The local economic impact of Canada’s Pacific Fleet
As Greater Victoria’s third-largest employer, the base is a major driver of the region’s economy.
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As Greater Victoria’s third-largest employer, the base is a major driver of the region’s economy.
Capital Daily’s educational series spotlighting Canada’s Navy is supported by Babcock Canada but the stories and journalism are produced independently by Capital Daily. Per our policy, Babcock Canada had no editorial input into this story. Find part one of the series here.
Tucked into the recesses of Canada’s most southwesterly coast is CFB Esquimalt, home of Maritime Forces Pacific (MARPAC). Though the base keeps a fairly low-profile, it is an economic powerhouse of the region, so much so that it has an unofficial reputation as Greater Victoria’s 14th municipality.
A casual observer could be forgiven for not realizing the instrumental role that CFB Esquimalt plays in the local economy. After all, the nature of the work done by Canada’s Department of National Defense necessitates a high level of security. But for those who work on the base or in an adjacent industry, the significance of it is clear. Its economic impact on the region is well understood by Bruce Williams, CEO of the Greater Victoria Chamber of Commerce.
“I think it's underestimated and under-known by a lot of people. It is understood that it is an economic driver, but people don't often see that, because what happens is behind gates,” Williams said.
“It's not a part of the everyday. But just take a look at the volume of traffic that flows in and out of that location every single day.”
The base is the third largest employer in the Capital Regional District. It employs approximately 6,500 people, comprised of 4,500 of military members and 2,000 civilians. The annual payroll amounts to roughly $440 million, and annual local spending by the base totals $611 million. All in all, the base is a massive economic driver for Esquimalt and Greater Victoria.
In addition to a large part of Esquimalt proper, the base has locations in Colwood, Pat Bay, Metchosin, Albert Head, and as far up-island as Nanoose Bay. Across those sites, there are roughly 1,500 buildings: 853 work buildings, and 710 residential housing units. Base Commander Captain (Navy) Sam Sader oversees much of the activity across these properties.
“Most people think of CFB Esquimalt as that piece of real estate at the end of Esquimalt Road. And yet we are dispersed in every community across the Greater Victoria area, in fact, we’re dispersed in about 23 different sites,” said Sader.
Employment and spending at that level has an impact that sends ripples through the local economy. Sader sees the wider community as an extended part of the base’s supply chain.
“That translates into hundreds of small and medium businesses, doing daily transactions with the base, providing it all the goods and services that it requires. And then thousands of Canadians employed outside of the base that are directly related with what we do here at CFB Esquimalt,” Sader said.
That all has an impact that Williams calls enormous.
“Services provided by other contractors, people who provide everything from tech support to physical support, food supply, HR, all that kind of stuff that is revolving around the day-to-day business at the base. It's like its own little town. Really. It's enormous, the number of people that benefit from that. It is into the many, many, many billions of dollars in this economy,” Williams said.
“There's even the point that it provides a little bit of an element of security to us, knowing that we have the Canadian military on the ground, and literally in the water.”
The base also supports co-op students in a variety of fields, including engineering, science, policy, safety and environment. Approximately 80 post-secondary students are employed through the program each year.
“Lots of trade apprenticeships happen through the base because of those construction companies and other service providers that are on the base. So that employment created by the base enables the apprenticeships that happen,” said Williams.
Luckily for the Township of Esquimalt, the jokes about CFB Esquimalt being its own municipality are just that. The financial benefits of having the base in Esquimalt are massive, something Mayor Barb Desjardins refers to as a “golden goose” in their backyard.
“It has made us a very financially stable community. We end up being assured of certain values and abilities to provide services,” Desjardins said.
The Township receives a biannual payment in lieu of taxes (PILT) from the federal government on behalf of both CFB Esquimalt and the Esquimalt Graving Dock, a separate but related federal property used for ship maintenance and repair. In 2020, PILT recieved by the Township was $17,541,992. The number fluctuates, but it ends up making up between 20 - 40% of its annual revenue.
Despite the large sum, the Township still has to be strategic with funds. PILT is a revenue stream entirely out of their control that’s paid in a lump sum biannually. Should the Township disagree with the assessment, the process of resolving that can take years. The exact figure fluctuates based on federal and provincial property value assessment.
