Budget Statement on Defense – Will Any of this Happen?

As the world grows more volatile and dangerous, now more than ever, Canada must be ready and able to defend our territory, our people, and our values to secure our sovereignty and to protect and uphold our commitments to our Allies. This includes helping to counter Russian aggression and to uphold Ukraine’s sovereignty and territorial integrity to ensure security across the Euro-Atlantic region.

In this period of great power competition and geopolitical uncertainty, Canadian leadership in the world will be defined not just by the strength of our values, but also by the value of our strength. A more confident, united, and stronger Canada can help transform this age of disorder into an era of prosperity for all Canadians.

This starts with rebuilding, rearming, and reinvesting in the Canadian Armed Forces. The government’s generational investments in our Canadian Armed Forces will provide our military with the necessary tools and equipment to protect our sovereignty and bolster our security. This increase in investment also creates opportunities for the Canadian defence industry. We will reform defence procurement to make it easier and faster to buy Canadian-made equipment—supporting our domestic defence industry and creating high-paying careers.

The Canadian Armed Forces are currently active in 37 operations around the world. The women and men of our military contribute to promoting global peace and security, while ensuring Canada’s place in the world. Canadian military operations range from maintaining international security and stability in the Middle East (Operation AMARNA), to leading a Multinational Brigade as part of NATO’s assurance and deterrence measures in Central and Eastern Europe and the Baltics (Operation REASSURANCE), to whole-of-government sovereignty patrols and security exercises in Canada’s Arctic (Operation NANOOK).

To address years of inadequate equipment for the Canadian Armed Forces and to strengthen Canada’s defence industry, Canada’s new government is accelerating investments to meet the North Atlantic Treaty Organization’s (NATO) 2 per cent of gross domestic product (GDP) target this year and put Canada on a pathway to meet the NATO Defence Investment Pledge of investing 5 per cent of GDP in defence by 2035.

As part of this pledge, Canada will invest 3.5 per cent of GDP by 2035 in core military needs such as supporting the Canadian Armed Forces, modernising our military equipment and technology, and building up our defence industries. An additional 1.5 per cent of GDP will also be dedicated to defence and security-related investments made by all levels of Canadian government, such as telecommunications and emergency preparedness systems which serve national defence and national security purposes. The government expects that currently planned spending by federal, provincial, territorial, and municipal governments will meet this 1.5 per cent commitment.

Through these investments, we are giving our Canadian Armed Forces the tools they need to defend every square foot of our sovereign territory, from the seafloor to the Arctic to cities to cyberspace, and to protect Canadians from present and emerging threats.

To protect our communities, Canada’s new government is also cracking down on illegal drugs and gun trafficking, hiring 1,000 new Royal Canadian Mounted Police (RCMP) personnel and 1,000 new Canada Border Services Agency (CBSA) officers, and making bail and sentencing laws stricter. In September, the government introduced new legislation to address the horrifying rise in hate, especially in Antisemitism and Islamophobia, and to protect religious and cultural buildings and spaces. Our government is fighting hate so that together, we can build a country where Canadians of all faiths can live their lives openly, freely, and safely. This is Canada, and in Canada, you should be able to wake up, get in your car, drive to work, or your place of worship, come home, and sleep soundly at night. Canada’s government is committed to making that promise a reality.

4.1 Defending Our Sovereignty

Canada must be prepared to defend our people, to secure our sovereignty, and to protect our Allies. Budget 2025 lays out the government’s plan to secure Canada, fulfill our responsibility to shared security with our Allies, build a world-class defence industrial base, and establish a new Defence Investment Agency that will accelerate the procurement process.

Rebuilding, Rearming, and Reinvesting in the Canadian Armed Forces

Canadians are proud of our Armed Forces and their unwavering dedication to protect us and our sovereignty. They keep people and communities safe through major disasters. They protect our sovereignty and respond to threats in our Arctic. They contribute to NATO’s deterrence and collective security efforts around the world. Our Canadian Armed Forces are among the best in the world, and they deserve the capabilities necessary to succeed in an increasingly challenging threat environment.

In 2013, Canada’s defence spending fell to less than 1 per cent of our GDP. It has since more than doubled in absolute terms, but more is needed. The brave members of our Canadian Armed Forces who are protecting our sovereignty do not have all the resources they need for a riskier world. Our military infrastructure and equipment need to be upgraded and updated, our defence capabilities need to be rebuilt and reasserted, and we need to work with partners to further research, investment, and procurement.

Canada’s new government is providing our military with the tools it needs to meet the modern threat environment by rebuilding, rearming, and reinvesting in the Canadian Armed Forces.

