Canadian Defense Spending Is a Joke. Here's How to Fix It.

In terms of geography, it’s hard to get luckier than Canada. Surrounded on three sides by ocean, far from any adversaries, and with a long-term ally to its south, the land of maple syrup and hockey riots has seemingly little to fear from the outside world. Hence, why successive governments have spent so little on defense over the last quarter century.

When you have few vulnerabilities, putting only 1.22 percent of GDP into your military isn’t such a problem. Or is it? In recent months, insiders have started to raise the alarm over Canada’s defense spending, painting a picture not of a nation that’s comfortably secure, but one that’s teetering on the edge of a self-inflicted crisis.

A crisis in which plummeting military recruitment, aging hardware, and budget cuts are leaving Ottawa incapable not only of supporting its allies, but perhaps also of even defending itself.

Woefully Unprepared: What Two Damning Reports Revealed

As damning reports go, they don’t come much more damning than two recent assessments diving into Canada’s Department of National Defense (DND). The first, published in November of 2023, was an annual look inside the department’s finances. The second, written in December, was an internal document that broadcaster CBC later revealed to the public.

While one was intended for public consumption and one only for insiders, the two pretty much said the same thing: Canada’s military is in deep trouble. Politico summed up the November fiscal report: “Canada’s military can’t deploy multiple operations concurrently to the extent that it is supposed to be able to, amid a recruitment crisis, aging fleets and infrastructure, and planned spending cuts.” The internal report was even more brutal.

In an overview of its findings, CBC wrote that “only 58 per cent of the Canadian Armed Forces (CAF) would be able to respond if called upon in a crisis by NATO allies right now — and almost half of the military’s equipment is considered ‘unavailable and unserviceable.’” Former navy commander Mark Norman spoke for many when he gave his reaction to the report on CBC: “This is borderline atrocious.” The trouble wasn’t so much the effects of low spending alone — although that has definitely played a part.

A limited military budget has been part of the Canadian model for over a quarter of a century. Nor was it a lack of skill or passion in the military. In multiple areas, Canada still shines brighter than its peers, including in its world-beating Special Forces.

The problem seems to lie deeper, almost on a psychological level — a psychology that can likely be explained by Canada’s geography. While the last two years of Russian aggression have been an urgent and bitter wakeup call for NATO’s European members — with even previous laggards like Germany at last reaching the two percent spending target — Ottawa seems content to keep on slumbering. After all, Europe is far away, as are Taiwan and China.

And with the military superpower that is the United States on its doorstep, Canada knows it has a close ally that will always defend it from attacks. Speaking to the Financial Times, Indo-Pacific expert Jonathan Berkshire Miller summed up Ottawa’s thinking: “Successive governments have tended to treat foreign policy as a ‘luxury item’ and have left it to the Americans to ‘step up to the plate’, or the Japanese and Australians in the Indo-Pacific.” This isn’t some new phase that can be pinned solely on the current government.

Although Stephen Harper talked a good game on defense, spending fell to an all-time low of one percent of GDP on his watch. For decades now, wars for Canada have been far away things engaged in out of a sense of duty and allyship. Despite the rock-solid commitment and performance of Canadian troops in Afghanistan, it’s doubtful that many saw the occupation as an existential issue — certainly not in the same way that Poland views growing Russian aggression.

Signs of a Shifting Mindset — And Why They May Not Be Enough

With the rise of a multipolar world, there are signs that this mindset is at last changing. Foreign Minister Mélanie Joly recently said in a speech that “our location on the globe — surrounded by three oceans — can no longer be relied upon to protect us.” At the same time, recent polling by the Angus Reid Institute has shown that over half of Canadians now say the government should increase its defense spending — a number that rises to nearly two thirds if a potential second Trump presidency is factored in.

Ottawa is starting to show it grasps the need to pull its weight. The Canadian deployment in Latvia on NATO’s eastern flank is set to grow to brigade-strength by 2026. In the Taiwan Strait, Canadian naval ships have begun joining US vessels in “freedom of navigation” operations.

At home, the government has pledged to invest forty billion Canadian dollars in the air defense system NORAD over the coming two decades. Yet, for all the things that are starting to move in the right direction, there are concerns that it’s not enough — that, for all the government may boast about things like buying 88 F-35 fighter jets, the Canadian armed forces remain woefully unprepared for a new era of military confrontations. Especially when you realize that, even now, the government is not only failing to raise military spending, but is cutting it.

