Defence policy update falls short of NATO 2% spending target

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The Liberal government will increase defence spending, but the cash injection will still fall short of its NATO spending target and Ottawa has no timeline to reach the pledge, officials said while unveiling the country’s new defence policy.

Prime Minister Justin Trudeau released the policy alongside Defence Minister Bill Blair at CFB Trenton on Monday. Called Our North, Strong and Free: A Renewed Vision for Canada’s Defence, the road map lays out plans for the Armed Forces for the next 20 years, but only details the yearly spending for the first five years. It focuses on enhancing Arctic capabilities, a region that Mr. Trudeau described as NATO’s western and northern flank given the threats posed by Russia and China.

The military is beset by personnel shortfalls and procurement delays that have put its force readiness at risk and pushed back critical equipment upgrades by years. For example, new warships were first expected in this decade but delivery was pushed back to the early 2030s.

Over the next two decades, the government says its new policy will add $72.3-billion in net new spending. Of that, $8-billion will roll out in the next five years. That will increase Canada’s defence spending from the current government estimate of 1.33 per cent of gross domestic product to 1.76 per cent in 2029-30, according to the document. But that would still fall short of NATO’s 2-per-cent target.

The document does not specify how quickly the increase will happen and the government said it could not provide that information Monday. However, the vast majority of the spending is back-ended and only scheduled to roll out after the 2025 federal election.

The spending announcement comes after the forces were told in 2023 to cut $4.4-billion over the next five years.

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In 2014, Canada, along with all other NATO country members, committed to spend 2 per cent of GDP on defence. At the time Canada spent just 1.01 per cent. Many other countries also spent well below the target, but Russia’s war in Ukraine spurred most other NATO members to increase their spending and set timelines for meeting the alliance’s target.

Officials at a technical briefing said there is no fixed date for Canada to hit NATO’s spending target. They said the defence budget is expected to be about $30-billion this year and hit $49.5-billion by 2030. One official suggested that even if the government immediately raised spending to 2 per cent of GDP, the military would need time build up to that level.

The technical briefing was granted to reporters on the condition the officials not be identified.

The Prime Minister defended the gap between Canada’s promises and its actual plan at a news conference, saying that it will lead to a doubling in defence investment between 2016 and 2026.

“We’re not quite at where our targets are right now,” Mr. Trudeau said. “We know there is more to come over the coming years as Canada continues to step up in a more uncertain, and quite frankly, more dangerous world.”

However, whether the forces even have the ability to hit the new spending pledges was questioned by experts and academics. They noted the military regularly struggles to buy new equipment within promised timelines; didn’t execute on some parts of the 2017 defence policy; and that its capacity to implement the new plan has eroded since then because of a major staff shortage.

Despite making recruitment a top priority in the 2017 policy, the staff shortfall has worsened and sits at approximately 15,000. The gaps are so serious the Royal Canadian Navy released a video warning it may not be able to meet its “force posture and readiness commitments in 2024 and beyond.” It said the army and air force face similar challenges.

The new policy only pledges to close the personnel gap by 2032. Several retirements are also expected among the top brass, including Chief of Defence Staff General Wayne Eyre.

“An organization that’s got that big of a shortage of personnel is going to have trouble buying all this stuff,” said David Perry, president of the Canadian Global Affairs Institute.

“These are good ideas. It’s committing needed funding on lots of stuff that would make a big difference – once we actually buy it.”

Ultimately, the current plan leaves Canada offside with its closest allies, who are investing more heavily in defence, Mr. Perry said. How Canada is viewed internationally is hinted at by it being left out of a Monday statement on the AUKUS security pact that includes the United States, Australia and Britain, he said.

Mr. Trudeau on Monday said the government wants to join one part of the pact but, AUKUS members made no mention Monday of collaborating with Canada, and only named Japan for future co-operation. Mr. Blair’s office told The Globe and Mail the government is optimistic Canada will also be invited to collaborate.

In a statement to The Globe Monday, NATO Secretary-General Jens Stoltenberg said the new policy is a “step in the right direction,” but he noted already two-thirds of allies have met the 2-per-cent target and most of the remaining will hit it by 2030.

“I count on Canada to reach this target as soon as possible – both for its own security, and for the alliance’s,” he said.

The U.S. released a more positive statement, with ambassador to Canada David Cohen calling it “real progress” and a “down payment” on Canada’s NATO pledge.

Under the new policy, the government will buy new tactical helicopters but the purchase won’t be funded in the first five years. By the end of the two-decade plan, the helicopters will make up the largest portion of the new spending at $18.4-billion.

Two of the most significant spends on new capabilities over the next five years are $917-million for intelligence and cyber operations and $401-million for long-range missiles.

The government is also promising to spend more on the basics. In the next five years, it will spend $1.9-billion to maintain the current navy ships, $1.8-billion on ammunition supply and production, $1.4-billion on military equipment maintenance and $942-million on infrastructure.

The opposition Conservatives said the new plan falls short of what’s needed. Meanwhile, New Democrats criticized the government for back-loading the spending. For example, the policy provides no new money in the first two years to improve access to housing for personnel.