Canada’s Defence spending plan leaves questions about future commitments

NATO members agreed in The Hague last year to increase defense spending to five percent of annual GDP by 2035. Canada aims to reach four percent by 2030, with core defense spending – encompassing expenses like personnel and equipment – projected to reach 3.5 percent by 2035. Currently, core defense spending is slated to be 2.6 percent of GDP by 2030, equating to approximately $99 billion.

Finance Minister François-Philippe Champagne defended the government’s approach, stating Canada is providing more transparency than other G7 nations. “In terms of spending on defence … you’ll see more transparency than most G7 countries,” he said. Prime Minister Mark Carney explained that extending projections further would be impractical due to the rapid pace of change in modern warfare.

Parliamentary Budget Officer Annette Ryan estimates that achieving the 3.5 percent target in 2035 would require core defense spending to reach $163.6 billion, a significant increase from the $43.9 billion spent in 2024. This gap represents an additional $70 billion annually.

The budget allocates $25 million to support the families of victims and communities affected by a fire at CFB Wainwright last month, which tragically claimed the lives of four soldiers and injured numerous others. An additional $3 million is earmarked for the Wainwright Military Family Resource Centre.

While the government has initiated several defense spending programs, the budget only allocates $755 million in new defense funding over the next five years. Many of the larger spending commitments are already accounted for or will be sourced from existing departmental resources. These include $7.6 billion for Canada’s military deployment in Latvia, which will see troop numbers increase to 2,600 and extend the mission to 2031, $2.3 billion for the Defence Drone Initiative, and $61.9 million to potentially participate in the European Union’s Ukraine Support Loan program.

Canada is currently negotiating major defense procurement contracts, including the potential purchase of up to 12 submarines from TKMS, advanced radar planes from Saab, and a mixed fighter jet fleet, though no funding has been specifically allocated for these initiatives.