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Defence spending 101
Recent discussions about Canada s defence spending have used the ratios of 1.3% of Gross Domestic Product. Also, we have heard the numbers 2%, 3. 5% and 5% respectively. Where do these numbers come from?
Canada currently spends about 1.3% of Gross Domestic Product (GDP) on defence expenditures. This compares with some typical NATO countries like these:
Canada currently spends about 1.3% of Gross Domestic Product (GDP) on defence expenditures. This compares with some typical NATO countries like these:
| Country | Defence to GDP ratio |
|---|---|
| United States | 3.40% |
| United Kingdom | 2.40% |
| Finland | 2.30% |
| Italy | 1.60% |
| Canada | 1.30% |
| Spain | 1.28% |
Canada is not the lowest on the list of the NATO countries, but it is near the bottom.
For decades, Conservative and Liberal Governments have committed to increasing defence spending to 2% as required by member countries of the North Atlantic Treaty Organization (NATO). Canada has not been successful at achieving this 2% goal.
With the re-election of President Trump, there is a new sense of urgency for all countries to increase defence spending. At first, President Trump said that the United States would not come to the defence of any NATO country which does meet the agreed NATO defence spending target of 2% of GDP. In response, Prime Minister Carney committed to reaching the 2% by March 2026, much sooner than expected.
One action being taken to move toward this 2% goal is to move the responsibility of the Coast Guard from the Department Fisheries and Oceansto the Department of National Defence.
The Coast Guard budget is about $2.5 billion. This instantly takes the defence spending to about 1.5% of GDP. If this is successful, Canada is then. 5% from the previous NATO target of 2%.
The Canadian Coast Guard was created in 1962 as a part of Transport Canada. In 1995, it was moved to Fisheries and Oceans. Some countries consider their Coast Guard as part of defence, and some consider it a non-military operation.
Canada has the second-longest Northern coastline, which must be patrolled and monitored. This is not a fisheries operation but is clearly a national security function. Hence the move to National Defence.
Overall, Canada has the longest coastline in the world, 5 times longer than the coastline of Russia. Canada has the second-longest Arctic coastline.
Recently, President Trump has increased the proposed defence spending target for member NATO countries to 5%. NATO countries have agreed to meet this target by 2035. That target will be reviewed in 2029.
The 5% target is broken down into two categories, 3.5% for core military spending, and 1.5% for defence related infrastructure
The actual outlay on core military spending such as personnel, guns, ammunition, ships, planes and other armaments that NATO countries need to reach, is 3.5% of GDP, not 5%.
The other 1.5% is for defence related infrastructure. This can include the cost of developing transportation links, seaports, airports, rail lines, defence materials, critical minerals, and other infrastructure which would be required at a time of conflict.
Many projects on this defence related infrastructure list come under the nation-building legislation, Bill C-5, which was just passed by parliament on June 26.
Under Bill C-5, a Schedule 1 Project List will be compiled for fast tracking. These projects were not originally envisioned to be defence expenditures, but some will qualify toward the 1.5% defence infrastructure target.
Having said all of that, to reach the 3.5% core military armament goal and the 1.5% defence infrastructure goal will be a steep climb, but it is doable, and it appears to be underway.
Thanks for reading.
Bill
For decades, Conservative and Liberal Governments have committed to increasing defence spending to 2% as required by member countries of the North Atlantic Treaty Organization (NATO). Canada has not been successful at achieving this 2% goal.
With the re-election of President Trump, there is a new sense of urgency for all countries to increase defence spending. At first, President Trump said that the United States would not come to the defence of any NATO country which does meet the agreed NATO defence spending target of 2% of GDP. In response, Prime Minister Carney committed to reaching the 2% by March 2026, much sooner than expected.
One action being taken to move toward this 2% goal is to move the responsibility of the Coast Guard from the Department Fisheries and Oceansto the Department of National Defence.
The Coast Guard budget is about $2.5 billion. This instantly takes the defence spending to about 1.5% of GDP. If this is successful, Canada is then. 5% from the previous NATO target of 2%.
The Canadian Coast Guard was created in 1962 as a part of Transport Canada. In 1995, it was moved to Fisheries and Oceans. Some countries consider their Coast Guard as part of defence, and some consider it a non-military operation.
Canada has the second-longest Northern coastline, which must be patrolled and monitored. This is not a fisheries operation but is clearly a national security function. Hence the move to National Defence.
Overall, Canada has the longest coastline in the world, 5 times longer than the coastline of Russia. Canada has the second-longest Arctic coastline.
Recently, President Trump has increased the proposed defence spending target for member NATO countries to 5%. NATO countries have agreed to meet this target by 2035. That target will be reviewed in 2029.
The 5% target is broken down into two categories, 3.5% for core military spending, and 1.5% for defence related infrastructure
The actual outlay on core military spending such as personnel, guns, ammunition, ships, planes and other armaments that NATO countries need to reach, is 3.5% of GDP, not 5%.
The other 1.5% is for defence related infrastructure. This can include the cost of developing transportation links, seaports, airports, rail lines, defence materials, critical minerals, and other infrastructure which would be required at a time of conflict.
Many projects on this defence related infrastructure list come under the nation-building legislation, Bill C-5, which was just passed by parliament on June 26.
Under Bill C-5, a Schedule 1 Project List will be compiled for fast tracking. These projects were not originally envisioned to be defence expenditures, but some will qualify toward the 1.5% defence infrastructure target.
Having said all of that, to reach the 3.5% core military armament goal and the 1.5% defence infrastructure goal will be a steep climb, but it is doable, and it appears to be underway.
Thanks for reading.
Bill