Better late than never.
While there are many takeaways from the federal budget, I think the underlying theme can best be summed up in one word: Seriousness.
For the first time in quite a while, the federal government is realigning budgetary priorities so Canada can deal with a more dangerous world. Key in this realignment is a shift in federal spending towards the military; at the same time, spending is being cut elsewhere.
The budget allocates $81.8 billion over the next five years to “rebuild, rearm, and reinvest in the Canadian Armed Forces.” Here’s the broad overview of how that money is being spent:
“This includes over $9 billion in 2025-26 that was announced by the Prime Minister in June 2025. Key investments include:
$20.4 billion over five years, to recruit and retain a strong fighting force, including generational pay raises for the CAF, and support CAF health care.
$19.0 billion over five years to repair and sustain CAF capabilities and invest in defence infrastructure, including expanding ammunition and training infrastructure.
$10.9 billion over five years for upgrades to Department of National Defence, CAF, and Communications Security Establishment digital infrastructure, including those needed for modern warfare, such as cyber defence.
$17.9 billion over five years to expand Canada’s military capabilities, including investments in additional logistics utility, light utility, and armoured vehicles, counter-drone and long-range precision strike capabilities, and domestic ammunition production, among other investments.
$6.6 billion over five years, starting in 2025-26, to strengthen Canada’s defence industry through a Defence Industrial Strategy. As the Strategy is implemented, starting with initial investments announced in Budget 2025, we will develop our defence industrial base so that more of our military capabilities are procured from Canadian supply chains. (See below for additional details).
$6.2 billion over five years to expand Canada’s defence partnerships, including expanded military assistance to Ukraine and increased military training and international policy programming.
$805 million over five years to the Canadian Coast Guard, the Canadian Security Intelligence Service, and Public Services and Procurement Canada for complementary initiatives to support Canada’s defence capabilities.”
More details are still required, particularly when it comes to ensuring the procurement system can turn this money into real capabilities. The top-line commitment is impressive, but given the scale of the security challenges facing Canada and many of our allies, tangible results need to be delivered.
With that said, it’s notable that even as the government expands defence spending, spending reductions are planned in other areas. The government plans to slow growth in direct program spending from 8% to 1%. With inflation over 2%, that will lead to cuts in real dollar terms. The budget also states that the Comprehensive Spending Review will lead to $13 billion in savings by 2028-2029, which, when combined with other savings and revenue, will lead to $60 billion in savings in that time. The government plans to reduce the public service by 16,000 jobs, for a total reduction of 40,000 (about 10% of public service employment) when combined with attrition and retirements.
Taking a high-level view, we have a government presenting a budget that simultaneously promises tens of billions of dollars in new defence spending, along with thousands of public service job reductions and tens of billions of dollars in spending cuts. And while there are some targeted support measures, this budget is more ‘guns’ than ‘butter’. It’s the kind of budget befitting a country that has long underinvested in the military and needs to make up for it, while also having overspent on the federal public service.
For that reason, while the budget is far from perfect, and while we need to hear more details on where all the new military spending is actually going, the budget is an important step in the right direction. For the first time in many years, the government is taking its role in providing a strong national defence seriously.
Spencer Fernando
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