00:00:00.000I think what's ended up happening, too, especially within Western countries since the fall of the Soviet Union in 1991 era, was that it kind of, oh, well, you know, the age of conflict is over.
00:00:15.520That the end of history, so to say, that we're now reaching this aspect of world peace.
00:00:21.560And so a lot of countries started treating their militaries as kind of non-essential, right?
00:00:31.100And so they became a bureaucracy like any other rather than as a very necessary part of any country.
00:00:46.520Well, there's no doubt in the last several months we've heard about our military making steps forward, that we've made commitments to do more with Canada's military.
00:00:55.400But how is that reflected in spending?
00:01:15.520Yeah, so in 2017, actually, is when they expanded the definition of defense, what counts as defense spending. And so from then on, it became veteran payments, peacekeeping and humanitarian operations, IT support to defense, defense personnel costs, and then just other program support.
00:01:42.400And so a lot of what we see in terms of new, quote unquote, defense spending is really just redefining where certain other spending has already been going and then putting it under the label of military so that we can say we're putting all of this much more money into our military.
00:02:03.980Okay, well, you know what, it's kind of new to me, but not so new that I'm hearing this because several months ago we had a chat with one of Canada's greatest experts on NATO, and Charlotte mentioned to us that when it comes to NATO commitment spending, things are included in the budget that you don't normally think about.
00:02:22.820things like the roads and highways uh the water systems water treatment facilities um you know
00:02:29.620certain um security elements to areas around our military bases which could be an entire city
00:02:37.380yeah yeah and so there's actually a pretty good example of this recently which was just august 10th
00:02:43.780ottawa announced a 768 million dollar construction contract for the rss main lab campus in nepean
00:02:53.620and so yeah this is actually more so for cbsa and also health canada but because of these broadening
00:03:02.420of terms now they can put it under that uh that nato defense budget and roughly roughly a billion
00:03:08.500dollars over the next 10 years is going to count towards that but also even within nato itself
00:03:15.380because they've got the five percent target that they want to countries to hit right and so 3.5
00:03:23.460percent of that is direct spending things that need to be on actually military itself but then
00:03:29.3801.5 percent can be military aligned so these kind of projects that we're seeing which yeah don't
00:03:36.260actually necessarily necessarily bolster our uh military but yeah it makes uh makes for good
00:03:44.180headlines what's going into that lab what what falls under that roof that might see this qual
00:03:49.940because it's if 1.5 is the target that we have we're allowed to schmoo other i guess if there's
00:03:56.660a better word for it to be able to schmoo this this number over other projects what's going to
00:04:02.900be under this roof and and how's the justification applied yeah well part of this was for the uh
00:04:12.500food supply chains and stuff as well which hey maybe you can make an argument for in terms of
00:04:18.420yeah if something like a global conflict was to kick off then obviously food supply chains are
00:04:25.620a very important thing to worry about in that scenario. But yeah, the actual buildings itself,
00:04:38.360yeah, they're more so for food security and that kind of stuff. And a lot of it is just
00:04:43.360bureaucracies, they're laboratories and stuff like that. So it's not even, you know, let's say
00:04:49.040military warehousing or anything of that nature. It's more so essentially, yeah, more bureaucratic
00:04:55.240buildings and as you say it's military adjacent perhaps but certainly i'm just assuming it's
00:05:00.780definitely not under military watch in other words it's not under the executive branch of the
00:05:07.280military right and yeah i mean there's there's other other examples of this too outside of this
00:05:13.360new project that was just announced august 10th the coast guard is a good example of of a budget
00:05:20.240that is now being counted as military despite the fact that the Coast Guard isn't armed.
00:05:27.100It's considered a civilian arm, but $2.6 billion now gets counted toward the Canadian military budget
00:05:42.540Okay, well, I guess if it's a trend, then we kind of need to look at it
00:05:46.180because what it says to me is this actually begins at NATO.
