Think Tank: It’s time for Canada to get serious about defence spending

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Prime Minister Mark Carney’s first major test on the world stage came this week, when he met U.S. President Donald Trump in Washington. While the discussions covered a range of bilateral issues—from trade to energy cooperation—defence spending was also a focal point.

The United States has long pressed Canada to increase its military investment. The meeting brought renewed scrutiny of Ottawa’s commitment to its NATO obligations, with President Trump saying that he was pleased that Canada was beginning to spend more on defence.

“Canada is stepping up the military participation [in NATO] because Mark knew they were low, and now they’re stepping it up, and that’s a very important thing” said Trump in the Oval Office..

For Carney, the challenge is substantial. Canada’s pledge to reach NATO’s benchmark of spending 2 percent of GDP on defence has loomed over successive governments for years, but progress has been slow and uneven. Despite periodic promises of renewed focus, Canada remains well short of its NATO targets. Meeting them now, amid domestic fiscal pressures and deep-seated structural hurdles, presents a formidable policy and political hurdle.

Liberal campaign commitments on defence will be tested early

Carney’s Liberals acknowledged defence spending challenges during the election campaign and pledged a renewed focus in their platform. Their promises included developing a clear roadmap to meet the NATO 2 percent target within a decade, modernizing the Canadian Armed Forces, strengthening Arctic security, and improving support for military personnel. There were also commitments to overhaul the procurement process to ensure faster delivery of equipment and to invest in new technologies and cyber capabilities.

However, the gap between promise and execution looms large. Successive governments have made similar pledges, only to see them stall amid political, fiscal, and bureaucratic realities. Carney’s challenge is to break that cycle, and the first thing to do is to take stock of where Canada stands.

A persistent gap between rhetoric and reality

Canada’s defence spending problem is by no means new. Since the 2014 Wales Summit Declaration, when NATO members pledged to spend 2 percent of their GDP on defence while also ensuring that 20 percent of their defence budgets were spent on major new equipment purchases, Canada has never met either target.

In 2024, Canada is estimated to have spent only 1.4 percent of its GDP on defence. While this is up from the 1 percent spent in 2014, it is still well below commitments.

This places Canada below key allies such as Germany, which recently met the 2 percent target, and far behind countries like Poland, which are investing at even higher levels in response to Russia’s invasion of Ukraine. Overall, 23 out of 31 alliance members are expected to meet their spending commitments in 2024, up from 11 in 2023. This leaves Canada with the distinction of being one of only eight remaining members to not meet the 2 percent target.

To make matters worse, Canada is one of only two countries, along with Belgium, to neither meet its 2 percent overall defence spending target nor the 20 percent equipment spending target.

The consequences of this chronic underinvestment are increasingly visible. The Canadian Armed Forces face critical shortages in equipment, aging infrastructure, and recruitment and retention challenges that have left the military struggling to maintain operational readiness. These problems are not merely about dollars and cents—they reflect deeper structural issues within Canada’s defence establishment, including procurement delays and a cumbersome bureaucracy that has hindered timely delivery of new capabilities.

Fiscal constraints and public ambivalence

Adding to the difficulty is the current fiscal context. After years of substantial spending on social programs and pandemic response measures, debt interest payments are rising, and Ottawa is under pressure to restore fiscal balance. While defence spending is widely viewed as essential to Canada’s global standing and security, allocating tens of billions of additional dollars over the next several years could further strain federal finances.

Public opinion further complicates the picture. Canadians have traditionally expressed limited enthusiasm for large-scale defence spending increases. While global security concerns—including Russia’s war in Ukraine and provocations from south of the border—have raised awareness of defence issues, polling still suggests that most Canadians place a higher priority on domestic issues such as health care, housing, and affordability. Convincing voters that ramping up military spending is necessary given the new international order will be part of Carney’s early challenges.

A dysfunctional procurement system

Even if political and fiscal hurdles can be overcome, there is then the matter of execution. Canada’s defence procurement system has a well-documented history of delays, cost overruns, and inefficiencies. Major projects—such as the replacement of our aging fighter jet fleet—have been mired in delays that have stretched on for years, if not decades. Moreover, a significant portion of increases in defence spending will need to be directed not at expanding capability but at catching up on long overdue maintenance and repairs.

This dysfunction raises the stakes for any new investments. It is not enough to announce funding boosts; Canada must also reform its procurement processes to ensure that funds translate into real improvements in capability and readiness. Without such reforms, even ambitious spending plans risk failing to deliver meaningful change on the ground.

An uphill battle 

The pressure from allies, particularly the United States, is unlikely to ease. Trump made burden-sharing a top priority during his first term, pressuring NATO allies to meet their commitments and signalling frustration with those who lagged behind. That dynamic appears set to continue. Canada’s reputation within NATO has taken a hit from its persistent shortfalls, and there is growing impatience among partners who see Canada as benefiting from collective security, while not contributing its fair share.

Beyond alliance politics, the global security environment underscores the need for Canada to take its defence responsibilities seriously. The resurgence of great power competition, rising geopolitical instability, and emerging security challenges in the Arctic and Indo-Pacific mean that Canada cannot afford to remain complacent. Security and trade are also increasingly intertwined—a package deal during negotiations with the new administration. Failure to take defence seriously could risk Canada’s trade networks.

Strategic investments are necessary to meet alliance obligations and safeguard Canada’s national interests in an increasingly uncertain world.

For Carney, the task ahead is clear but difficult. Meeting Canada’s defence policy goals will require a multi-faceted approach: securing public and parliamentary support for higher spending, reforming procurement and defence administration, and articulating a compelling vision of Canada’s role in global security.

There is, perhaps, a window of opportunity. Security concerns are rising on the global agenda, but success will depend on moving beyond the familiar Canadian cycle of promises and delays.