OTTAWA — One of Canada’s most influential business lobby groups is making an unprecedented request for increased defence spending in Thursday’s federal budget because of Russia’s invasion of Ukraine.
The Business Council of Canada says it is time for Canada to commit to matching the NATO target on defence spending of two per cent of gross domestic product.
Canada’s level currently stands at less than 1.4 per cent but has been pressured for years by the United States and other NATO allies to boost spending to the two per cent target.
In a March 15 letter to Finance Minister Chrystia Freeland, the council said the Russian invasion is forcing the world to shift its focus from domestic priorities to defence and security.
The council, formerly known as the Canadian Council of Chief Executives, is the advocacy group for the country’s top business leaders and has not traditionally pushed for defence spending during past budget cycles.
President Goldy Hyder says it is important for the budget to signal a commitment to NATO and to embrace a larger global economic plan to show how Canada can address the volatile international landscape spawned by the Russian war on Ukraine.
“The war brought out the question of ‘OK, so what’s Canada doing?’ And so, there we have some making up to do,” Hyder said in an interview.
“And especially on the budget, I think the commitment to NATO, and demonstrating that it’s more than just directional, is going to be important.”
The letter refers to two new major spending commitments by Norway and Germany to meet the two per cent target.
Germany’s commitment is particularly significant because the country had for decades maintained a less aggressive military posture that grew out of its Second World War history. Berlin has shifted its foreign policy by supplying weapons to Ukraine fighters.
Some Liberal cabinet ministers have publicly acknowledged the significance of the German shift on military spending and dropped hints this could pave the way for more by Canada.
Freeland was in Berlin last month to meet with officials there about their new defence spending commitments. Freeland said during that trip that she wanted to have some “firsthand conversations” about the shifting ground. “And certainly, defence spending is something we have to look at carefully.”
The Conservative opposition reiterated its call for increased defence spending Tuesday.
“With the escalating war in Ukraine and threats to our national security around the world, Conservatives want to see a budget that ensures Canada re-establishes its position as a trusted global security partner and a reliable member of NATO,” said the statement from defence critic Kerry-Lynne Findlay and procurement critic Pierre Paul-Hus.
On Tuesday, NDP Leader Jagmeet Singh reiterated his view that the two per cent target is “arbitrary” but that the military does need further investments given what happened in Ukraine.
“When it comes to what we expect in the budget, we think that we’ve laid out our concerns,” Singh said. “I expect that the government will heed our concerns, but also acknowledge that we need to invest in supporting the troops that do so much work for us.”
The Liberals struck a deal last month to secure NDP support on key votes like the budget, in exchange for spending on some NDP priorities, and Hyder doesn’t want that to derail necessary spending on defence.
He said government appeared to be on track after the last federal election to introduce a budget focused on recovering from the COVID-19 pandemic, and then “boom, the war happens,” triggering widespread concerns over energy supplies, food security and the military.
“Now we have a new government or at least have a new formation of a government. I don’t know how much influence that’s going to have on the budget because that looks like a spending agenda here,” said Hyder.
Now, Canada and its allies need to face the fact that Russia is a nuclear power led by an unpredictable and potentially unstable president in Vladimir Putin, he said.
“The nuclear option is what everybody is what everybody’s scared of. He’s a madman,” he said.
“We need a long-term, ambitious, integrated strategy that includes our foreign policy agenda, our trade agenda, our natural resource agenda, our human resource agenda, our relationship-with-the-United States agenda. These are not one offs.”
This report by The Canadian Press was first published April 5, 2022.
Mike Blanchfield, The Canadian Press
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