Canada’s Minister of National Defence reassured lawmakers on Thursday that the federal government is progressing well towards reaching NATO’s longstanding, politically sensitive expenditure goal by next spring. David McGuinty’s confidence in the nation achieving the two percent of GDP military spending benchmark was met with doubt from the Opposition Conservatives, who highlighted the Department of National Defence’s historical challenges in utilizing its annual budget fully.
Apart from the minister’s statements, a concrete step towards reaching the target emerged publicly. The U.S. Defense Security Cooperation Agency approved a $3.6 billion munitions sale to Canada on Thursday. This planned acquisition includes numerous bombs, including smart munitions, deployable by CF-18s and potentially F-35s or F-39 Gripens.
This purchase will bolster the Royal Canadian Air Force’s inventory of aerial munitions and underscores Canada’s reliance on the United States for weaponry. Last spring, Prime Minister Mark Carney pledged that Canada would meet the former NATO target by the fiscal year’s end and injected an additional $9.3 billion into the defense budget. This commitment coincided with the Western military alliance’s decision to raise the threshold to five percent of GDP, with 3.5 percent directly allocated to the military and 1.5 percent to defense infrastructure.
Canada’s total planned defense expenditure for the current fiscal year stands at approximately $63 billion, with the exact figure for the following year not specified in the latest federal budget. The current fiscal year’s increased investment is described as fundamental and aims to replenish weapon and munition stocks depleted due to years of insufficient funding and contributions to Ukraine.
The issue of whether the department can effectively utilize the additional funds has been a concern for McGuinty. In response to Conservative defense critic James Bezan, McGuinty stated, “We’re good. We’re on this and monitoring it closely, and you’re right to raise it. And we’re ensuring that we will deliver on time by March 31.”
A significant portion of the additional funding for this year was allocated to higher salaries for military personnel. Between 2020 and 2023, National Defence struggled to spend around $5.37 billion, some of which was rescheduled for future years and some returned to the federal treasury.
Capital spending, earmarked for new equipment, has been particularly challenging. A recent report by the Parliamentary Budget Office revealed that $18.7 billion in equipment spending outlined in the Liberal government’s 2017 defense policy did not materialize.
Meeting the two percent target holds political significance for Canada. The country has faced persistent pressure from allies, notably the United States, to achieve the benchmark set at the 2014 NATO summit in Wales.