• Budget 2025 proposes to provide $81.8 billion over five years on a cash basis, starting in 2025-26, to rebuild, rearm, and reinvest in the Canadian Armed Forces (CAF). This includes over $9 billion in 2025-26 that was announced by the Prime Minister in June 2025. Key investments include:

  • $20.4 billion over five years, to recruit and retain a strong fighting force, including generational pay raises for the CAF, and support CAF health care.
  • $19.0 billion over five years to repair and sustain CAF capabilities and invest in defence infrastructure, including expanding ammunition and training infrastructure.
  • $10.9 billion over five years for upgrades to Department of National Defence, CAF, and Communications Security Establishment digital infrastructure, including those needed for modern warfare, such as cyber defence.
  • $17.9 billion over five years to expand Canada’s military capabilities, including investments in additional logistics utility, light utility, and armoured vehicles, counter-drone and long-range precision strike capabilities, and domestic ammunition production, among other investments.
  • $6.6 billion over five years, starting in 2025-26, to strengthen Canada’s defence industry through a Defence Industrial Strategy. As the Strategy is implemented, starting with initial investments announced in Budget 2025, we will develop our defence industrial base so that more of our military capabilities are procured from Canadian supply chains. (See below for additional details).
  • $6.2 billion over five years to expand Canada’s defence partnerships, including expanded military assistance to Ukraine and increased military training and international policy programming.
  • $805 million over five years to the Canadian Coast Guard, the Canadian Security Intelligence Service, and Public Services and Procurement Canada for complementary initiatives to support Canada’s defence capabilities.

Launching the Defence Industrial Strategy

Canada’s new government is moving to take immediate and decisive action to rebuild Canada’s defence capacity, rearm the Canadian Armed Forces, and invest in the Canadian defence industry. This generational investment in our defence and security creates enormous opportunities for Canadian businesses.

The defence sector in Canada accounts for over 81,200 direct and indirect jobs. Past defence projects have generated high-paying jobs in local communities. The opening of the new B Jetty in CFB Esquimalt in British Columbia created close to 1,300 jobs during its construction. The Future Aircrew Training program, an $11.2 billion investment in training the next generation of Canadian aviators, has the potential to create or maintain 3,400 jobs annually across Canada. Our River-class Destroyer project is expected to create or maintain over 5,000 jobs over the next 15 years, many of which will be in Halifax, Nova Scotia.

As we invest to build Canada’s defence industrial base, our renewed commitment to defence will create many more fulfilling, high-paying careers for Canadian workers. Business opportunities will be across the supply chain: from the production of raw materials, including steel and aluminum, to the truckers and rail workers who ensure their transit, to those who transform these materials into equipment, weapons, ammunition, and vehicles. It will also drive innovation in technology sectors, including artificial intelligence, quantum, and cyber.

To that end, the government is launching a new Defence Industrial Strategy. This strategy will ensure Canada’s defence investments are now guided by a whole-of-government approach to building sovereign defence capacity—creating high-paying careers, opportunities for businesses, and sourcing Canadian resources in the process.

Initial Investments Under the Defence Industrial Strategy:

Of the $6.6 billion to strengthen Canada’s defence industry noted above, the government is already allocating $4.6 billion over five years on a cash basis, starting in 2025-26, for initial investments under the forthcoming Defence Industrial Strategy to improve access to capital, drive research and innovation, bolster domestic supply chains, and grow critical resource stockpiles. The government will release the Defence Industrial Strategy in the coming months. Key initial investments include:

• $68.2 million over three years, starting in 2025-26, to the Department of National Defence (DND), Innovation, Science and Economic Development Canada (ISED), the National Research Council (NRC), and the Communications Security Establishment to establish the Bureau of Research, Engineering and Advanced Leadership in Innovation and Science (BOREALIS).
• $1.0 billion in 2025-26 to create a new Defence and Security Business Mobilization Program at the Business Development Bank of Canada to provide loans, venture capital, and advisory services to help small-and medium-sized businesses contribute to Canada’s defence and security capabilities.
• $656.9 million over five years, starting 2025-26, to ISED to develop and commercialise dual civilian-military technologies in a range of industries, including aerospace, automotive, marine, cybersecurity, artificial intelligence, biodefence, and life sciences.
• $334.3 million over five years, starting in 2025-26, to ISED, NRC and the National Science and Engineering Research Council for a suite of measures to help anchor quantum technology companies in Canada and provide pathways to technology adoption in defence-related applications and industries.
• $443.0 million over five years, starting in 2025-26, to Natural Resources Canada and ISED to support the development of innovative critical minerals processing technologies, support joint investments with Allies in Canadian critical minerals projects, and develop a critical minerals stockpiling mechanism to strengthen Canadian and Allied national security.
• $182.6 million over three years, starting 2025-26, to DND to establish a sovereign space launch capability.

