Canada Military Budget

In June 2017 Canada laid out plans to boost military spending by a mammoth 73 percent over 20 years, with an expected leap from US$14 billion in 2017 to $24.2 billion by 2027, in order to ensure the country is "strong at home, secure in North America and engaged in the world." Major question marks hover over the proposals.

Outlining the strategy, Defense Minister Harjit Sajjan said 07 June 2017 if Canada was serious about its role in the world, it must be serious about funding its military. The increases would drag the country's defense budget from around one percent of GDP in 2017 to 1.4 percent by 2024-25, nearer the two percent target set for NATO members.

Due to the failure of most NATO member states to reach the two percent target, Canada is already the sixth-highest spender in the bloc, and 16th in the world. The country has consistently been a frequent contributor to overseas coalitions, supporting the UK and US in various large-scale engagements the world over. Evidently, despite the "years of neglect" the country's military has endured, it is already a well-funded fighting force.

Historically, Canadian forcesfound themselves underfunded relative to NATO expectations of 2 percent of gross domestic product (GDP). After the Cold War, defense spending was slashed in 1990 from just below 2 percent of GDP to 1 percent between 1998 and 2009. Canada made a major commitment after 9/11 that deployed its forces to Afghanistan under NATO that would have stressed the defense budget had expenditures remained at 1 percent of GDP.

Consequently, by the end of the first decade of the twenty-first century, Canadian forces were severely underfunded. Estimates show that the Afghanistan conflict cost CAD 18 billion — a figure that may understate the cost to replace worn-out equipment from that conflict. By 2008 politicians recognized the underfunding of Canadian forces and gradually increased the budget to about 1.5 percent of GDP.

Canada's 2008 defense budget reached its highest level since WWII with an estimated defense budget of US$18 billion. The GoC's Canada First Defence Strategy will bring the annual defense budget to $30 billion by 2027-2028.

The investments required to implement the Canada First Defence Strategy are supported by increased, long-term funding. This commitment will reverse the damage done by major cuts to the defence budget in the 1990s. Indeed, after defence spending peaked in the waning years of the Cold War, funding for defence declined in real terms by roughly 30 percent as the government of the day dealt with the federal deficit. While a series of episodic increases between 1999 and 2005 helped the budget to grow in real terms, they were not predictable and did not sufficiently address the rust-out of key equipment platforms, strain on personnel and other challenges arising from a high operational tempo. To address the problem, the Government increased defence funding through Budget 2006 by $5.3 billion over five years, including a baseline increase of $1.8 billion starting in 2010-11. In doing so, it established a firm foundation for the future and raised the baseline on which future efforts to rebuild the Canadian Forces will be anchored.

Moving forward from this strong footing, the Government, in Budget 2008, augmented the automatic annual rise in Defence funding from 1.5 percent to 2 percent starting in fiscal year 2011-12. Over the next 20 years, this increase is expected to expand the Defence budget from approximately $18 billion in 2008-09, to over $30 billion by 2027-2. This figure reflects the new investments made by the Government as outlined in this document. Overall, the Government will spend close to $490 billion on defence over the next 20 years.

With this funding framework, National Defence will be able for the first time to plan for the future on the basis of stable and predictable funding, which will allow it to strategically allocate resources and build the capabilities necessary to meet the country's defence needs. Furthermore, in addition to this new formula, the Government is committed to separately fund incremental costs for major operations.

The GoC's, Canada First Defence Strategy has a dedicated portion of the defense budget to aerospace procurement. The Canada First Defence Strategy has previously announced aerospace equipment purchases including; C-17 Globemasters, C-130J Hercules, and CH-47F Chinook Helicopters, totaling approximately $15 billion. In addition, new major fleet replacements will cost $20 billion for fixed-wing search and rescue aircraft, destroyers and frigates, maritime patrol aircraft, and fighter aircrafts. The equipment and fleet replacement figures reflect spending over the next 20 years, 2008-2009 to 2027-2028. The Readiness budget component of the Canada First Defence Strategy spending will reach $140 billion, 29 percent of the total $490 billion budget. Approximately $140 million will be spent each year on spare parts, maintenance and training. This element of the budget will contribute to the overall allocated funds for aerospace procurement.