Mark Carney’s first budget has delivered the biggest increase in defence spending in decades, as the government seeks to rebuild the military at a time when the Prime Minister says Canada can no longer rely on the United States for protection.
The fiscal plan, tabled a week before Remembrance Day, includes $84-billion to the Department of National Defence over five years, believed to be the biggest short-term cash infusion for the military since the Korean War. The new spending will go to pay raises, precision-strike capabilities, upgrading aging infrastructure and cyberdefences, among other things.
It’s a dramatic reversal of fortune for the Canadian Armed Forces, which has been dogged for years with problems that include recruiting new members, rusting-out equipment, declining levels of combat readiness and sexual misconduct allegations that led to significant churn in top leadership.
Finance Minister François-Philippe Champagne holds a copy of the federal budget in the House of Commons on Nov. 4. The budget delivered the biggest increase in defence spending in decades.Sean Kilpatrick/The Canadian Press
But the windfall is arriving without a new detailed strategy for a department that has a history of failing to spend allotted funds even with more meagre budgets. The Carney government has yet to produce a fully fledged defence policy that would lay out a long-term vision for the military.
In the absence of an imminent threat, Canadians have long debated the various roles of its standing military: peacekeeping, obligations to allies, defence of the homeland, and overseas combat deployments to root out terrorism or aggression such as Afghanistan or Korea. The Carney government’s budget says only that the significant cash injection is necessary to defend Canada “in an increasingly dangerous and divided world.”
Whatever the answer, the risk also remains that sustained political will to fund a significant rebuild of the Canadian military could falter in future years as it has in days past.
Retired general Wayne Eyre, former chief of defence staff between 2021 and 2024, says persistent underfunding of the CAF was an issue while he was in the Forces.Spencer Colby/The Canadian Press
Retired general Wayne Eyre, who served as chief of the defence staff between 2021 and 2024, said he wished this money had arrived when he was still in the Forces.
“I was banging my head against the wall trying to get this type of investment done while I was still serving,” Mr. Eyre said. “So I’m happy for the institution, happy for the country.”
He said persistent underfunding dates back farther than many Canadians might realize.
“We have been under resourced for probably a couple of generations in terms of the expectations that were put on the Canadian Armed Forces.”
The government’s fiscal plan said the new spending would give the Armed Forces “the tools they need to defend every square foot of our sovereign territory, from the sea floor to the Arctic to cities to cyberspace, and to protect Canadians from present and emerging threats.”
The budget earmarked new money for recruiting, training, equipment, military infrastructure and cyberdefence capabilities, as well as a stand-alone agency to handle procurement, and money to beef up Canada’s military industrial base. It also set aside $2.7-billion for three years to pay for Operation Reassurance − the Forces’ largest overseas mission − which supports deterrence measures on the North Atlantic Treaty Organization’s eastern flank through a deployment in Latvia.
Mr. Carney, speaking to a Toronto audience Friday, pitched the defence spending as an economic play in which more of the money gets spent in Canada.
“It’s not just about protecting Canada,” the Prime Minister said. “It’s protecting Canada first and foremost. But it’s an enormous opportunity to build the cutting-edge industries of the future.”
The fiscal plan only offers a 30,000-foot view on how the money will be spent – with many details still to come.
The new Department of National Defence cash was the budget’s biggest single funding for any department by cash outlay, John Fragos, spokesman for Finance Minister François-Philippe Champagne said.
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Prime Minister Mark Carney tours the Adazi Military base in Latvia in August. The budget set aside $2.7-billion over three years to pay for Operation Reassurance, which supports deterrence measures through a deployment in Latvia.Christinne Muschi/The Canadian Press
David Perry, president of the Canadian Global Affairs Institute think tank, said as far as he can determine this represents the largest short-term boost in military funding since the 1950s, when Canada was fighting in the Korean War.
For instance, the year-over-year increase for the Department of National Defence between the current 2025-26 fiscal year and the year prior is about 38 per cent, he said. That pushes DND’s budget alone – not including defence-related spending in other departments – to about $48-billion this year, up from about $34.5-billion in 2024-25, Mr. Perry said.
Consistent scarcity in the military has led to a litany of problems that include delayed procurement. “We’re sailing ships 10 years or more longer than they were designed for. We’re flying fighter aircraft 15 to 20 years beyond their expected operational life,” Mr. Perry said.
In 2023, an external review warned Canada’s CF-18 fighter aircraft force was “in crisis” and suffering from low morale, high rates of departure among instructor pilots and a shortage of maintenance technicians, impairing its ability to meet defence obligations to allies.
In hearings last year, the Commons defence committee was warned by the Conference of Defence Associations Institute, which represents more than 400,000 retired and active members of the Armed Forces, that while NATO countries should have more than 30 days of ammunition on hand, Canada had only enough for a few days.