When Ottawa’s critics point out that it spends well below the NATO two percent threshold, defenders of the current policy reply that the figure is misleading. After all, Canada is the world’s tenth largest economy. While it might only spend 1.22 percent of GDP on defense, that’s still a heck of a lot of money.

In raw dollar terms, that puts it in NATO’s top seven spenders — way ahead of smaller economies like Estonia that spend over three percent. The trouble with this way of looking at things is that NATO spending isn’t static, and many members are rushing to splash more cash. Poland is hiking defense spending to over 3.5 percent.

Turkey is increasing its spending to an eye-watering four percent. That means the whole “seventh place in raw dollars” ranking won’t hold even if Canadian defense spending remains stable over the coming years. But staying stable is not on the cards.

Even as most of the rest of NATO are increasing their military budgets, Ottawa is heading in the opposite direction. The Liberal Party government has made a big deal of the additional 8 billion Canadian dollars it pumped into defense following Russia’s invasion of Ukraine. But the coming cuts are visible in the government’s own spending projections.

Estimates tabled in the House of Commons in February show the planned defense budget dropping from C$26.49 billion in 2023–2024 to C$25.33 billion in 2025–2026 — a reduction of over 900 million Canadian dollars. Overall, Defense News estimates the cuts will total 1.7 billion Canadian dollars by the end of 2026.

Canada’s Crumbling Military Hardware

With any military, there’s expected to be a gap between the equipment it has on paper and what it can actually put into the field in an emergency. So it’s not all that unusual to read that Canada’s military hardware wouldn’t be 100 percent ready to deploy if war broke out tomorrow. What is unusual, though, is how glaringly large the gap is between Ottawa’s on-paper strength and the reality.

According to the internal December report leaked to CBC, all branches of the Canadian armed forces are crippled by a lack of kit in fit state. The numbers are staggering. Forty-six percent of all equipment in the army is considered “unserviceable.”

For the navy, the fraction of “frigates, submarines, Arctic Offshore Patrol Ships and defense vessels” that cannot be deployed is over half. The air force is in even worse shape: the report says 55 percent of its hardware is “unserviceable.” These numbers are compounded by similar problems affecting military infrastructure, problems highlighted in the public November report: “A significant number of assets are approaching or have surpassed their life expectancy and have deteriorated.”

As Politico summed up the grim news: “Military fleets are hampered by a mix of badly needed repairs, obsolescence, personnel shortages and inadequate maintenance infrastructure.” The Royal Canadian Navy illustrates just how bad things have gotten. The fleet is aging and in danger of becoming outdated.

The country’s 12 frigates — the backbone of the navy — are over 25 years old. The Economist notes that the four submarines backing them up are even-older hand-me-downs from the British Royal Navy. Perhaps even worse is the lack of naval replenishment vessels.

According to War on the Rocks: “Were these ships to be used in a military operation, they would be of limited use given that Canada’s one dedicated naval replenishment ship lacks navy-grade radars or a self-defense system — which critics argue makes it unfit for a war zone.” The air force, likewise, runs on outdated kit as it awaits the arrival of new F-35s in 2026 — mostly CF-18s from the 1980s and used F-18s that once belonged to Australia. The problem doesn’t just stem from low overall defense spending, but also from how the government prioritizes what money is available.

The National Post notes that a typical military will put aside 20 to 30 percent of its budget for replacing outdated kit and investing in new technologies. Ottawa, however, puts aside just ten to fifteen percent. As the Post writes: “This has forced the military to soldier on with obsolete and worn-out equipment while it waits for replacements.”

The problem is compounded by a procurement system that prioritizes fiscal caution over speed and efficiency. Public Services and Procurement Canada oversees purchases for all federally funded programs, and its remit is to ensure money is spent in a low-risk, fair way. The result: the Remotely Piloted Air System program took 17 years to secure drones, while most of Canada’s allies took four years or less.

The Recruitment Crisis Hollowing Out the Ranks

Officially, Canada’s regular forces are supposed to stand at 71,500 personnel, with another 30,000 in reserve. Since the pandemic, though, the military has been hemorrhaging recruits while simultaneously failing to bring in new talent. According to figures published in fall of 2023, the actual strength of the regular forces was down to 63,149.

