Thank you for that.
We've heard the example of Luxembourg raised before, and I think you may have meant as a percentage of GDP, as opposed to per capita. NATO uses three measurements of military spending in order to compare: one is actual dollars; the second is percentage of gross domestic product; and the third one is per capita spending. Most defence analysts would agree--and I think Brian MacDonald would say the same thing--that the per capita measurement is probably not the best one, because it understates spending by countries like India and China, which have large populations.
Secondly, you can look at a percentage of GDP--that is a very common measurement. Canada's spending as a percentage of GDP was around 1.1% or 1.2%--a respectable amount. That puts us more in the middle of the pack along with Spain, Germany, and Belgium. I'm not sure if it's the only way you would want to look at it, because as one of my interns from Carleton University, whose home country is Pakistan, pointed out yesterday, Pakistan spends 25% of its GDP on defence. I don't think that's the gold standard we want to aspire to.
Our view is that you have to look at the actual dollars. That's how much money you're able to spend on equipment, how much firepower you're able to deliver. I think that is the best measurement.
In the 1990s, the so-called decade of darkness, all countries in the world were reducing defence spending. The Cold War was over. Anybody who kept spending levels up at the end of the Cold War would have been seen as living in a cave somewhere, because of course the Cold War was over: defence reductions were warranted. In fact, some studies we've done have shown that Canada's defence spending declined at a much lower level than the global average did--although you'd be looking at countries like Russia, which really dipped fast, and those would pull the average down, admittedly. So I think that was warranted.
Defence spending started increasing, actually, with Paul Martin's first surplus budget around 1998. As you see on chart 1, it started increasing at that point.
Thank you.