00:05:50.240maybe I'm wrong about this, NATO accepting a country's sovereign security as part of a NATO
00:05:57.140agreement, I guess maybe there's a military logic to each country in NATO having their own secure
00:06:03.660base. But it almost feels to me like that should be a prerequisite of being a member of NATO,
00:06:09.700that you're able to secure your food, that you're able to secure your borders and your waters
00:06:15.160uh of a civilian nature before your military is applied anywhere does that seem unreasonable
00:06:21.880no that seems pretty pretty reasonable i think i think what's ended up happening too especially
00:06:28.300within western countries since the fall of the soviet union in 1991 uh one era was that
00:06:36.080it kind of oh well you know the age of conflict is over that uh the end of history so to say that
00:06:43.260We're now reaching this aspect of world peace.
00:06:46.760And so a lot of countries started treating their militaries as kind of non-essential, right?
00:06:56.440And so they became a bureaucracy like any other rather than as a very necessary part of any country.
00:07:07.200Why do you think NATO is ramping up so much on a global level, trying to enforce this to the degree that a country like Canada is jumping around, trying to budget for improvements that are vastly needed?
00:07:21.960And I think anybody in the military, anybody watching over our military would say, yeah, we need some revamping here.
00:07:28.880But at what point do we think, wow, why is NATO pumping so hard on the accelerator right now compared to years gone by?
00:07:38.480Well, I think, well, mainly because of the Russia invasion of Ukraine.
00:07:44.720And then also there is added pressure with people looking at China invading Taiwan.
00:07:52.220Then you've also got the Middle Eastern theater with Israel and Iran.
00:07:58.080And just in general, I think these countries are starting to wake up to the fact that, yeah, no, conflict is still very much a human element.
00:08:11.800And so, yeah, I think I think looking at that aspect of things and then also, too, once Trump came into office, he started pressuring NATO and other NATO countries saying, hey, America is essentially making up for all of the lack that the other countries are doing in spending.
00:08:35.780You guys are kind of sitting here going, well, as long as we've got America in our corner, then we're safe.
00:08:40.440And he put his foot down and pretty much said, no, we're not going to be subsidizing your guys' defense any longer.
00:08:46.620And so if you want America to stay in the NATO alliance, then you guys have to meet your obligations.
00:08:54.700it's kind of crazy to me that it really took that the americans kind of just saying okay look we're
00:09:01.460gonna we're gonna have to get everybody to pay their their just due on this i mean for for so
00:09:08.840long now i i'm the first to admit sure we'll be in nato whatever we've got america nato's great
00:09:15.740because we've got america we've got this huge defense uh and and attack engine this machine
00:09:22.000that can be put into action at the drop of a hat
00:09:24.760that has placement all over the world.
00:10:16.400Well, and you know, this mirrors a larger trend within Canadian fiscal policy as a whole, even outside of the military itself. When Carney came into office, he started running the budget. Trudeau had everything under one umbrella, pretty much. And then Carney split it into capital and operation costs and said that, okay, well, we're going to balance the operating budget.
00:10:43.900And then what ended up happening and both left-leaning think tanks have covered this, the PBO, who is considered independent and right-leaning.
00:10:54.600So they all converge on this where the $300 billion of capital spending that Carney has been promoting as investments in Canada's future, about at least $95 billion of that is things that can't be considered an investment at all, like say corporate tax credits and so on.
00:11:16.240And so there has been a lot of shifty accounting within Parliament since Carney came into office in order to, well, you can see how that looks, right?
00:11:29.660It makes it if you take things out of the operating costs and put them into the capital bucket, then you make it easier to budget or balance your operating budget.
00:11:40.060But then also you make it a good sales pitch for look at how much I'm investing.
00:11:46.540And so, yeah, it seems like that's that's a lot, whether it's whether it's more mundane day to day kind of spending or whether it's the military stuff that there seems to be a lot of accounting shiftiness.
00:11:59.520Well, you know, even if it's not shiftiness, it's a different perspective on accounting.
00:12:03.880It's a completely different, it's not a ledger system anymore.
00:12:10.480It does feel, and I've said this before, I think you probably will agree with me,
00:12:14.140it feels more like corporate reporting and corporate forecasting than it does that of a country.
00:12:22.440You know, it feels more corporate than diplomatic.
00:12:25.420It feels more forward thinking for the sake of getting you to buy in today than a real budget showing how desperate we are would actually be.
00:12:40.020Now, to Carney's credit, it's hard to get people to build into a country and invest in themselves when they see the struggle on the books so blatantly.
