Canada must spend billions more to meet NATO commitments: report

The Budget Office calculated defence spending would have to surpass $60 billion a year by 2025 to meet NATO spending targets—$20 billion more than is budgeted currently.

Canada must spend billions more to meet NATO commitments: report
The Canadian Press / Sean Kilpatrick
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Canada must spend billions more to meet its NATO commitments, says the Commons national defence committee. 

The Budget Office in a 2022 report calculated defence spending would have to surpass $60 billion a year by 2025 to meet the NATO target. “There remains a gap,” said the report, Canada's Military Expenditure And The NATO Two Percent Spending Target.

“We’re talking about tens of billions of dollars to reach this rate,” Budget Officer Giroux testified at 2022 hearings of the Commons government operations committee. 

“Even if we add a few hundred million to this you still have quite a significant shortfall we have to meet,” he said.

Prime Minister Justin Trudeau privately told NATO last year that Canada would not meet their defence spending targets, according to a leaked Pentagon assessment.

Obtained and first reported by The Washington Post, the document acknowledged Canada suffered from “widespread” military deficiencies that harmed relations with Western allies.

It spent an estimated 1.29% of its GDP on defence in 2022—well short of the 2% guideline. NATO views the benchmark “as the floor, not the ceiling.”

Canada’s military spending last year totalled 1.7% of GDP, for a total of $32.5 billion according to Public Accounts. Economic output was $1.89 trillion, reported Blacklock’s Reporter.

It never exceeded 1.4% of GDP the previous 26 years.

Defence Minister Bill Blair said Wednesday it “is a challenge for Canada” to achieve the same funding targets as the U.S., United Kingdom and other allies.

The Department of National Defence (DND) boasts a $26.5 billion budget this fiscal year. That amount is expected to increase to almost $40 billion by 2026/27.

“We are going to reach it,” he claimed, despite Canada being the only NATO member without a plan to reach the benchmark.

Blair did not specify when Canada would match the funding levels of NATO allies. 

These shortfalls prevent the Canadian Armed Forces (CAF) from mounting “a major operation,” reads the assessment, including funding proxy-war activities like Operation UNIFIER to build up the Ukrainian military.

They train Ukrainian troops in Latvia, Poland, Britain and at home, but have expressed hesitancy to do so in Ukraine.

NATO allies expressed uncertainty with Canada maintaining its commitments to the war-torn nation.

“We will be there until Ukraine wins the war,” said Finance Minister Chrystia Freeland last April 12.

Canada has pledged more than $19 billion in multi-faceted support to Ukraine – $12.4 billion in financial assistance, $4 billion in military aid and equipment donations, $352.5 million in humanitarian assistance, $422 million in development assistance and over $210 million in security and stabilization programming.

The prime minister has repeatedly dodged questions from reporters on NATO spending commitments.

“I continue to say and will always say that Canada is a reliable partner to NATO, a reliable partner around the world,” he told reporters last April 19. 

He later claimed Canada would provide its troops with the necessary tools.

However, an open letter from the Canada-based Conference of Defense Associations Institute says the CAF lack the readiness, personnel, and procurement processes necessary to be effective.

“Years of restraint, cost cutting, downsizing and deferred investment have meant that Canada's defence capabilities have atrophied,” said 60 signatories that included former Canadian defence ministers, military commanders, and security and intelligence officials.

The defence committee report, Time For Change: Reforming Defence Procurement In Canada, said those challenges remain ongoing.

A recent internal Department of National Defence (DND) presentation obtained by CBC News backed those concerns, citing only 58% of the CAF is battle-ready. 

Almost half the military equipment is considered “unavailable and unserviceable,” it reads, including 45% of equipment set aside for the defence of Europe.

Calls to find $15 billion in savings over the next five years will prompt the reallocation of $79 million from the “ready forces” over that time. 

Canadian military leaders claim the Trudeau government misrepresents defence spending for “political gain.” 

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