Budget 2024 reveals that Justin Trudeau’s Liberal government is serious about increasing spending on defence. This is good news. The bad news is that almost all of our allies are spending more.
Up until Tuesday’s budget, Liberal promises on defence spending contained a large dose of speculation. Last week’s defence policy review, for example, projected spending over 20 years, which is largely meaningless.
Future governments will decide how much they want to spend on defence 10 or 20 years from now. What matters is the here-and-now.
As it turns out, in the here-and-now of Budget 2024, defence spending on a cash basis will rise from $33.8-billion in this fiscal year (2024-25) to $44.2-billion next year (2025-26). That’s a $10.4-billion increase in one year. This includes both commitments from the defence policy review and previous announcements.
Spending reaches $49.5-billion in 2029-30, which will fulfill the Trudeau government’s commitment to bring defence spending to 1.76 per cent of GDP by that date.
There are caveats. First, part of that increased spending will be eaten up by inflation, which currently hovers around 3 per cent.
Second, the federal government has a bad habit of booking money to spend on defence equipment, but then failing to spend it, because of the department’s cumbersome procurement process. Recruiting new members for the Forces – think of it as person procurement – is also a chronic problem. Will the department actually spend the money it is being given? As well, internal cost-cutting exercises could eat into budgeted increases.
Third, there will be a federal election in October of next year, if not before. Polls suggest that Conservative Leader Pierre Poilievre may be the one making longer-term decisions on defence spending.
Finally, and by far the most importantly, other NATO allies are ramping up spending on defence far more quickly. Eighteen of NATO’s 32 members are now keeping the promise that all members made in 2014 to spend no less than 2 per cent of GDP on defence. Others will reach that goal in the next few years.
Russia’s wanton invasion of Ukraine in 2022 prompted some of the most important members of the Atlantic alliance – especially France and Germany – to move swiftly toward 2 per cent.
Chinese and North Korean belligerence has our Pacific allies doing the same. Japan’s defence spending is at record levels, with further substantial increases on the books, while Australia has committed to acquiring a fleet of nuclear submarines.
So while reaching not-quite-1.8 per cent of GDP on defence may seem impressive, compared to the current level of 1.33 per cent, this pales in comparison to what others are doing.
When Defence Minister Bill Blair released the new defence policy last week, U.S. Ambassador to Canada David Cohen described the commitments as “a substantial down payment” on Canada’s alliance obligations. NATO Secretary-General Jens Stoltenberg called it “a step in the right direction.”
Canada’s allies will continue to regard this country as a laggard in defence spending. We just won’t be lagging quite as badly as before.
The budget doesn’t offer line-item commitments on where exactly the money is to go, but it does highlight the two most important priorities. The first priority is the North American Aerospace Defence Command. Canada and the United States have embarked on a generational upgrade of NORAD’s air and space defences.
But while the Liberal government has promised to commit $38-billion over 20 years to the upgrade, the Americans have been pointedly asking when Canada is going to start writing cheques. Budget 2024 appears to suggest Canada’s NORAD money will soon start to flow.
The second commitment is to upgrade Canada’s battle group in Latvia to brigade level, with 2,200 well-equipped troops ready to deter Russian aggression in Europe. Most defence analysts would agree these are the right priorities.
Both Conservative and Liberal federal governments have been overpromising and underdelivering on defence for years.
But if the current Liberal government and whatever comes after it meet the commitments contained in this budget, we will finally be starting down the road to rebuilding Canada’s military.
Even if, compared to most others, it still isn’t nearly enough.
John Ibbitson