Madam Speaker, we are here today to discuss Bill C-40, which was introduced by the Liberal government on the other side of the House.
Essentially, Bill C-40 creates a new, ostensibly independent structure. I will come back to this independence issue later. Known as the Canadian corporation for defence investment, this entity would be a Crown corporation responsible for running its own operations, a bit like other Crown corporations such as the Canadian Broadcasting Corporation, for instance.
As far as Bill C‑40 is concerned, no discussion of military procurement can ignore the broader problem facing Canada's military equipment. A lot of people are aware of the state of Canada's aging, underperforming and often non-operational equipment, which has made headlines after all. This equipment includes certain Canadian warships that are more than 40 years old, and four submarines, only one of which is operational while the others remain dockside undergoing endless repairs. Things are reaching a point where maintaining this broken equipment is so difficult that some people wonder whether it will ever return to service.
We can even think of the old jets, the famous F‑18s from the 1980s. I was born in the 1980s, and these jets are older than I am. We see that there is a problem of underinvestment in defence, which means that the armed forces' equipment is in a sorry state. I would go even further and say that a while ago, we got our hands on an internal Canadian Armed Forces report stating that no less than 50% of their equipment is allegedly unusable. It may be on the inventory, but the reality is that this equipment is gathering dust and rusting away because it is too old and no longer functional. There have been so many budget cuts in this area that, according to some reports, soldiers had to buy their own boots and get reimbursed for them afterward.
There were even some reports last year indicating that the Canadian Armed Forces could not even intercept the Chinese weather balloons flying over Canada. The armed forces could not even do that because they had so many problems related to efficiency. I think Canada's army looks like a bit player on the world stage. I would even say it is in bad shape. This is the result of many years of complacency, unfortunately, so now it has some catching up to do. There has been a lot of talk over the past few years about Mr. Trump wagging his finger at us and saying that Canada needed to do its part and invest in its military.
That said, we do need to take this issue seriously, but not only because of the U.S. President. As everyone knows, Russia is becoming increasingly aggressive, as its invasion of Ukraine demonstrates. China is also posing an increasing threat to Taiwan. Major powers are challenging the U.S.-led order. That was once the dominant world order, but that seems to be less and less true these days. Given the U.S. withdrawal, there is a need—or at least, a sense of urgency—to reinvest in our military capabilities and ensure that we can defend ourselves adequately, especially considering that virtually all of the equipment we have is operationally dysfunctional.
Looking at the figures, it cannot be said that nothing has been done. In budget 2022, the defence budget stood at roughly $30 billion. By 2025, it had risen to $60 billion, effectively doubling.
That said, this is what appears on paper. As was mentioned earlier in the House, the government has also engaged in a degree of creative accounting by including in defence spending costs that do not necessarily relate directly to defence. This includes, among other things, moving the Coast Guard into that spending category, as well as substantial increases to military salaries and pensions.
As a result, there are no more soldiers and no more equipment, but on paper more money has been spent and Canada appears to be moving closer to the prescribed targets and ratios. All of this has contributed to Canada finally reaching the much-touted benchmark of spending 2% of GDP on defence, which is NATO's baseline target. As long as anyone can remember, that has always been the target, yet Canada has almost never met it. However, Canada appears to have reached that target over the past year through creative accounting.
To give the average person an idea, $60 billion is the equivalent of Quebec's health care budget. People generally have no idea what that amount represents; clearly, it is a lot of money. It goes to things like hospitals, doctors and nurses. The federal government is now engaging in some creative accounting to put the equivalent of all of that into its military budget.
That represents 2% of the gross domestic product. That is quite a lot of money. The government is now promising to go up to 5%. The actual commitment is 3.5%, not 5%. All that to say that the budget would increase from $60 billion to $160 billion in 2035. As we can see, a great deal of money would go to defence.
As for me, a light bulb has turned on, and it seems to me that there may be a danger or risk associated with this sudden, radical and drastic increase to the budget of the Department of National Defence. Members may agree that we need to invest more in the armed forces, but this does not mean that there are no risks.
I identified the same risks as those outlined by the Parliamentary Budget Officer, who was invited to appear before the committee. Those are risks that I thought were an issue. In her opinion, a budget that increases so quickly might cause a problem because, if a government normally allocates x amount of money and doubles it the next day, there could be some waste. That may be the case, particularly since the government seems to want to reach the long-standing 2% target, or even 3.5% or 5%. In the end, the goal seems to be to spend as much as possible to reach the quotas. In fact, the goal should be to make the right investments in the right places. I think that is what we should prioritize. That is why parliamentary accountability will be key. It is about ensuring that money is not being spent just for the sake of spending, and that it is being invested where there are real needs.
During her appearance before the committee, the Parliamentary Budget Officer even told us that the government had no plans. I am not making this up. She asked to see the defence investment plans for the coming years, but there are none. The government is committing to spending 5%, yet it does not know how much will be spent next year, or the year after that, or in the years to come. Worse still, the government cannot tell us what the money will be spent on. The only thing we know for certain is that the government will meet its target. Understandably, that is worrying. I am getting the impression that the government is winging it. I, for one, do not think the government should be winging it when billions of dollars are at stake. We are talking about a lot of money, and it cannot be spent haphazardly or without a clear plan.
There also appear to be serious problems within the defence procurement system. We have already touched on the major challenges. Incompetence also seems to be an issue. There seems to be a deeper problem, at least when it comes to efficiency and the internal management of defence procurement.
To fix the problem, the Liberals announced a solution last year. They wanted to create an agency to manage defence procurement. Going forward, responsibility would rest not with Public Services and Procurement Canada, but with an independent agency. That meant finding someone to run the agency.
Who did the Prime Minister put in charge of the agency? Obviously, given the size of the agency and the amount of money involved, a top-tier manager was needed.
What skills and qualifications did the government look for in the future defence procurement superhero? Did it look for someone with expertise in procurement? The answer is no. Did it look for someone with expertise in defence matters? The answer is no. Did it look for someone with expertise in emerging technologies, perhaps a former member of the military? The answer to all of those questions is no. Instead, the government brought in a banker, a guy from the upper echelons of international finance. That is what happened. He was chosen by the Prime Minister. What made him the most qualified candidate? Well, he is a personal friend of the Prime Minister. They met back when they both worked at Goldman Sachs. A friend is a friend. There was a lot of money to spend, and a friend was going to be the one spending it.
When the Prime Minister called him, he probably said something like, “Hey, buddy, I have hundreds of billions of dollars to spend on defence. I know you have zero qualifications in that area, no military background and no expertise in procurement or new technologies, but you are a banker and you know numbers. I thought maybe you would like to spend all this money for me, so I am going to hire you.”
There was the WE Charity scandal, where a billion dollars supposedly went to friends of the Liberals. There was the ArriveCAN scandal, with costs ballooning from $80,000 to $54 million for an app. There was also the Phoenix pay system, which was supposed to save the government $78 million a year but instead, ended up costing $2 billion. After all that, the Liberals found a new gravy train for their Liberal friends.
Now this, this really worries me.
A guy like that, a top gun, a friend of Carney, an international investment banker—