00:12:48.580When you can show me EBITDA or whatever the national version of that is for a country, when you can show us a future that is bright and cheery based on balancing the books, theoretically, it makes it a lot easier to get people to buy into spending now.
00:13:06.460yeah yeah that makes sense and i mean too i think i think we are headed to this point where
00:13:13.140the external pressures of the world are going to push things in a direction that
00:13:21.200action is necessary like it won't necessarily be a sales pitch trying to get people on board
00:13:28.100it will just you know go back to this no we we've got to do it kind of game and just pulling the
00:13:33.100trigger uh no matter whether people are happy about it or not now obviously they'll they'll
00:13:38.460try to bend the narrative in a way that that is beneficial to them but i do see us entering this
00:13:43.040this world where it's it's less about uh yeah trying to get people to buy in and just doing
00:13:48.280what you have to do because even you know china just this week uh august 28th they overhauled
00:13:57.300their entire national defense mobilization law so they've pretty much made it now that uh yeah
00:14:03.940the the updated framework is includes compulsory compulsory civil uh civilian service so men aged
00:14:11.78018 to 60 then requisition of private assets if it's deemed in the benefit of their national
00:14:19.540interest uh integration of technology supply chain mobilization all of this kind of stuff
00:14:24.900And I think if I'm correct on this, there was also another major one where it was now they can do that. It used to be in terms of national sovereignty. So they could only invoke that kind of thing if it got invaded or attacked.
00:14:42.960Whereas now they're categorizing it as national interest.
00:14:47.740And so that could be going out if they want to, say, take Taiwan forcefully, then this mobilization measure could be could be used.
00:14:57.240And, you know, we've got we've got guys to like Palmer Lucky down in the States who does a lot of defense building.
00:15:05.960He was the one that created Oculus way back in the day, sold it, but now he works on national defense.
00:15:14.220But he's made a point that pretty much everything coming out of China these days is dual use, like even their ferries that they're using for civilian use, that the government makes it so that they have to be able to also carry military equipment if need be.
00:15:31.660And so, yeah, I think this is going to be a larger trend of of the world of everybody essentially preparing for something of that nature.
00:15:42.280You know, if we had to have the Canadian version of it, maybe we say, OK, we've got the peacekeeping version of this frigate and we have the battle version of this frigate.
00:15:51.460So, you know, it's the same unit, but let's make sure that it's it's it's being applied appropriately.
00:15:57.240What else do you see out there, Liam, in the way of defense spending?
00:16:01.660that is maybe not getting the spotlight that it should be at the moment i know that we've ordered
00:16:06.460some planes allegedly uh we have ordered some submarines allegedly i don't know where we are
00:16:12.140with those deals are we missing anything else out there you think well in terms of like actual
00:16:19.180let's say like material um yeah whether it be tanks whether it be submarines whether it be
00:16:27.580fighter jets this kind of stuff that's obviously an issue and should be taken care of but the
00:16:33.820biggest one the biggest issue i see is in terms of recruitment and the people in terms of military
00:16:40.940uh like you know it'd be i used to think about myself as a very patriotic person that if anything
00:16:47.960if the time came around where i needed to fight for my country that i would be willing to do so
00:16:53.040But over the last five to 10 years with how I feel that our government looks at people like me or even to how they've been abusing the treasury and so on, all of these kind of things.
00:17:07.320It's like, why would I fight for this country?
00:17:09.700It doesn't feel like the country is fighting for me.
00:17:12.340And so I think that is the biggest issue.
00:17:15.980And you talk to people in the military that have been there for decades, and they talk about how low morale is and how a lot of people in it are just waiting for their retirement package, essentially, and they're going to be out that door the minute that they can get it.
00:17:34.060Yeah, it's hard to blame them when what are you fighting for.
00:17:38.520that's a perspective that uh you know i don't think we often consider but it is really true
00:17:45.460liam that if you are not really loving what your government has done for you if you're seeing
00:17:49.480as a young person your parents struggling uh you know working several jobs you know you're living
00:17:55.820in a situation where even getting groceries is difficult for the average person it's got to be
00:18:02.460difficult to say I'm going to stand up and do something when so little has been done for the
00:18:09.760country over a decade. That does make sense to me. So that motivation is definitely, there's no
00:18:16.620motivation to say we've got this great thing, we're going in the right direction, we need you
00:18:21.860to make sure that we have our sovereignty and our protection through this. Yeah, you're right,
00:18:26.300I don't see that. I don't see that storyline.
