In many ways, Tuesday's federal budget is expected to change the long-standing scenario for the Canadian Forces and the Department of National Defence.
Instead of becoming the institutional embodiment of Charles Dickens' character Oliver Twist – the orphan who asked for more – they will likely find themselves in the awkward position of having so much money that it will be difficult to support them.
That will stand in contrast to other federal departments that have been ordered to tighten their belts to help pay for what Prime Minister Mark Carney has called a “generational investment” not just in the military but in federal infrastructure.
These investments will be made subject to the Liberal government being able to muster enough votes among opposition parties to get the measures passed.
But that's a debate that will unfold over the next month.
The pressure on Canada to spend more on defense—from allies and even from the general public—is enormous and will exist no matter who is in power.
After decades of slow progress, Canada is suddenly pouring billions into defense—and fast. For The National, CBC News chief correspondent Adrienne Arsenault looks at how the industry is evolving and meets the companies willing to showcase what's selling.
This is one of the key demands of the Trump administration and the expectation of NATO allies, who have collectively agreed to spend five percent of gross domestic product on defense (3.5 percent directly on the military and 1.5 percent on defense infrastructure).
And it happens in front of hot the war in Ukraine and the simmering dispute in the Middle East.
“I think what we will do in the budget is pave the way for achieving the five percent target by 2035,” Defense Secretary David McGuinty said recently after visiting the Hanwha Ocean Ltd. shipyard. in Geoje, South Korea, which is bidding for Canada's multibillion-dollar submarine program.
“I think we are very clear about this commitment, not only for ourselves, but for all our NATO partners. We are committed to achieving this goal,” he said.
Submarine replacement program
The submarine replacement program is a perfect snapshot of where the Canadian Forces is today and the challenges it faces.
Although he has dominated the headlines lately, he is one of those financial orphans in the Department of Defense because there is no money tied to him at the moment.
“I'm not sure when the government will decide to fully fund the submarine program,” Vice Adm. Angus Topshey said, also after visiting the same shipyard and spending a day at sea aboard one of the South Korean fleet's KSS-III submarines, which it wants to sell to Canada.
“At the moment we are still working on clarifying the costs and making sure we understand how much this program will cost, and I expect that it does fit into the government's commitment to achieving the NATO five percent target.”
Defense analyst Dave Perry said the Prime Minister had spent a lot of time talking about buying new submarines. “By the time the budget is published, he will have visited two potential suppliers, but the submarine project does not yet have a budget,” Perry said.
“So I'm going to find – hopefully – a measure in the Budget to provide funding to actually acquire the submarines that the Prime Minister has been looking for.”
Beyond submarines, he added, there are a number of important projects and equipment initiatives that have required funding since the 2017 defense policy.
We are looking for “real financial obligations”
The Liberals, led by former Prime Minister Justin Trudeau, often promised to reinvigorate Canada's military but never put money behind it.
The Parliamentary Budget Office recently calculated underspending. Between 2017 and 2023, the Department of Defense's efforts to procure new equipment fell short by $18.3 billion.
Given the prime minister's political importance to rearmament, Perry said the government would not only allocate money as part of fiscal policy, the long-term federal budget, but “actually put it in a place where someone can actually point to a section of the budget and see the actual financial commitment that is being made, not just saying we'll get there, but actually presenting a forecast of how spending will increase over time.”
Likewise, Perry said he expects the budget to outline how the federal government intends to jump-start the nation's defense industrial base.
During the federal election last spring, Carney emphasized that growing the defense industry was key to economic growth and job creation. In June, it signed a framework agreement with the European Union that will eventually allow Canadian companies more seamless access to the European market.
South Korea recently signed a defense cooperation agreement that will help open up access to this market.
Some experts said federal investment will be needed to get the industry fully back on its feet. To ensure smooth implementation of the National Shipbuilding Strategy, hundreds of millions of dollars were invested in the first two shipyards.
Just recently, ammunition manufacturers said it would cost at least $800 million to open new production lines.
“Given how often the prime minister has talked about this, I think it would be very sensible for them to have something in the budget that would give more specificity to what they specifically want to do in terms of capacity investment and the broader defense industrial strategy,” Perry said.
The only limitation in this aspect is that the Carney government has yet to implement its defense industrial strategy. This is not expected to happen until the end of this year.
“Even if they haven’t developed a full strategy yet,” Perry said. “The budget would be a logical place to flesh this out a little bit.”