“If Canada were called on to participate in a major operation, only 58 per cent of the Canadian Armed Forces would be available to respond, and 45 per cent of the Canadian Armed Forces’ equipment is currently unavailable or unusable,” then CDA executive director Youri Cormier told MPs.
On top of this, the Forces were running into problems retaining people and recruiting new ones. In 2024, then defence minister Bill Blair bluntly said this crisis represented a “death spiral for the Canadian Armed Forces” if not fixed.
It was no surprise, then, that the new budget allocates 25 per cent of the boost in defence spending to a pay increase for Canadian Armed Forces − announced in June and retroactive to April − to help retain and recruit more people. This included a 20-per-cent increase for the lowest ranks, 13 per cent for non-commissioned members and junior officers, and 8 per cent for senior officers.
Retired general Tom Lawson, who also served as chief of the defence staff, said he has a son in his 40s who’s a pilot in the Forces and was approaching the point where some pilots might leave to fly for commercial air carriers. He said the new investments and pay raise “has sealed it” for his son, who will now likely remain in the Forces for a full 30- to 35-year career.
The budget allocates nearly $18-billion for new equipment over five years including long-range precision strike capabilities that could include mobile missile launchers and extended-range and anti-ship missile systems. Other priorities include counterdrone gear that can be used by Canadian troops in Latvia to detect and neutralize small drones, as well as a range of armoured vehicles.
What’s missing is money for submarines, which will cost up to $2-billion each. Canada is looking at buying up to 12 subs with a serious offensive capability to launch missile strikes. This acquisition would make it the first time in history the Royal Canadian Navy has more than a token presence underwater. Right now, it has four subs, of which only one is normally operational. The Liberals say the money for new subs will be in future budgets.
National Defence Minister David McGuinty and Prime Minister Mark Carney join South Korean Prime Minister Kim Min-seok and Hahnwa Group vice chairman Kim Dong Kwan on a tour of submarines at Hanwha Ocean Shipyard in Geoje Island, South Korea, on Oct. 30. Mr Carney faces a historic choice between South Korea and Europe for the purchase of a 12-submarine fleet.
Adrian Wyld/The Canadian Press
The budget funds a stand-alone defence procurement agency that’s charged with tackling the delays and spiralling costs that have become a hallmark of military purchasing in Canada.
Back in 2024, a defence policy update under then prime minister Justin Trudeau laid out top spending priorities, many of which will remain. These include sustaining military equipment with sufficient spare parts and upgrades, enabling more domestic ammunition production, installing maritime sensors to surveil ocean traffic, building out a string of northern supply hubs to support Arctic operations, ground-based air defences and a new focus on drones.
The Canadian government isn’t finished with defence spending hikes. The budget includes more than $9-billion in additional annual spending that Mr. Carney announced in June to enable Canada to reach a long-overdue NATO alliance commitment to spend 2 per cent of gross domestic product on defence.
That same month, at the NATO summit in The Hague, the Prime Minister also committed Canada to boost core military spending much further – to 3.5 per cent of GDP by 2035. That will require $30-billion to $40-billion more in additional annual funds.
Prime Minister Mark Carney visits Fort York Armoury in Toronto with Defence Minister David McGuinty, left, and Chief of the Defence Staff Jennie Carignan, in June.Arlyn McAdorey/Reuters
Defence Minister David McGuinty, in an interview, said he has been told by officials that the budget’s spending will take Canada to between 2 per cent to 2.4 per cent of GDP, depending on the size of Canada’s economy. (Spending for NATO calculations includes more than just the National Defence budget.)
At the heart of the defence spending is a plan, funded by $6.6-billion over five years, to build a stronger homegrown military industrial base, Mr. McGuinty said.
He said more than 70 cents of each procurement dollar is spent on U.S. military goods and the Carney government wants to keep more of this money at home. “We’ve got the electricity, we’ve got the inputs. We’ve got the steel and the aluminum, we’ve got the engineering capabilities,” he said. “It’s an opportunity to expand on the 600 companies we have now.”
Mr. McGuinty said General Jennie Carignan, chief of the defence staff, is working on ideas that could significantly expand Canada’s military reserves as an adjunct to the regular forces. “One of the things we’ve heard is Canadians want to be more engaged. They want to be helpful. If there’s a wildfire, if there’s a flood, if there’s some sort of other emergency situation, they want to be able to contribute.” Mr. McGuinty said the Department of National Defence is looking at Scandinavian countries that include Finland which is significantly expanding its reserves.
A bigger presence in the Arctic, where global warming is making ship navigation easier, is also part of the budget. The Liberals are moving ahead with plans to expand forward operating bases in the North and a new $1-billion Arctic infrastructure fund – not part of the Department of National Defence budget – that will pay for new airports, sea ports and all-season roads in the region that would have dual-use applications for both civilians and the military.