The reserves, meanwhile, had dropped to just 22,217 personnel. Those numbers may not seem wildly divergent. A military of over 63,000 is still a military with lots of employees.

But that gap of roughly 8,000 makes a real difference to how effective Canada’s armed forces can be — especially when you take into account the people missing: mid-level personnel in technical and support roles. The navy, where the shortages are particularly acute, illustrates this point. Naval commander Vice-Admiral Angus Topshee revealed that things were in a “critical state,” saying that “many occupations are experiencing shortages at 20 per cent and higher.”

Among those occupations are marine technicians, naval communicators and combat information operators in the mid-level ranks, as well as naval engineering technicians at supervisor level. In some cases, the roles are forty percent short of official targets. This is a huge problem.

The real thing that makes a nation’s armed forces effective is the people in the support roles — the ones ensuring that all the kit works, that ships can leave dock, planes can fly, and that information flows are integrated. Losing people in these vital roles is like removing a body’s central nervous system and expecting it to still function properly. The Globe and Mail recently noted: “Realistically, it will take more than a decade to generate midranking officers’ and sailors’ replacements.”

Politico reports that “DND doesn’t have enough people to maintain airplanes, and expects that problem to linger for years.” Exactly why Canada is facing such a shortfall of military recruits is a complicated question. Recruitment was picking up pace before the pandemic — although staffing levels were still low — so Covid may share some of the blame.

The private sector has been luring people away with better pay, creating a related retention crisis. But the government also seems too wedded to outdated models of recruitment. A longstanding ban on permanent residents enlisting in the military was overturned in 2022.

The result was a flood of 21,000 applications from permanent residents — of which CBC reports that only 100 were ever hired. This wasn’t because all 21,000 were manifestly unfit. Rather, the extra security screening was implemented so slowly that applications took 18 to 24 months to process.

According to official figures, the wait was so long that 15,000 wound up walking away.

The Arctic: Canada’s Emerging Strategic Vulnerability

There are only eight arctic countries in the world: the US, Canada, Denmark (through Greenland), Iceland, Norway, Sweden, Finland, and Russia. Of these, Russia alone owns the majority of land in the region — slightly over fifty percent. But Canada is far and away the second biggest player.

According to Policy Magazine, forty percent of Canada’s landmass is considered arctic. Canada’s arctic coastline covers 162,000 km. As global warming accelerates and new shipping lanes open in the once-frozen north, that land is going to become increasingly valuable.

Unfortunately, Ottawa is doing next to nothing to protect it. According to leaked US documents, Canada’s commitment to the Arctic is so limited that “significant Arctic capabilities and modernization plans have not materialized.” While Russia has been building new ports and bases and expanding its military infrastructure in the region, Ottawa has paid the far north little thought.

The Wilson Center has written about how Canada is NATO’s “weakest link” in the Arctic, stating that “domain awareness is inadequate” and raising the possibility that future Russian gray zone tactics might aim to create new facts on the ground before Ottawa is even aware something is happening. Nor does the threat originate solely in Moscow. Despite having northern borders that stop way short of the Arctic, China has declared itself a “near-Arctic” power and begun to move into the region.

The Wilson Center notes: “China’s technological and military prowess could be a game changer in the Arctic over time, whether in partnership with Russia or on its own.” Given that Ottawa has recently accused Beijing of meddling in its affairs, this is a threat that needs to be taken extremely seriously. The Economist put it of Moscow and Beijing’s presence in the Arctic: “If the navy is to respond to this, the money will have to be found for new frigates and submarines to give it a persistent presence in harsh conditions.”

Canada will also have to invest in new icebreakers. Canada currently fields twelve of these key vessels, against Russia’s fifty. While two more have been in the pipeline since 2021, the build schedule and costs are still being negotiated.

Falling behind in the Arctic could impact Canada’s future security and economy in ways few seem willing to grapple with. A Russian invasion of Europe — or a Chinese invasion of Taiwan — is unlikely to represent an existential threat to Ottawa. But the Arctic is different.

If nothing else, the government should at least be prioritizing defense spending in the far north.