A New Defence Investment Agency

Canada’s new government is focused on providing the women and men in uniform with the equipment they need, when they need it. With the right tools in their arsenal, we will reinforce Canada’s sovereignty, create high-paying new careers for Canadian workers, and strengthen our defence partnerships with Allies.

Canada’s defence procurement is currently fragmented across several departments, slow to consult industry, and too complicated to respond to rapidly evolving military needs—leading to significant delays in delivering critical equipment. To protect our sovereignty and bolster our industrial capacity, the government announced the creation of a new Defence Investment Agency (DIA), which will overhaul and streamline Canada’s defence procurement. The DIA will approve procurements to support strategic defence sectors in Canada, so that we are able to ensure the Canadian Armed Forces has the world-class equipment it needs, and at the same time create new careers, grow our economy, and support innovation in aerospace, shipbuilding, and advanced manufacturing.

The Defence Investment Agency will have three objectives:

1. Consolidate procurement processes—removing duplicative approvals and red tape, accelerating defence procurement, and providing industry with greater clarity and certainty. With a centralised process of review and approval, procurements will advance faster. 
2. Target procurements to support strategic defence sectors in Canada, so that we are able to meet the capability needs of the Canadian Armed Forces, and at the same time create new careers, grow our economy, and supercharge innovation in aerospace, shipbuilding, and advanced manufacturing. 
3. Ensure earlier engagement between the Canadian Armed Forces and Canada’s defence industry, so the military can communicate operational needs, and industry can provide realistic assessments of timelines, costs, and technological options. Early engagement will ensure both the government and industry can better anticipate future needs and build industrial capacity ahead of time, at speed and scale.

• Budget 2025 proposes to provide $30.8 million over four years, starting in 2026-27, with $7.7 million ongoing to Public Services and Procurement Canada to establish the DIA. The DIA will accelerate the delivery of goods and services to better meet the needs of the CAF at the best value for Canadians by centralising processes and enhancing engagement and collaboration with Canadian industry and international partners. The Agency’s focus will be on defence procurements valued at $100 million and above, including submarines and other critical capabilities that the CAF requires.
• Budget 2025 proposes to provide $52.5 million over five years, starting in 2026-27, with $12.2 million ongoing to Public Services and Procurement Canada to modernise and increase capacity for the Industrial Security Program to meet the needs of the DIA and support Canada’s defence industry.

Strengthening Canada’s Presence: Operations REASSURANCE and AMARNA

Canada launched Operation REASSURANCE in 2014 following Russia’s first invasion of Ukraine. More than a decade later, it remains the CAF’s largest overseas mission, with approximately 2,000 troops currently deployed to deter Russian aggression and defend NATO territory.

Canada is strengthening transatlantic security and reaffirming our commitment to defend NATO territory in the face of ongoing Russian aggression. Under Operation REASSURANCE, Canada provides Armed Forces personnel to the Canadian-led NATO Multinational Brigade-Latvia (MNB-Latvia).

In MNB-Latvia, Canada leads around 3,000 troops from 14 contributing nations. The work of the Canadian Armed Forces strengthens NATO’s defence of its Eastern Flank and contributes to deterrence efforts along Latvia’s nearly 300 km border with Russia.

In August 2025, the Prime Minister announced the renewal of Operation REASSURANCE for three years, starting in 2026-27. This renewal will sustain the Brigade’s personnel and military capabilities in Latvia—reinforcing our collective defence, strengthening co-operative security, and keeping NATO’s presence strong on its Eastern Flank.

• Budget 2025 proposes to provide $2.7 billion over three years on a cash basis, starting in 2026-27, to the Department of National Defence in support of the renewal of Operation REASSURANCE. Operation REASSURANCE will remain the CAF’s largest overseas mission.

This year, Canada also launched Operation AMARNA, the CAF’s contribution to strengthening peace and security in the Middle East. Operation AMARNA allows the CAF to adapt to changing geopolitical dynamics and respond to emerging security challenges in the region.

• Budget 2025 proposes to provide $300.1 million over three years on a cash basis, starting in 2025-26, to the Department of National Defence and the Communications Security Establishment to support Operation AMARNA. This will be partly offset by $155.8 million over three years of existing Department of National Defence resources.