Canada will miss defense funding targets, report says

Canada will miss defense funding targets, report says

This is revealed in a report by the Parliamentary Budget Officer (PBO), Yves Giroux, which was made public on Thursday.

the PBO notes, however, that Canada’s military spending has increased significantly since 2014. Thus, nominal defense spending has increased by 67% between 2014 and 2021, even though this increase corresponds to a 40% increase in the GDP as indicated by the PBO.

Also, according to the projections of the PBO in total, Canada’s military spending will increase from $36.3 billion in 2022-2023 to $51 billion in 2026-2027, representing spending of 1.33% to 1.59% of the GDP of Canada.

Even with the massive investments and the increase in the budget of the Department of National Defence, there is therefore a significant gap to reach 2% of the GDP, agrees the Parliamentary Budget Officer. Ottawa would need to add $18 billion to the defense budget in 2022-2023, and $13 billion in 2026-2027.

the PBO notes that Ottawa would need to invest an additional $75.3 billion over the next five years to achieve a spending of 2% of its gross domestic product.

New expenses, new equipment

The largest share of the Department of National Defense budget is devoted to its personnel, according to the report of the PBO. The share of the budget allocated to the purchase of new equipment has been increasing since 2014, but it is below the 20% mark of the budget requested by theNATO to member states, including Canada.

In 2017, Ottawa committed to long-term investment in the Canadian Armed Forces with its Protect, Secure, Engaged (PSE) defense policy. The government wanted to maintain and even increase the capabilities of the Canadian army. Investments under this policy are expected to total $553 billion over 20 years – to 2036-2037.

The acquisition of new military equipment, planned in PSE, would reach $164 billion, according to the report of the PBO.

The requirements ofNATO in terms of financing the armed forces, however, include different categories of expenditure, such as pensions paid to veterans. They also include public spending on paramilitary forces like the Canadian Coast Guard and contributing to peacekeeping and humanitarian activities, as well as payments to security agencies, whether in Canada or elsewhere.

This method of calculating defense expenditures boosted Canada’s military budget by $7 billion in 2017, and these are recurring expenditures, explains the PBO in his report.

Defense expenditure accounting as a percentage of GDP is quite a simple calculation, declares the PBObut even with investments of 1.59% of the GDP in 2026-2027, Canada will remain below its commitment to NATO.