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Chris Young \/ The Canadian Press<\/p>\n
Prime Minister Mark Carney announced major new defence spending last summer, but how and where that money will be spent is every bit as important as the dollars involved, Kyle Volpe Hibert argues.<\/p>\n
Carney last summer committed Canada to NATO\u2019s elevated target of members spending five per cent of GDP on defence by 2035. If Ottawa honours that, the military\u2019s annual budget will skyrocket to $160 billion in less than 10 years. That\u2019s roughly five times more than the Department of National Defence\u2019s budget estimates were in 2024-2025.<\/p>\n
But Ottawa is hoping this can also turbocharge Canada\u2019s broader economy by steering investments into retooling the CAF for modern warfare toward domestic companies. Indeed, the Defence Industrial Strategy includes some eye-popping targets. The government claims it will create 125,000 high-paying career jobs, increase defence exports by half and spike defence-industry revenues by 240 per cent and more \u2014 all within a decade.<\/p>\n
Much of the strategy hinges on helping Canadian companies become leaders in dual-use technologies with both commercial and military applications. Think data centres, drones, space-based capabilities and artificial intelligence. And there\u2019s a good reason why.<\/p>\n
Western governments must come to grips \u2014 fast \u2014 with how AI-powered autonomous weapons systems are changing the nature of contemporary combat. This is brutally apparent more than four years into the Ukraine war and in hotspots elsewhere. Yet the West\u2019s ability to surge production of these systems \u201cremains amateurish at best,\u201d argues Eric Schmidt, the former Google CEO turned defence tech investor in a recent op-ed for the Financial Times.<\/p>\n
This is a serious problem. \u201cMastery of autonomous systems and the ability to build those weapons in abundance will determine the outcome of future wars,\u201d Schmidt writes. \u201cThe West must learn from what is happening on the frontline in Ukraine, accelerate innovation and build the industrial base required to produce at the scale and speed the next conflict will demand.\u201d<\/p>\n
All told, Ottawa\u2019s rearmament plan claims to cover investment of over half a trillion dollars into Canadian security, economic prosperity and sovereignty. Yet there are serious hurdles to convert this rhetoric into reality.<\/p>\n
The most obvious are the mammoth but necessary funding commitments. Decades of neglect and underinvestment have hollowed out Canada\u2019s military precisely as the world is becoming more dangerous. Although perhaps the larger problem is how far behind Canadian companies have fallen in the new globalized digital economy, which runs on intangible assets \u2014 data, patents, algorithms and intellectual property (IP).<\/p>\n
\u201cInstead of investing in Canadian firms to help them develop, own and sell Canadian intellectual property, governments have poured billions of dollars into foreign multinationals to set up domestic branches while most of the value those companies generate, particularly through the ownership of their IP, flows out of the country,\u201d Benjamin Bergen, CEO of the Canadian Venture Capital and Private Equity Association wrote in a recent essay for Maclean\u2019s.<\/p>\n
The result, Bergen says, is that Canada is funding its own economic decline. \u201cWe get the jobs. Someone else gets the wealth.\u201d<\/p>\n
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