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Canadian soldiers with the 5th Canadian Division participate in Operation Nanook, the Canadian Armed Forces’s annual Arctic training and sovereignty operation, in Inuvik in March, 2025. A larger presence in the Arctic, a region of increasing strategic importance, is also part of the budget.COLE BURSTON/AFP/Getty Images
Mr. Eyre said Canada grew complacent about military spending because “we’ve had the luxury of being one of the most secure countries in the world.” But rising geopolitical instability, as well as advances in weaponry, from cyberattacks to missiles, have eroded this security.
He said he thinks “peak threat” is approaching due to the rising ambitions of countries such as Russia and China.
“We’ve got global authoritarian leaders who see themselves as men of history and destiny who want to accomplish certain things in their lifetime, whether it’s the unification of China and Taiwan, or whether it’s re-establishing the mythical Russian Empire,” Mr. Eyre said. “These men are not getting any younger, and they’ve surrounded themselves with yes men, and they don’t welcome bad news, so that just raises the opportunity for miscalculation.”
Andrea Charron, director of the Centre for Defence and Security Studies at the University of Manitoba, said Ottawa should be planning a Canadian quick reaction fighter facility in co-operation with the U.S., Denmark and Greenland at the U.S.’s northerly Pituffik Space Base in Greenland to speed up response times for the Royal Canadian Air Force in the Arctic.
Prof. Charron said Canada also needs to have a funded operation for the defence of the country, so that the Armed Forces stop dipping into maintenance funds when they need to scramble jets. Right now, the Forces “must steal from Peter to pay Paul,” she said.
Prime Minister Mark Carney tours the CAF barracks at the Adazi Military base in Latvia. The new budget allocates $19-billion over four years toward capability sustainment and improving aging infrastructure.Christinne Muschi/The Canadian Press
The new budget allocates $19-billion over four years toward capability sustainment and infrastructure, but offers no more detail. Prof. Charron said replacing the CAF’s aging infrastructure is a key priority. “Many of the bases are circa 1950 with all the problems of old buildings, including outdated water, sewer and electrical infrastructure.”
One concern raised by many defence analysts is the amount of money that National Defence is being asked to absorb. The department has repeatedly failed to spend all its budget money in past years.
It’s like “drinking from a firehose,” Prof. Charron said of the rate of cash being directed into defence.
“A lot of money needs to be spent in a short amount of time, which means speed and strategy need to be carefully balanced,” she said.
Philippe Lagassé, an associate professor at Carleton University who researches defence policy and procurement, said it’s likely a “significant chunk” of the new budget money will lapse, or go unspent in the years for which it was allocated. Ottawa’s budget includes new funding mechanisms to be able to execute more quickly.
But risks remain. Will the government be able to approve new procurement purchases? Will the Forces find companies with enough labourers to quickly rebuild its infrastructure at a time when the country is also trying to accelerate home construction?
“As the saying goes, hard things are hard, and hard things in defence are doubly hard. Having acknowledged that, though, the next step is simply to get on with it,” Prof. Lagassé said.
He said the new defence procurement agency will help if it can streamline the purchasing process. Prof. Lagassé, however, said he thinks a legislative change is needed to vest more authority in the agency – to give it more heft as it deals with other departments and agencies in government purchasing – and he’s not sure a secretary of state has enough power to get things done. “I think he needs to be a full minister,” he said of the job given to Stephen Fuhr, the new Secretary of State for Defence Procurement.
It’s far from certain, however, the political commitment to replenish the Canadian military will survive a change of leader or fiscal circumstance.
Finance Minister François-Philippe Champagne delivers his budget speech in the House of Commons on Nov. 4. The government seeks to rebuild the military at a time when the Prime Minister says Canada can no longer rely on the United States for protection.Sean Kilpatrick/The Canadian Press
Even the NATO spending commitment could be up for revision in 2029, the year member countries have set for themselves to revisit their increased pledge. It also happens to be the year Donald Trump’s term as U.S. President is supposed to end.
Perrin Beatty, who served as defence minister in Brian Mulroney’s government, knows this well. In 1987, he proposed a massive rebuild of the Canadian Armed Forces, including a fleet of nuclear-powered submarines to make Canada the master of its own waters. It also included airstrips in the Arctic for CF-18 fighter jets, tripling the size of the reserves, and equipping and training them to cope with incursions on Canadian territory.
Within a couple of years, however, these plans were dashed.
Mr. Beatty says it wasn’t the peace movement that sank his proposal. “It was a rearguard action from the Department of Finance who said: ‘We don’t want to spend this amount of money on defence.’ ”
He recalls then vice-admiral Chuck Thomas, who commanded the navy in the late 1980s, would tell him “You can have as much sovereignty as you’re prepared to pay for.”
“This was a central issue then and a central issue now,” the former minister said. “We have to decide if we mean what we say when we claim to be a sovereign nation.”