About 25 per cent of the new defence spending in the federal budget is a previously announced pay increase for Canadian Armed Forces personnel.Spencer Colby/The Canadian Press
The Canadian government is boosting defence spending by $84-billion over five years in the 2025 budget, saying the country needs a stronger military “in an increasingly dangerous and divided world.”
It’s billing the new funds as the largest defence investment in decades.
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The fiscal plan, which offers more money for recruiting, equipment and cyberdefences, was hazy on how far along Canada is in meeting its new NATO spending targets.
Separately, the government is creating a $1-billion Arctic Infrastructure Fund to pay for new airports, sea ports and all-season roads in the north that would have dual-use applications for both civilians and the military.
“A confident nation protects its sovereignty at home and its interests abroad, through strength, stability and partnership with allies who share our values,” Finance Minister François-Philippe Champagne said.
The government was unwilling to say Tuesday how much closer the 2025 budget gets Canada to reaching its NATO commitment to spend 3.5 per cent of gross domestic product, or economic output, on military spending.
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The budget was silent on the matter and Mr. Champagne, asked how far along Canada is now in meeting this new NATO benchmark, did not produce a number. All he would say is “we’re going to make the defence investment that are needed to reach our NATO target.”
David Perry, president of the Canadian Global Affairs Institute, said the rate of spending increase at the Department of National Defence right now is bigger than anything since the early 1950s.
He said the defence spending increases are “eight times more ambitious in the near term” than former prime minister Justin Trudeau’s “Our North, Strong and Free” defence policy. “It’s completely different than what we’re used to seeing.”
Mr. Perry said he’s puzzled why the Carney government is refusing to say how much closer the 2025 budget will get Canada toward the 3.5-per-cent NATO target. He said Canada’s allies are reading budget documents to keep track of its progress on military spending so “it’s strange to me why they don’t bother to break out the math on that.”
About 25 per cent of the new spending is a pay increase for Canadian Armed Forces − announced in June and retroactive to April − to help retain and recruit more people. This included a 20-per-cent increase for the lowest ranks, 13 per cent for non-commissioned members and junior officers, and 8 per cent for senior officers.
The budget also earmarks nearly $18-billion over five years for new equipment, including armoured vehicles, counterdrone and long-range-precision strike capabilities as well as domestic ammunition manufacturing.
It also allocates $6.6-billion over five years to expand Canada’s defence industry through a Defence Industrial Strategy to be unveiled in the months ahead. It would improve access to capital for companies, drive research and innovation, bolster domestic supply chains and boost stockpiles of critical minerals.
“Every company in the country should basically have a defence strategy,” Mr. Champagne told reporters.
The budget frames the defence dollars as preparing Canada for war. “As the world grows more volatile and dangerous, now more than ever, Canada must be ready and able to defend our territory, our people, and our values to secure our sovereignty and to protect and uphold our commitments to our allies,” the fiscal plan said. “This includes helping to counter Russian aggression and to uphold Ukraine’s sovereignty and territorial integrity to ensure security across the Euro-Atlantic region.”
The 2025 fiscal plan allocates another $10.9-billion over five years for upgrades to digital infrastructure at the Department of National Defence, Canadian Armed Forces and the Communications Security Establishment, the country’s electronic eavesdropping agency, “including those needed for modern warfare, such as cyber defence.”
The federal budget lacks any funding for 12 submarines, even though Prime Minister Mark Carney lowered himself into a South Korean model on a recent visit to Asia.Adrian Wyld/The Canadian Press
Missing from the budget is any funding to buy the 12 submarines Canada is seeking, which would cost up to $2-billion each. Prime Minister Mark Carney himself kicked the tires on a South Korean submarine last week while visiting the country. “Considering that the Prime Minister climbed into a submarine last week in South Korea, it’s kind of strange to see no money provided,” Mr. Perry said.
Ottawa is also allocating another $2.7-billion for three years to pay for Operation Reassurance − the Forces’ largest overseas mission − which supports deterrence measures on NATO’s eastern flank through a deployment in Latvia.
In June, Canada fulfilled its NATO alliance commitment to spend 2 per cent of gross domestic product on defence after Mr. Carney’s new government boosted military expenditures to more than $62-billion with an addition of $9-billion in funds.
That same month, however, Mr. Carney also pledged Canada would further hike defence spending to 5 per cent of GDP by 2035: a goal composed of two parts.
The first component would see Canada and other NATO countries boosting core military spending to 3.5 per cent of GDP by 2035.
The second NATO commitment is to spend 1.5 per cent of GDP on security- and defence-related infrastructure that would have a dual civilian and military purpose, such as bridges, ports and roads, as well as cybersecurity and measures to protect energy pipelines.
In Tuesday’s budget, the government said it is confident this second target will be met by “currently planned spending by federal, provincial, territorial, and municipal governments.”