Federal budget shores up cyber defences but is silent on new jets and warships

The new federal budget focuses on ones and zeros over tanks and troops by pouring hundreds of millions of dollars into new and improved cyber and national security defences.

Several federal departments will not only see upfront cash but promises of long-term spending to counter both the threat of hackers — state-sponsored and otherwise — and cyber-criminals.

National Defence, by comparison, is seeing virtually nothing in terms of new spending on the nuts and bolts of the military, other than initiatives outlined in the recently tabled national defence policy.

The 2018 budget is, on the surface, a tacit acknowledgement that the nature of threats to national security — the nature of modern warfare itself — is changing.

The budget recycles the government's $3.6 billion pledge last December to provide veterans with the option of a pension for life and better services.

But cyber-security was, by far, the headline national security measure in the budget.

Finance Minister Bill Morneau's fiscal plan sets aside $750 million in different envelopes — much of it to be spent over five years — to improve cyber security and better prepare the federal government to fend off online attacks and track down cyber-criminals.

More for CSE

It also promises an additional $225 million, beginning in 2020-21, to improve the capacity of the country's lead electronic intelligence agency, the Communications Security Establishment, to gather foreign signals intelligence.

The Liberals will soon pass new national security legislation — C-59 — and CSE will receive important new powers and responsibilities to disrupt global cyber threats.

"These are brand new tools. They're going to need lots of resources — technological resources, personnel resources — to engage in those kinds of operations," said Wesley Wark, a University of Ottawa professor and one of the country's leading experts on cybersecurity and intelligence, in an interview prior to the budget.

The sense of urgency about getting the country's cyber-security house in order is being driven in part by the fallout from Russian hacking and meddling in the 2016 U.S. presidential election, said a former assistant parliamentary budget officer.

"With what we've seen south of the border, I think cyber-security and cyber-threat has been elevated in this budget to a high-priority item," said Sahir Khan, now the executive vice president of the Institute of Fiscal Studies and Democracy.

The budget creates two new entities to deal with online threats.

The first, the Canadian Centre for Cyber Security, will assemble all of the federal government's cyber expertise under one roof — a plan that will require new legislation.

The second organization will be run by the RCMP and be known as the National Cybercrime Coordination Unit.

It will coordinate all cybercrime investigations and act as a central agency to which the public can report incidents.

The budget also includes cash for Public Safety's National Cyber Strategy, which not only aims to protect federal government networks but is meant to collaborate with the corporate financial and energy sectors to boost their defences.

Military procurement a work in progress

The budget's dearth of new spending on the real-world military — at a time of significant global insecurity — is due to reasons that are partly political and partly organizational, said Khan.

The former Conservative government's inability to deliver on promises of new equipment during its nine-year tenure was a political "albatross around its neck," he said.

The Liberals may have produced a clear defence policy but they have yet to straighten out the procurement system, he added.

The Trudeau government has promised a lot of military capital spending down the road. Khan said it seems determined to keep the issue out of the spotlight in the meantime.

What's missing from the new budget is a clear commitment that National Defence will get the cash it needs as those needs arise.

"I think there was a lot of clarity in the policy direction coming out of the government [defence] white paper," said Khan. "What a lot of us are trying to understand is whether the money … is accompanying that change in direction … so that DND has a stable footing to meet its needs."

He said he still has questions about whether promised future spending on fighter jets and warships has been baked into the federal government's long-term fiscal plans.

A senior federal official, speaking on background prior to the release of the budget, insisted that military capital spending is welded into fiscal plans going forward into the 2030s.

Defence Minister Harjit Sajjan has said repeatedly, since the strategy was released last June, that the defence plan was "fully costed" into the future.

Up until 2016, National Defence produced an annual list of planned defence purchases.

The Liberals promised to produce their own list of planned acquisitions and table it this year. Khan said it "needs to be presented to Parliament and the public."

Training and retaining?

The cyber initiatives in Monday's budget drew a mixed response from the high-tech sector.

On the one hand, the Council of Canadian Innovators praised budget signals that suggest the Liberals are open to dealing with home-grown companies rather than buying off-the-shelf from major U.S. firms.

"The imperative to build domestic cyber capacity is not just economic. It's existential," said Benjamin Bergen, the council's executive director.

"Without a domestic capacity in cyber we risk becoming a client state. Innovators welcome the announcement of a new Canadian Centre for Cyber Security, which will allow for information sharing between the public and private sector."

What the budget didn't offer was a clear commitment to training and retaining highly-skilled software engineers and IT professionals.

"We would have liked to have seen a retention strategy. There wasn't one," said Bergen. "We know Canada produces amazing graduates but we're struggling to keep that talent here."

The council estimates there will be up to 200,000 job openings in high-tech by 2020, which will put pressure on the industry and on the federal government as it bulks up its cyber capability.

Adam Froman, CEO of the Toronto-based data collection firm Delvinia, was blunt when asked if the federal government will be able to fill all of the cyber-security job openings created by this budget.

"They're not going to be able to. Plain and simple," he said. "Or they're going to have to outsource those jobs to foreign companies."