Last evening, the House of Commons passed Budget 2025. The budget marks the most significant investment in the Canadian Armed Forces (CAF) and national defence in decades. This is a generational push to rebuild, rearm, and modernize our military, starting with personnel, infrastructure, and procurement.
The budget is an ambitious attempt to reposition Canada’s defence posture to better confront the complex and demanding threat landscape—both at home and abroad. In the face of increasingly disruptive and assertive global state actors, a deteriorating security and climate environment in the Arctic, and growing domestic pressures on the CAF to respond to natural disasters and emergencies, the injection of funding is both welcomed and long overdue.
At the centre of this is the federal government’s commitment to meet NATO’s defence spending targets—reaching 2% of GDP by the end of this fiscal year and a planned gradual increase to 5% by 2035. Through a combination of military and security-related investments, Canada will see $81.8 billion in defence spending on a cash basis over the next five fiscal years.
Notably, the budget places a large emphasis on people by committing approximately $20 billion to pay increases and improved benefits for CAF members. These increases come in tandem to the $18 billion earmarked to repair and sustain equipment and infrastructure, modernize our digital infrastructure, and adopt advanced capabilities across all domains.
The upcoming Defence Industrial Strategy (DIS) will be tailored around fostering the development of a robust defence industrial base, investing in sovereign capabilities, and supporting the development of partnerships with likeminded nations to ensure the CAF is prepared for any environment. Key to making this a reality will be the newly established Defence Investment Agency (DIA), designed to streamline and expedite major multi-year procurement projects.
While the budget frames defence spending as a driver for economic growth, several details fundamental to implementation remain unanswered. Namely: how will the new DIS and DIA avoid the pitfalls that have long hindered previous initiatives; how will responsibilities be divided across federal departments; and how will these substantial investments be deployed quickly without sacrificing rigorous oversight or the responsible stewardship of public funds?
Without clearly defined fiscal horizons or credible GDP growth forecasts, long-term procurement projects with sustained costs, such as the acquisition of submarines, fighter jets, or naval ships, cannot be properly accounted for. Furthermore, the uptick in spending will test Canada’s industrial capacity, labour availability, and environmental commitments. Nonetheless, it presents a generational opportunity for Canada to invest strategically in the domestic industrial base, while simultaneously engaging more effectively with allies and international partners who share Canada’s interests.
Looking ahead, the success of Budget 2025 will depend both on the government’s ability to execute its plan and on industry’s capacity to scale and deliver on demand. The forthcoming DIS will likely clarify some missing parts, including priority sectors, timelines, industrial partnerships, and the general operationalization of the DIA. It will need to define what “buy Canadian” means in practice and establish clear metrics for success in a rapidly evolving defence ecosystem where time is of the essence.
As Canada moves forward with this bold plan, patience, agility, and a willingness to take risk and innovate will be critical to its success. But most importantly, the government must continue to effectively make the case to Canadians that long-term, sustained investments in defence are not only vital for nation-building but are essential to safeguarding our sovereignty and preserving our economy.