Specialization as a Path Forward

For all the long-term, serious issues facing the Canadian military, they are not unsolvable. Solutions do exist, so long as the political willpower is there to take them. One obvious solution hangs over all the others: spend more money — commit to hitting the NATO two percent target, or at least start heading in that direction.

But that is unlikely to happen. Leaked documents appearing in the Washington Post in 2023 revealed that Justin Trudeau had told NATO allies that Canada would “never” meet the two percent threshold. A different route exists, however — one that wouldn’t force the government to spend more, but could still make Canada’s military more effective both for its own defense and for helping its NATO allies.

That route is specialization. The idea comes from a 2023 War on the Rocks article, which argued that rather than have an underfunded military that tries to do everything, Ottawa should instead zero in on the things it’s really good at and aim to become a world leader in them: “Canada should focus its new investment on building up capabilities in key force-multiplying areas such as cyber, special forces, and energy security.” Some of these are straightforward picks.

Canada’s special forces stand among the best in the world and did sterling work in Afghanistan. Building out this ability and creating a larger elite group that can do things no one else can wouldn’t be easy, but Ottawa is coming from a good starting point, with the bonus that this would be far less expensive than buying new military hardware. Cost effectiveness is also behind the suggestion to invest in cyber — an increasingly important part of modern warfare, and among the cheapest capabilities to develop.

Canada already has a lot of local know-how: War on the Rocks cites a thriving technology sector, five top-50 universities for computer science, and a strong cyber security private sector. The most curious suggestion is investing in energy security. Canada has huge oil reserves, lots of natural gas, and some of the world’s largest deposits of the critical minerals needed for making renewables.

The idea is that Ottawa could use those stockpiles to turn itself into NATO’s energy provider. The concept stems from how Vladimir Putin weaponized Russia’s energy supplies to Europe over the Ukraine conflict. When he shut off the taps to the continent in the summer of 2022, there were serious fears that Europe would freeze that winter, or that industry would collapse.

In the end, the worst predictions didn’t come to pass — but only because Europeans got lucky: the winter of 2022–23 was unbelievably mild, China was still in lockdown and not buying up the world’s LNG, and allies like the US and Norway worked to keep them supplied during the crunch. The energy cut-off could have easily worked. Transforming Canada into the alliance’s energy guarantor in the event of any future conflict could stack the deck so NATO never has to face such a problem again.

Focusing on specialization would mean downsizing other parts of the military, and it’s possible that deep spending cuts in other departments could be regretted. But it’s clear that something needs to be done. The option of Ottawa just kicking back and relying on geography and the US to protect it is no longer sustainable.

These are decisions that need to be taken now to secure Canada’s long-term security — decisions that, if delayed much longer, could result in Ottawa being unable to patrol its Arctic, help deter an invasion of Taiwan, or fulfill its obligations to NATO partners in Europe.

Sources

1. https://www.politico.com/newsletters/ottawa-playbook/2023/11/17/conversation-starters-for-halifax-00127746
2. https://warontherocks.com/2023/05/preparing-canada-for-a-new-generation-of-security-challenges/
3. https://www.economist.com/the-americas/2023/07/24/canadas-miserly-defence-spending-is-increasingly-embarrassing
4. https://www.ft.com/content/b5d91bce-4e36-427a-8fbd-00764bfa3460
5. https://www.cbc.ca/news/politics/polls-canadians-defence-spending-trump-1.7133640
6. https://www.defensenews.com/global/the-americas/2024/03/05/canadian-leaders-vow-to-be-gentle-in-making-defense-spending-cuts
7. https://globalnews.ca/news/9643739/canada-military-defence-spending-nato-preparedness-west-block/
8. https://www.theglobeandmail.com/opinion/article-canadas-navy-doesnt-just-have-a-recruitment-crisis-it-also-has-a/
9. https://www.cbc.ca/news/politics/permanent-resident-military-applications-enrolment-1.7116469
10. https://www.cbc.ca/news/politics/nato-canadian-armed-forces-europe-1.7135390
11. https://www.wilsoncenter.org/article/arctic-security-awakening-wake-call-canada
12. https://nationalpost.com/news/canada/defence-procurement-no-match-for-modern-warfare
13. https://nationalpost.com/opinion/ivison-canadas-selfish-free-ride-on-defence
14. https://www.gzeromedia.com/gzero-north/graphic-truth-russia-s-icebreaker-fleet-dwarfs-us-canada