The Carney government's defence aspirations

What does Prime Minister Carney's 2% announcement tell us about his goals for defence?

Canada will be spending 2% of GDP on defence within the next fiscal year. Provided that the government can stay focused and the money is actually spent, this is good news and long overdue.

As announced by Prime Minister Carney on Monday, Canada’s defence expenditures are slated to reach $62.7 billion in 2025-2026, which will get us to the 2% target. The details surrounding how Canada is going from a $40 billion defence budget to $62.7 billion in 2025-2026 are a bit hazy at the moment, shall we say. As Steve Chase reports, an additional $9 billion is being injected into the DND/CAF budget, coupled with “defence-related spending in other departments of around $14-billion.” Additional information about the $9 billion for DND/CAF is available here. What exactly is included in that $14 billion remains difficult to parse, but it seems to be tied to the Canadian Coast Guard (annual budget and maybe new ships?) and the Communications Security Establishment.

Since these figures are somewhat wobbly, it may be more useful to look at what the announcement tells us about the government’s defence aspirations. I’ll highlight a few that give us a sense of the direction the Carney government is taking.

First, the new spending is addressing budgetary shortfalls in some ongoing projects. It’s about time. A number of existing projects were moving ahead without the funding needed to get the full capability the CAF requires. Topping up these budgets was a no-brainer, and it’s a bit shocking that we had to wait for a new Prime Minister to address them.

Second, there’s new money for recruitment and retention, and to augment the civilian defence workforce. The Prime Minister spoke about salary increases for the CAF, which I assume is part of the $2.6 billion allocated for recruitment and retention. The fact that more money is going to defence civilians is a promising sign, since there were concerns that a reduction in the public service would hit DND at a time when it needs far more people to reach the 2% target. This investment suggests that the Carney government will grow DND, notwithstanding efforts to trim the wider public service.

Thirdly, the National Procurement budget that funds repairs and maintenance is getting a top-up, too. This is excellent news. The National Procurement budget has been chronically underfunded, which has affected all sorts of fleets, infrastructures, and the CAF’s readiness. National Procurement usually gets far less attention than the larger capital portfolio, but it’s vitally important.

Fourthly, approximately $500 million is going toward ‘digital foundations’ for DND/CAF. I’m guessing this means a classified cloud for the armed forces and perhaps CSE. The amount allocated suggests seed funding for this initiative, rather than a full capability. The key question here is whether DND/CAF will be allowed to go with the most capable and interoperable classified cloud supplier, Amazon Web Services, or whether the Carney government will push for a Canadian solution. Maybe the government will insist on a mixed solution. It’s hard to say at the moment.

Fifth, there is new money for emerging technologies, with a focus on Canadian suppliers. This makes sense given Canada’s strengths in AI, quantum, and autonomous systems. To make sure that these emerging tech firms thrive and develop the best possible solutions for Canada, though, the government should also be thinking about providing initial capital for Canada’s founders and innovators. Since the announcement included funding for the Canadian defence industrial base, I’m hopeful that we’ll see a defence innovation investment fund come out of that. The fine folk over at One9 will have more to say about that soon.

Finally, there’s the biggest part of the announcement, politically speaking: $2 billion to diversify Canada’s defence partnerships and reduce our military dependence on the United States. In the weeks that followed the Canadian election, it looked like the Carney government had pulled a switcheroo: after running an ‘elbows up’ campaign, Canadian ministers were talking about how Canada and the US were stronger together, there were reports that Carney and Trump are cooking up a deal before the G7, and there was talk of Canada joining the American Golden Dome. Suffice to say, it looked like the elbows had come down and the knee was being bent. Well, the Prime Minister put those elbows right back up on Monday, noting that the United States is ‘monetizing its hegemony’ and reducing its collective security commitments. That’s the toughest language we’ve heard since the election. This $2 billion to diversify Canada’s defence partnerships suggests that the Carney government is serious about reducing the amount of American capability that the CAF acquires. (For my take on the civil-military tensions this is likely creating, see my recent Policy article.)

A caveat is in order on this issue, though. The announcement notes further that Canada will “continue to leverage partnerships with the US when it is in Canada’s best interest to do so.” This leaves open the door to Canada contributing to various American military endeavours, such as Golden Dome, and continuing to buy kit from the United States when it makes sense to do so.

Indeed, this is a good opportunity to comment on the whole discourse surrounding the future of the Canada-United States defence relationship. Both ardent defenders of the existing relationship and its strongest critics tend to present the question as an either/or proposition: Canada is either fully aligned with the United States or dramatically pivoting away from the Americans. This framing presents a false dichotomy. Canada can remain a good and close ally of the United States while diversifying its partnerships and building more sovereign capability. Were Canada to go from spending 75% of its capital expenditures on American capability to spending closer to 60%, it would be hard to argue that Canada is recklessly abandoning its American alliance. And it would be equally hard for the United States to complain about this reduction, given the President’s rhetoric that Americans don’t need Canada for anything. A measured shift away from American military technology is neither the end of the world nor the dawn of a new one. This is a question of degrees, not binaries.

To conclude, this announcement is a starting point. There were a lot of gaps and silences in the material provided, such as: Where do the submarines fit in? What new aircraft are we buying exactly? Is the defence procurement agency still a go? We should expect far more defence announcements in the months to come.