Defence department bracing for tight budget Thursday

It seems the only soldiers who are safe from the coming budget axe are those that parade around Parliament Hill in the changing of the guard ceremony for tourists in the summer, a leaked report suggests.

Defence spending will be in the federal budget crosshairs this week as the Canadian Army faces another barrage of major reductions over and above the Harper government's established deficit-fighting strategy and program review.

An army planning document, obtained by The Canadian Press, shows that land forces are bracing for a further eight per cent hit on operating and maintenance in the coming fiscal plan, in addition to an existing 22 per cent budget reduction.

The latest cuts, estimated in the range of $32 million, will slice into the army's ability to train for operations in the jungle, desert and mountains, and come on top of $226 million in cuts ordered in the government's strategic review and Deficit Reduction Action Plan, says a Jan. 31, 2013 document, written by Lt.-Gen. Peter Devlin.

There's expected to be an $8 million clawback on contracted services, and the army will be required to absorb a further $10 million related to civilian wages.

Reserves brace for cuts

The document says funding for full-time reservists will have to be further reduced, and unused cash in the budget for part-time soldiers may have to be raided in order to keep full-timers.

Yet, despite the budget ravages, the army is under pressure to maintain the pet projects and pageantry admired by the Conservatives, who once promised stable and predictable funding.

"Ceasing activities viewed as priorities by the government of Canada will invite scrutiny into those activities the Army chooses to do at the expense of those items that hold government interest," said the letter, which is meant to guide the army's business planning for the coming year.

"As an example, activities such as the Ceremonial Guard hold particular interest for the (government of Canada) and must be sustained; even at the expense of area programming. Any and all (government of Canada) directed activities will be fulfilled."

The Ceremonial Guard, comprised of mostly reserve members, conducts the changing of the guard ceremony on Parliament Hill during the tourist season.

National Defence is the biggest discretionary line item in the federal budget and has long been the target for deficit-slashing governments, regardless of political stripe.

Prime Minister Stephen Harper warned Defence Minister Peter MacKay last June that initial budget cut proposals did not go deep enough on the administrative side of the department, a message he reinforced at the swearing-in of new defence chief Gen. Tom Lawson when he said he wanted a military with "more teeth and less tail."

Afghanistan wrap-up lowers budget

When criticized about how spending cuts appear to have singled out the army, MacKay has pointed out that the army's baseline budget is $500 million higher than it was when the Conservatives took office in 2006.

"After years of unprecedented growth, and following the end of the combat mission in Afghanistan, it is necessary for the government to balance military needs with taxpayer interests," said MacKay spokesman Jay Paxton.

"Under our government, the military will always have the tools it needs to defend Canada and care for its people."

Defence sources say as much as $600 million will be cut out of military "readiness" in all branches in the coming year. Readiness refers to training and equipment maintenance that a military needs to do in order to deploy both overseas and at home.

Indeed, Devlin's planning report says the army will have to limit the scope of its operations in the Arctic, which is "five to seven times" more expensive than missions conducted in southern Canada.

The average 1.5 per cent increase in the army's budget for fuel comes nowhere near covering the anticipated diesel costs, which rose by 24 per cent in 2011-12. As consequence, the army will have to "reduce the level of activity."

Surplus assets set for sale?

In a recent interview with Maclean's magazine, MacKay revealed that department intends to sell surplus property, some of which is either outdated or too costly to maintain.

Analyst Dave Perry from Carleton University in Ottawa has crunched the overall defence budget numbers and projected, in an updated analysis to be released this week, that the department will lose $2.4 billion — about 12.4 per cent — of its approximately $20-billion budget when compared against spending in 2011-12.

In his benchmark report, retired lieutenant-general Andrew Leslie called for deep cuts in the size of National Defence headquarters and for the savings to be plowed back into the field force.

But Perry's analysis shows that since the government will not cut the overall size of the regular or reserve forces, and is not expected to give up equipment capabilities, such as specific classes of planes, tanks and ships, there is nowhere else to cut except in readiness and training.

"Since the size of the regular Forces is the largest driver of overall personnel spending, and major capital fleets account for the bulk of capital equipment fleets, this essentially protected the two single largest spending categories from the budget reduction," Perry wrote in his analysis, obtained in advance by The Canadian Press.

"As a result, the department has been tasked with finding the majority of its cuts from the funds spent on (operations and maintenance)."

Leslie's report has gone largely ignored, he said.

"DND has taken almost no action to enact his recommendations," Perry said. "As a result, the bulk of the budget cuts are falling on operational readiness and training."