Government cost-cutting blows $150M hole in army's equipment maintenance budget

The Liberal government's recent internal budget cutting exercise at the Department of National Defence (DND)has deprived the army'ssystem for maintaining equipment and vehicles of up to $150 million, CBC News has learned.

And when the preservation of older systems the kind that might have to be pressed into service during an emergency is factored in, the funding gap grows to $260 million, the army acknowledged in a written statement.

The shortage of what DND callsnational procurement funding is having an impact on the army's ability to respond toa crisis call from NATO or to domestic emergencies, such as the recent wildfires in Western Canada.

The "overall serviceability of operational [army] fleets is, as of 10 June 2024, 52 per cent," Lt-Col. Sandra Lvesque said in a statement released to CBC News. CBC asked the departmenta series of questions about maintenance funding, equipment and training systems.

That statement means 48 per cent of the army's equipment is unserviceable a slight deterioration since last year.

CBC News published a leaked document last spring that outlined the state of readiness across the entire military. At the time, the military'sfigures indicated that46 per cent of the army's gear was considered "unserviceable."

DNDsaidthe army's overall maintenance and upkeep budget amounts to $586 million this year.

"This covers contracts and the overhead costs associated with industrial support as well as repairs; however, the fund allocation is approximately $150 million short of maintaining the current force's serviceability and roughly an additional $260 million short if considering obsolescence and long-term fleet management obligations," the statement said.

"This shortfall will result in a lower serviceability of many Canadian Army fleets."

Military told to cut $810M this year

The latest federal budget, tabled last spring in the House of Commons, tasked DND withcutting internal spending by$810 million in the current fiscal year, andby $908 million per year in 202627 and beyond.

In an internal department message, posted the day after the budget was tabled, now-former deputy minister of defence Bill Matthews and now-retired chief of the defence staff Gen. Wayne Eyre told staff that the cuts would target "activities that have a history of underspending their approved funding, and ... initiatives to be delivered in future years."

Defence Minister Bill Blair has insisted that any internal military budget cuts would target the bureaucracy, not military capabilities.

Retired lieutenant-general Andrew Leslie, a former army commander who served one term as a Liberal MP, said there's a clear disconnect between what the minister promised and what's happening to the army.

"The Armed Forces don't have the resources they need to do their jobs right now, let alone tomorrow," he said.

"If the minister is under the assumption that they do have enough money to do everything they're supposed to do, he's either misinformedor he's not telling the truth."

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Canadas military shortfalls are a national disgrace, says retired lieutenant-general Andrew Leslie, a former Liberal MP who served as commander and chief of staff of the Canadian Army.

Defence analyst Richard Shimooka agreed and said he believes the budget shortfall islikely to have a disproportionate effect on the army's ability to respond to domestic emergencies.

"They have focused all their energies in order to sustain the two thousand or so troops and the ancillary capabilities in Latvia," Shimooka said, referring to Canada's role in NATO's deterrence mission in eastern Europe.

The budget woes, he said,are "going to have serious consequences" for the army if it's called on to respond to domestic crises likefloods or fires, because those missions are considered lower-priority than overseas deployments.

"They're going to have to find savings somewhere," he added.

Skimping on maintenance and upkeep, he said, could have "serious consequences" for the army's operational readiness.

The militaryis getting more money from the federal government overall a cash bump that's largely being swallowed by the purchase of new equipment.

But the department has struggled to reconcile the additional cash with the need to cut elsewhere in its budget. At the end of June, Eyre told CBC News that the military did not have answers to crucial questions about how or where the cuts would shake out.

All of this is taking place as Canada faces increasing pressure from allies to spend even more on defence than already planned. The country is also being asked to maintain more units athigh readiness in case the situation in Europe deteriorates further and Russia's war with Ukraine spills over into neighbouring nations.

The army is leading an effort to bulk up NATO forces in Latvia to a full brigade (roughly 4,300 troops or more) and has faced a number of challenges beyondthe maintenance budget.

It has reorganized its training for soldiers heading to Europe by eliminating a decades-long annual exercise where infantry, tanks, artillery and aircraft trained together.

The training for deployed units will now be done in Latvia. The army has insisted the change is not a consequence of budget reductions.

But Leslie saidmoving the training to Europe means the military no longer has to pay for contracts associated with the now-defunct training regime,including contracts for simulators and travel expenses for soldiers and equipment.

"There is no doubt that the Armed Forces right now are in a state of crisis," he said.

"And what is not helping the morale of the troops, air, land or sea or Special Forces, is people trying to insist that reductions in funding is not a budget cut.

"If you reduce national procurement, if you reduce essential travel for the troops to get to training facilities, if you reduce the capacity of Canadian industry to build ammo, then by definition, you reduce the ability to train."

The army has confirmed, meanwhile,that the renewal of an important simulator contract, under the Weapon Effects Simulation Modernization (WESM) project, is in limbo. The government had asked industry for information and had been expected to ask for proposals last fall, but nothing has happened so far.