Canada to boost defence spending to 2% of GDP this fiscal year, reach NATO target: Carney

Prime Minister Carney announces Canada will achieve the 2 per cent NATO target five years ahead of schedule and further accelerate funding in the coming years.

Canada will boost defence spending by billions of dollars to meet NATO’s two per cent of GDP target this fiscal year, Prime Minister Mark Carney announced Monday, in a speech focused on “threats from a more dangerous and divided world.”

The pledge comes ahead of next week’s G7 summit, hosted by Canada in Kananaskis, Alta.

“We will further accelerate our investments in the years to come, consistent with meeting our new security imperatives,” Carney announced during a speech at the Munk School in Toronto.

“We will ensure every dollar is invested wisely, including by prioritizing made-in-Canada manufacturing and supply chains,” he added.

Canada has never met NATO’s existing spending target, despite its 2014 pledge to do so, and has faced public pressure from member countries for years to meet its commitment.

NATO allies initially signed on to hit the two per cent target by last year — when former NATO secretary general Jens Stoltenberg then said the figure should be a floor instead of a ceiling — but former prime minister Justin Trudeau’s government said Canada wouldn’t get there until 2032.

Carney’s new timeline comes well ahead of that 2032 goal, and of the 2030 target he pledged during the federal election.

Canada spending on submarines, aircraft, artillery

To reach the two per cent number, the federal government says it needs to spend an additional $9.3 billion beyond what it has already laid out in previous defence-spending plans.

Among the new spending — included in the government’s supplementary estimates tabled Monday morning — are funding for Canadian Armed Forces salary increases, and to diversify Canada’s partnerships beyond the U.S., among other line items.

Part of Carney’s spending plan also includes Canada’s participation in the $234-billion (€150 billion) ReArm Europe program, a commitment that was highlighted during the speech from the throne late last month.

The prime minister added it will help to diversify Canada’s military suppliers with “reliable European partners,” and saying later in the speech Canada is “too reliant on the United States.”

“We should no longer send three quarters of our defence capital spending to America,” Carney said.

Canada is also expanding Canadian Coast Guard’s mandate to better integrate it into Canada’s NATO defence capabilities. Carney says it will “better secure our sovereignty and expand maritime surveillance.”

The prime minister said Canada will be boosting its defence spending by investing in new submarines, aircraft, ships, armed vehicles and artillery. Carney said there will also be investments in new radar, drone and sensors to monitor the seafloor and the Arctic. The government has not laid out any details of those commitments, however, including specifically what it plans to buy or how much it’ll cost.

“Our fundamental goal in all of this is to protect Canadians, not to satisfy NATO accountants,” Carney said.

Defence spending on NATO summit docket

Defence spending is expected to be a major focal point at the NATO summit in The Hague later this month, where Secretary General Mark Rutte has signalled he will propose an overall investment plan that would increase defence investment to five per cent of GDP — 3.5 per cent for core defence spending and 1.5 per cent in defence-related investments like infrastructure.

The most recent NATO figures show Canada spent 1.45 per cent of its GDP on defence in 2024. Most other NATO allies, 22 of the 32 member countries, meet or exceed NATO’s current two per cent target.

According to National Defence, Canada is projected to spend $52.3 billion on defence in the 2025-26 fiscal year.

A report released last fall from the parliamentary budget officer (PBO) stated the federal government would need to spend $81.9 billion to hit the two per cent of GDP target by 2032-33.

But, according to the federal government, the PBO and NATO have differing methods for calculating GDP. The $9.3 billion in new spending announced Monday will get Canada past the two per cent mark, according to NATO’s guidelines.

“None of it is going to be creative accounting,” Carney insisted, when asked by reporters on Monday afternoon about the difference in calculations and his ability to meet the spending target several years earlier than Trudeau had said was possible.

In a press conference on Parliament Hill Monday, Conservative Leader Pierre Poilievre said his party supports getting to the two per cent target as soon as possible, and is in favour of additional funding for the military.

“That’s why we’re calling on the government to bring in a budget, because all of this will require a budget,” Poilievre said. “A budget that not only puts this money forward, clearly identifies where it comes from, but cuts waste in bureaucracy, consultants, foreign aid, corporate welfare and other areas, so that the necessary increase in the military does not come as an inflationary burden on the backs of our Canadian taxpayers, who’ve been suffering for far too long.”

After criticism from the opposition for not tabling a spring budget, Carney has promised one is coming in the fall.

New defence policy coming

“Canada’s Department of National Defence will immediately design a new defence policy that reflects both today’s and tomorrow’s threats,” Carney said.

The new policy comes just 14 months after Trudeau’s government released “Our North, Strong and Free: A Renewed Vision for Canada’s Defence.”

With files from CTV News supervising producer Stephanie Ha