“It comes with those risks about not knowing, one year to the next … you're not in full control of your own taxes. But our staff have done a great job over the years of doing that, very conservatively. So that when there are bumps, we've got that covered,” said Desjardins.
The Township is looking for ways to continue to understand and encourage growth and participation in the local economy. Desjardins says an economic development office is in the works in order to accurately track and capture the wealth that employees of the base bring into the community.
“Every day, we have in excess of possibly 7,000 people coming into the community, and going out again, in the evening. Some of them will live in the community. But a lot of them come from other areas of the region. And so when they come here, they then may shop here, they may stop at a restaurant here, they certainly probably buy gas here. So there's a huge economic benefit to having those people as well,” Desjardins said.
Housing developments are also underway to encourage more base employees to live in Esquimalt. The Township has approved a number of multifamily housing units close to the base. Desjardins estimates that a total of 400 units are under construction at the moment.
“We asked developers to go and reach out to the base to understand what kind of housing they might require, and what are their other services they might require,” Desjardins said.
“When they live here, they're going to shop here, they're going to come to our local stores, but also to our local eateries. And so the benefit to our local businesses is significant. ... It really is a catalyst for other businesses to come to Esquimalt and set up. You know that you have a captured workforce that is really very stable.”
Aside from the active workforce, Sader says that past base members, after finishing their service, choose to return to Esquimalt and Greater Victoria. By attracting members from across the country, this puts Esquimalt on the map.
“The interesting thing is, wherever you go, you can say, I'm from Esquimalt. And people know where it is, because of the military and because of the Navy,” Desjardins said.
The impacts of the base go beyond just dollars and cents. The average defense team member contributes 125 volunteer hours in their local communities each year. Navy members are hockey coaches, soccer coaches, volunteer members of the Township’s Community Arts Council, the Victoria Rainbow Kitchen Society, and more.
“The extent of the boots on the ground, the volunteer hours, you can't quantify the value of that. It is so significant, and small towns like Esquimalt run on volunteers. … They are part of every avenue of the social fabric of our community. And if we didn't have them, so many of those things just would not be able to exist,” said Desjardins.
The spirit of volunteerism within the base is a point of pride for Sader. Since the 1990s, the base has donated $11 million to a variety of local charities, and they work closely with the United Way. Part of their donation stream comes through the National Defense Workplace Charitable Campaign. It’s an annual event that runs from September to December, where employees of the base can donate to charities of their choice through payroll deductions.
“We like to look at it more from a triple bottom line perspective where we have the social and cultural aspect of the relationship. … Because ultimately, we live in those communities. That's why we are not a separate municipality, because all of our members live in all of those communities across the CRD. And they're very much engaged in their communities, and they care tremendously about the well being of those communities,” said Sader.
Throughout the pandemic, Sader says the base has done its best to support the local economy. With Navy members required to quarantine in separate rooms before taking off on missions, the base has been renting hotel rooms in Esquimalt.
“We contracted over a million dollars worth of hotel rooms from the local community, which has been really great because obviously with the tourism sector taking a big hit during COVID. It was one of the ways that we were able to, to support that specific sector,” said Sader.
Currently, the base is undergoing the largest recapitalization in its history. That involves building a new jetty, to the tune of $781 million. That in turn will attract more ships to the region.
“In the following years, we'll start seeing new classes of ships here at CFB Esquimalt. ones that have never existed before, such as the Arctic offshore patrol ship,” said Sader.
One of the projects that Sader is most excited about is the digital modernization of the base. They’re working to update technology infrastructure and are collaborating with the Centre for Ocean Applied Sustainable Technologies (COAST).
“It is a very exciting time. We are in a time where we are modernizing a lot of our capabilities, we are digitizing. We have the digital Navy strategy, where we are creating a lot of opportunities. Whether it's artificial intelligence, cloud computing, 3D printing, we provide a lot of cool opportunities to students from [the University of Victoria], or other universities across the region,” said Sader.
From Williams's vantage point, the economic impact of the base will also play an important role in driving Greater Victoria’s post-pandemic recovery.
“The steady ongoing operation of that base will be a very steadying influence on the economy with the amount of services and procurement they do within this community,” said Williams. “It's irreplaceable, quite frankly. And that element of this community makes us the envy of many places in Canada.”
This is the second in a six-part series exploring the history of Canada’s navy from a Victoria perspective. Find part one, about the history of Victoria and the impact of the Canadian Navy on the city, here.