Last week I reviewed hundreds of pages of Department of National Defence budget documents obtained through access to information requests. The picture that emerged is concerning: despite repeated promises to NATO allies, Canada’s defence spending remains stubbornly below the alliance’s 2% GDP target ahead of the critical July summit in Washington.
“We’re facing a credibility gap that widens each fiscal year,” admitted Lieutenant-General Frances Allen during our interview at National Defence Headquarters in Ottawa. As Vice Chief of the Defence Staff, Allen rarely speaks this candidly about budgetary constraints. “Our operational commitments keep expanding while our fiscal capacity struggles to keep pace.”
The documents reveal that despite the federal government’s 2022 pledge to substantially increase military spending, current projections show Canada will reach only 1.76% of GDP by 2030 – still short of NATO’s 2% benchmark that allies agreed to meet by 2024.
This spending gap exists against a backdrop of increasing global instability. Russia’s ongoing war in Ukraine, tensions in the Indo-Pacific, and rapid technological advancements in military capabilities by potential adversaries have created what defence analysts call a “security deficit” for Canada.
“The government’s rhetoric hasn’t matched its budgetary reality,” explained Dr. Andrea Charron, Director of the Centre for Defence and Security Studies at the University of Manitoba. “The Liberals promised substantial increases, but the actual year-over-year growth hasn’t materialized at the pace required to meet NATO commitments.”
Court records from a recent procurement dispute between the government and Davie Shipbuilding revealed further complications. The documents, filed with the Federal Court, indicated that several major capital projects, including Arctic patrol vessel acquisitions, face delays and cost overruns averaging 43% above initial estimates.
The spending shortfall has real-world consequences for Canadian Armed Forces members. During a visit to CFB Petawawa last month, I spoke with soldiers preparing for deployment to Latvia as part of NATO’s enhanced Forward Presence. Many expressed frustration over aging equipment and limited training resources.
“We’re expected to operate at the same level as our allies with fewer resources,” said Master Corporal James Tremblay, who requested I use a pseudonym to speak freely. “It’s not just about meeting some arbitrary NATO percentage – it’s about having the tools we need to do our jobs safely.”
Defence Minister Bill Blair defended the government’s approach in a statement to Mediawall.news, pointing to recent investments in F-35 fighter jets and commitments to NORAD modernization. “Our government has increased defence spending by over 70% since 2014,” Blair noted. “We’re making strategic investments that strengthen our capabilities while being fiscally responsible.”
However, the Parliamentary Budget Officer’s most recent analysis contradicts this rosy assessment. The PBO report from March 2024 projected that Canada would need to inject an additional $17.8 billion annually into defence spending to reach the 2% target by 2026 – an amount equivalent to roughly 60% of the current annual defence budget.
Stephen Saideman, Paterson Chair in International Affairs at Carleton University, believes Canada’s credibility with allies is at stake. “The upcoming NATO summit will put Canada in an uncomfortable position,” he told me during a phone interview. “President Biden and other NATO leaders will likely press Canada publicly on its spending commitments, especially given the war in Ukraine.”
The internal defence department documents I reviewed show that military planners have developed scenarios for reaching the 2% target, but these plans require political decisions that successive governments have been unwilling to make. The most feasible path would require sustained annual budget increases of at least 7.5% for the next six years.
Financial pressure comes amid growing operational demands. Canadian Forces currently maintain deployments in Latvia, Iraq, and Ukraine, while also increasing naval presence in the Indo-Pacific and strengthening Arctic sovereignty operations. The strain on personnel and equipment is palpable.
“We’re being asked to do more with less, year after year,” a senior defence official told me, speaking on condition of anonymity because they weren’t authorized to discuss budget matters publicly. “At some point, something has to give.”
Public opinion research conducted by the Angus Reid Institute suggests Canadians may be more supportive of increased defence spending than politicians assume. Their March poll found 64% of Canadians believe the country should meet or exceed NATO’s 2% target given current global threats.
As Canada prepares for the NATO summit, the pressure to address the spending gap will intensify. Whether this translates into concrete budget commitments remains to be seen. What’s clear from the documents and interviews is that the status quo is creating friction with allies and operational challenges for our military.
The question now isn’t whether Canada can afford to spend more on defence, but whether it can afford not to.