00:18:30.300And that's a broader trend across all Western countries.
00:18:38.300When you go talk to the young men, presumably the type of people that you would need to need to rely on in that scenario.
00:18:45.880They all overwhelmingly feel very similarly where why would I fight for this country?
00:18:52.540And yeah, it's, you know, that's kind of the inevitable endpoint of the last 10 years of social policies that they've been putting into place, whether it even be with public messaging and all of that kind of stuff.
00:19:07.260They've been telling the young men of the country that they're an issue to be dealt with.
00:19:11.680And then it's like, well, when you need those people, now you can't just turn around and expect them to, you know, jump by your side at first ask when you've been essentially telling them that they're a problem to be managed.
00:19:57.220There needs to be both, yeah, the financial that, you know, also for just pure material that it's going to be worth my efforts and potential sacrifice, whether it's for the family that I leave behind in that scenario or, you know, have to come or coming home to.
00:20:15.240But then also, yeah, then there is the ideological aspect as well of like, what am I fighting for if I'm, you know, you listen to, you listen to, for instance, Trudeau during his time where he was asked to define what a Canadian is.
00:20:31.640And it's a very circular logic where he said a Canadian is a Canadian is a Canadian, which doesn't make any sense.
00:20:43.340And they've even too back in 2015 said that Canada has no, no core identity. So then when you're telling me that, you know, I need to step up and be ready to defend Canada, but you can't even define what Canada or a Canadian is, it's pretty hard to get somebody on board with that, that sales pitch.
00:21:04.720And so I think that would be the very first necessary step in something like this to in terms of essentially, you know, because there's been how can you defend what you can't define?
00:21:19.220Right. And there's been a there's been a push, especially since our last election cycle to, you know, to defend Canada, put your put your elbows up.
00:21:32.120But it's more of an anti-American stance than it is a pro-Canada stance.
00:21:37.380And so you really need to I think that that is the first the first issue that needs to be dealt with is starting to have a have a pro-Canada sentiment.
00:21:45.760You know, Liam, we've had a hell of an issue being true patriot love.
00:21:50.520As soon as people see the word patriot, the bristles go up in the back of their neck.
00:22:10.660We've left no room for people to say, I love my country.
00:22:14.420We want everybody to define themselves as independents in this country, but really we don't want them to love the country enough to even say, love your country, even though it's in our national anthem.
00:22:28.620I do think that there is that disconnect of national pride that needs to come back in some fashion format, that we need to have our own identity as a nation, something that is worth defending.
00:22:40.920Yeah, I completely agree. And I think, you know, even to this, this could go back to our, our very founding in terms of a lot of nations like consider America when it was when it was founded, it was founded through revolution and through war.
00:22:57.400And so that, you know, that idea of we need to establish this and protect it at any cost, that is very different from how Canada came about, which was we have these kind of like leftover patchwork colonies and it's kind of becoming a nuisance to govern them from over the seas now.
00:23:19.160And so let's just let them self-govern. And it kind of just fell together. And so that kind of mythos, that sense of self isn't as ingrained, I think, as some other nations like, say, America, where you get that patriotism from.
00:23:36.720I can understand that too, but we do have to define ourselves in some modern term in this hemisphere, I think, to really get that sense of pride going.
00:23:48.800$900 million to be spent on a science lab, that's under our defense spending.
00:23:54.060NATO says it's okay, we can put it toward 1.5% over the next 10 years of our military spending, and that's for NATO-related security and resilience spending.
00:24:03.900I guess we share the information in that lab with other NATO members.
00:24:08.100We'll find out more about what happens in that building.
00:24:10.520I guess under 300 people will be employed there.
00:24:13.920And it looks like a pretty major commitment that we've made here.
00:24:18.800Prime Minister Carney announced Canada had hit the NATO 2% target
00:24:22.480with total defence spending of more than $63 billion.
00:24:26.620One of it's going to a lab in Nepean, Ontario.
00:24:31.020Liam, thanks for having this chat with me.
00:24:33.900feels like therapy. I really needed that. Of course. Yeah. Thanks, Mike.