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Budget forces Canadian military to stow equipment shopping list until 2016-17

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OTTAWA - The badly needed new equipment on the Canadian military's shopping list may end up becoming a wish list over the next three years after Tuesday's federal budget pushed $3.1 billion in planned capital spending into the future.

The reallocation and delay outlined in Finance Minister Jim Flaherty's fiscal plan was something long expected in defence circles, and a dramatic demonstration of how far the department has fallen in terms of the political pecking order in Ottawa.

In practical terms, it's a reflection of the government's failure so far to deliver long-promised new ships, search planes, helicopters and trucks. But it's also part of a Conservative campaign to outflank the deficit in the run-up to the 2015 election.

Defence sets aside a certain amount each year to buy new gear, but the new budget kicks that planned spending — originally scheduled to take place between 2014 and 2017 — to "future years," putting many programs in doubt.

Flaherty defended the decision, saying it wasn't a cut and the money is being socked away until the military can use it.

"There's no point in having money sitting there when they can't spend it this year, which they can't," he said prior to the budget's public release. "So, we're pushing it forward, not taking it back."

A senior government official, speaking on background, wasn't able to provide a list of the affected projects and noted that the cash in many instances had not been appropriated by Parliament.

Future governments must decide when the money will be put back, the official said.

The stowing of equipment funds adds to previous Conservative austerity measures, which have already carved as much as $2.1 billion out of defence.

As the biggest discretionary pot of federal money, the military is accustomed to having a target on its back. But the pain won't end once the government delivers a $6.3-billion surplus at the end of the 2015-2016 budget year, one defence analyst says.

National Defence will continue to feel the squeeze as the Conservatives strive to keep the books balanced — without generating new revenues — in order to finance long-promised goodies such as income splitting, said Dave Perry, a professor at Carleton University and a researcher with the Conference of Defence Associations.

"If you are making all of these moves to restrain federal spending writ large, cut taxes and spend money on other programs, I don't see a big windfall coming for the military post-2015," Perry said.

"I just don't see how it can work given the political parameters they've outlined."

Deferring capital spending will erode the buying power of projects that have already been announced, forcing the military to either make do with fewer ships, planes and vehicles, or settle for less sophisticated gear, he added.

The replacement of the country's aging jet fighters, which National Defence was supposed to start spending on next year, will likely be the most high-profile victim of the reallocation.

The government put the F-35 program, a political lightning rod, on hold in December 2012 and has yet to say whether it will hold a full-fledged competition to determine which fighter to buy.

Other big-ticket items likely to fall into the shuffle would include the navy's new supply ships, the long-promised Arctic patrol boats, replacements for Canada's aging Sea King helicopters and new fixed-wing search planes, among others.

Defence Minister Rob Nicholson, who announced a reboot of the military procurement program last week, promised the government would begin posting a renewed list of its defence equipment needs this June.

In the meantime, though, Perry said the renewed departmental spending freeze — coupled with other restraint measures — will have a significant impact on defence, forcing it to internally reallocate as much $591 million by 2015.

That will mean less cash for operations, maintenance and training — and the numbers are stark.

In the 2009-10 budget year, the last before the axe began to fall on spending, National Defence was given $7.6 billion to spend on upkeep, fuel, patrols and exercises. According to Perry's research, that number has fallen by 18 per cent.

The effects are already apparent. On Monday, the Snowbirds flying team announced it was cancelling performances in the U.S. due to budget cuts. A number of the army's logistics trucks, known as the B-Fleet, have also been mothballed.

And defence sources say funding for CF-18 operations and maintenance, the air force's premier weapons system, has already been curtailed by as much 25 per cent.

"The navy has a lot less flexibility because they don't have the math to play with," Perry said. "They'll be tying up ships, even if there is no further pain."

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