In many respects, Tuesday’s federal budget is expected to flip a long-established script for the Canadian military and the Department of National Defence.
Instead of being the institutional embodiment of the Charles Dickens character Oliver Twist — the orphan who asked for more — they are likely going to be in the uncomfortable position of having so much cash it will be hard to keep up.
That will stand in contrast to other federal departments that have been told to tighten their belts to help pay for what Prime Minister Mark Carney has termed “generational investments” in not only the military but federal infrastructure.
Those investments will take place assuming the Liberal government can muster enough votes among opposition parties to see the measures pass.
But that is a debate that will unfold over the next month.
The pressure for Canada to spend more on defence — coming from allies and even the general public — is enormous and would be there regardless of who is in charge.
Canada’s $8.7B defence spend: Who’s getting in line
It is one the key demands of the Trump administration and an expectation of NATO allies, who’ve agreed collectively to spend five per cent of the gross domestic product on defence (3.5 per cent directly on the military and 1.5 per cent in defence-related infrastructure).
And it comes in the face of a hot war in Ukraine and the a simmering dispute in the Middle East.
“I think what we’ll be doing in the budget is laying track to meet the five per cent target by 2035,” Defence Minister David McGuinty said recently, after touring the Hanwha Ocean Ltd. shipyard in Geoje, South Korea, which is bidding on Canada’s multi-billion dollar submarine program.
“I think we’re very clear about this commitment, not just for ourselves but all of our NATO partners. We are committed to achieving that target,” he said.
The submarine replacement program is a perfect snapshot of where the Canadian military sits at this point in time and the kind of challenges it faces.
Although, it has dominated the headlines recently, it is one of those fiscal orphans within the defence department because it has no money attached to it at the moment.
“I’m not sure when the government will make a decision about the full funding of the submarine program,” said Vice-Admiral Angus Topshee, also after touring the same shipyard and spending a day at sea aboard one of the South Korean navy’s KSS-III submarines, the kind they want to sell to Canada.
“At this point, we’re still working to refine the costs and make sure that we understand what this program will cost and I would expect that this does fit in within the government’s commitment to get to the NATO target of five per cent.”
Defence analyst Dave Perry said the prime minister has spent a lot of time talking about purchasing new submarines. “He will have, by the time the budget is published, have visited the two potential suppliers, but the submarine project does not yet have a project budget,” Perry said.
“So I’m going to be looking for — hopefully — a measure in the budget to provide the funding to actually acquire the submarines that the prime minister has been shopping around for.”
Beyond the submarines, he added, there are a number of important equipment projects and initiatives that require fuinding — going back as far as the 2017 defence policy.
The Liberals, under former prime minister Justin Trudeau, often made pledges to revitalize the Canadian military but never attached money to them.
The Parliamentary Budget Office recently quantified the underspending. Between 2017 and 2023, the defence department efforts to buy new equipment fell short by $18.3 billon.
Given the prime minister has attached political importance to rearmament, Perry said it will be up to the government to not only allocate money in the fiscal framework, the long-term federal budget, but “actually put it someplace where somebody can actually point to a section in the budget and see the actual financial commitment that is being made, not just word saying we will get there, but actually presenting a forecast of how spending will increase over time.”
Similarly, Perry said, he’s expecting the budget will spell out how the federal goverment intends to kickstart the country’s defence industrial base.
During last spring’s federal election, Carney emphasized how building up the defence industry was key to growing the economy and creating jobs. He signed a framework agreement with the European Union in June that will eventually allow Canadian companies smoother access to the European market.
In South Korea recently, a defence co-operation agreement was signed that wiill help pry open access to that market.
Several experts have said getting the industry fully on its feet will require federal investment. Getting the National Shipbuilding Strategy on a even keel saw hundreds of millions of dollars poured into the first two shipyards.
More recently, ammunition-makers have said at least $800 million will be needed to open new production lines.
“Given how often the prime minister has talked about this, I think it would make a lot of sense for them to have something in the budget that would put more flesh around what they’re specifically looking to do in terms of those investments in capacity and the wider defence industrial strategy,” Perry said.
The one limitation on that aspect is Carney’s government has yet to deliver its defence industrial strategy. That’s not expected until later this year at the earliest.
“Even if they do not yet have the full strategy finalized,” Perry said. “The budget would be a pretty logical place to flesh that out a little bit.”
