NR – 13.232 - July 13, 2013
OTTAWA – Recent reports in the media are providing a misleading impression of how the Department of National Defence manages its spending. This statement is being issued to clarify matters:
Based on current departmental financial information, our unused appropriations in 2012-13 will be less than $1.5 billion. The final 2012-13 spending levels will be reported to Parliament later this year as per normal. It is important to note, however, that the vast majority of the amount of unused appropriations was beyond the department's control.
For example, these unused appropriations were associated with:
- Requirements to lapse authorities associated with decisions that flowed from the deficit reduction action plan which were announced after the Main Estimates were tabled.
- rescheduling of a payment to a foreign government from 2012-13 to 2013-14, as required by accounting rules;
- a change in the timing of payments required from a judicial decision as the decision was not taken until early April 2013, pushing the funds into the 2013-14 fiscal year; and
- revised cash flow schedules for capital equipment and infrastructure projects.
Defence procurement tends to be complex and lengthy, involving a number of stakeholders. Spending forecasts are based on plans but these plans are dependent on a number of assumptions and considerations.
While there are many examples where the procurement has proceeded largely as planned (such as the acquisition of the Hercules aircraft), there are other examples where the plans change over time driven by factors internal to government and to our private sector contractors. This is not unique to Canada – it is experienced in all countries engaged in military procurement. However, these delays require the department to adjust its spending authorities so that they continue to be aligned with changing spending requirements.
The Department continues to work to mitigate these delays but it is recognized that while mitigation may be possible, expecting total elimination would be unrealistic. It is far more important to ensure we are spending money properly, and for the purposes for which Parliament has approved it, than to simply spend all of our available money for the sake of spending it. That kind of behaviour would be wasteful in the extreme, and a betrayal of the trust placed in us by Canadian taxpayers.
National Defence remains fully committed to providing the best use for taxpayer dollars.
Sincerely,
Stephen O’Connor
Interim ADM (Finance/Corporate Services)
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