Defence policy must respond not only to an uncertain and unstable world abroad, but also to challenging circumstances at home. In designing a new defence policy, the Government has sought to remain attentive to the very important domestic influences on Canada's defence posture and, in particular, to current fiscal circumstances.
The Government's broad program for political, social, and economic renewal is focused on preserving the values that make Canada one of the most fortunate countries in the world. At the present time, however, our prosperity - and with it our quality of life - is threatened by the steady growth of public sector debt.
The accumulated debt of the federal and provincial governments currently stands at approximately $750 billion; the federal government's annual debt servicing payments in 1994-95 alone will amount to $44 billion - more than the budget deficit of $39.7 billion and some 27% of the total federal budget.
This situation limits governmental freedom of action in responding to the needs of Canadians and constrains the ability of governments at all levels to deliver essential services. To deal with this problem and avert a crisis of confidence in the Canadian economy, the federal government has been cutting its expenditures. The Economic and Fiscal Update issued in October 1994 confirmed in no uncertain terms the Government's intention to meet the fiscal challenge presented by both the deficit and the debt.
Over the past several years, the need to control the federal deficit has led to significant cuts in most areas of spending, including defence. Indeed, as the accompanying chart illustrates, the defence funding assumptions contained in the 1994 budget envisaged a level of defence spending in the year 2000 that, in real terms, would be less than 60 percent of that assumed in the 1987 Defence White Paper.
In an environment of fiscal restraint, the Government must continue to constrain all expenditures, including those devoted to defence. The report of Parliament's Special Joint Committee on Canada's Defence Policy took account of this basic reality. It called for a period of relatively stable funding, but at lower levels than those set out in the 1994 budget. Although National Defence and the Canadian Forces have already made a large contribution to the national effort to reduce the deficit, the Government believes that additional cuts are both necessary and possible. The details of the Department's future funding will be set out in the upcoming budget.
Defense Reduction
The Department and the Canadian Forces have absorbed past reductions in a variety of ways. Canadian defence commitments have been revised, personnel levels cut back, operations and maintenance budgets shrunk, defence infrastructure reduced, and capital programs cancelled or delayed. As a consequence of the further decline in defence expenditure that forms the fiscal context of this paper, cuts will be deeper, and there will be more reductions, cancellations, and delays. In some areas, the Department of National Defence and the Canadian Forces will do less. The Department and the Forces will also reshape the defence program and operate more efficiently to deliver the elements of the policy outlined in this White Paper.
Although fiscal considerations are a key factor in formulating an appropriate and realistic defence policy, the Department and the Canadian Forces must also take account of a variety of other domestic developments. Canadians have asked for the renewal of responsible government. They want government to show leadership in addressing a demanding political, financial, economic and social agenda. They ask it to be efficient with its use of the taxpayer's dollar: if private industry has had to restructure in light of difficult economic circumstances, government must do the same. Canadians look to government to be effective in developing innovative and constructive measures to address current and future challenges. They demand it be ethical in the style and substance of its decisions, and open in consulting Canadians on important issues.
Beyond meeting these fundamental requirements, all government departments must be mindful of other current issues. These include the need to foster a strong sense of nationhood, to promote industrial growth and international competitiveness, to protect the environment, to provide training for youth and for Canadians affected by economic restructuring, and to ensure that government adapts to demographic changes in the workforce as well as in society as a whole. Notwithstanding the unique vocation of the Department of National Defence and the Canadian Forces, the new defence policy set out in this White Paper takes account of these considerations as well.
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