleet and the newly announced plans to purchase Saab\u2019s GlobalEye airborne early warning aircraft. <\/p>\n
The promise is part of his commitment to NATO\u2019s Defence Investment Pledge , which aims to bring Canada\u2019s defence spending to five per cent of annual GDP: 3.5 per cent on direct military spending and 1.5 per cent on critical defence infrastructure. <\/p>\n
\u201cA strong, resilient defence industry requires fundamental rethinking of our approval and production targets,\u201d Carney said in his keynote speech at the CANSEC security conference in Ottawa on Wednesday. \u201cThanks to you \u2026 we are now building again.\u201d <\/p>\n
The prime minister said that rather than checking items off a pre-existing defence wish list, the government wants to ensure the $81.8 billion in spending over five years that was outlined in November\u2019s budget has long-term benefits for the Canadian economy. <\/p>\n
\u201cThere\u2019s a series of other investments that we can make that will help protect Canadians. We need to help our allies, but we can do that in a way, given that the industry is changing rapidly, that maximizes the Canadian benefit,\u201d Carney told reporters after his speech. <\/p>\n
Economists have called the recent push to expand Canada\u2019s defence sector one of the most significant financing initiatives in the country\u2019s history, providing a \u201conce-in-a-generation opportunity\u201d to invest in the economy. <\/p>\n
Analysts from CIBC Capital Markets said in a recent note that the Defence Industrial Strategy and the Defence Investment Agency (DIA) could accelerate deployment and anchor supply chains. <\/p>\n
\u201cThe federal government\u2019s unified economic resilience and national security mandate is translating into tangible structural change,\u201d the analysts said. \u201cThe formation of the DIA addresses long-standing procurement bottlenecks by consolidating authority, enabling independent capital deployment and introducing alternative contracting models such as early down-selection and sole sourcing.\u201d <\/p>\n
The analysts, however, said the investments have to extend beyond traditional forms of defence. <\/p>\n
\u201cThe investment requirement extends beyond defence assets into enabling infrastructure, including housing, utilities, and logistics, particularly in the North,\u201d they said. <\/p>\n
David Perry, chief executive of the Canadian Global Affairs Institute, said he wants more details about the spending from Carney. He said the government has not provided projection details on how they\u2019ll get to the five per cent GDP target, something the Parliamentary Budgetary Officer also flagged in a Feb. 5 report. <\/p>\n
\u201cThey mean what they say, and so far they\u2019ve been delivering on it in terms of spending,\u201d he said. <\/p>\n
But he said a lot of people are still skeptical about how they hit the previous defence spending target of two per cent of GDP. <\/p>\n
\u201cHowever, myself and lots of other people are really skeptical about how they\u2019re going to be able to reach (two per cent of GDP on defence spending), because that announcement didn\u2019t come until halfway through June.\u201d <\/p>\n
Perry said the DIS is trying to maximize economic returns by increasing defence exports, investing in Canadian intellectual property and growing smaller companies domestically, which would in turn boost Canada\u2019s economic productivity and labour market. <\/p>\n
\u201cThe government needs long-term plans to continuously make purchases in some kind of forecasted predictable way over time, and not just create opportunities for the next five years that then go away after 20 years,\u201d he said. \u201cThey need to create opportunities where companies can grow, scale, export, and rely on their home market to buy from them.\u201d <\/p>\n
Christyn Cianfarani, chief executive of the Canadian Association of Defence and Security Industries, said any funding commitment needs to go beyond the current Liberal government. <\/p>\n