By James Careless

Prime Minister Mark Carney says Canada will hit its 2% GDP NATO spending target this year. The federal government will also write the Defence Industrial Strategy that the domestic defence industry has been asking for, and create a centralized Defence Procurement Agency to speed up defence purchases in Canada.

“I’m announcing today that Canada will achieve NATO’s 2% of GDP target this year, half a decade ahead of schedule, and we will further accelerate our investments in years to come consistent with meeting these new security imperatives,” Carney said during a speech at the University of Toronto on June 9, 2025. “We will invest in new submarines, aircraft ships, armed vehicles, and our artillery, as well as new radar, drones and sensors to monitor the sea floor and the Arctic. Canada’s Department of National Defence will immediately design a new defence policy that reflects both today’s and tomorrow’s threats, informed by experts, some in this room, and the experience of allies and partners including Ukraine. [And] We are in the process of creating a new defence procurement agency that will be guided by that new defence industrial strategy and overseen by our newly appointed Secretary of State for Defence Procurement. The defence procurement agency will centralize decision-making and move at pace to get our armed forces the equipment they need when they need it.”

This builds on the commitments made last year in Canada’s defence policy, Our North, Strong and Free (ONSAF), to strengthen Canada’s sovereignty, security, and prosperity, and drive economic growth in this pivotal moment. This plan includes a cash increase of over $9 billion ($8.3 billion on an accrual basis) in defence investment this fiscal year (2025-26), bringing Canada’s defence spending to 2% of gross domestic product.

READ: Our North, Strong and Free: A Renewed Vision for Canada’s Defence

As well, Carney announced that, “we are actively seeking to strengthen transatlantic security, particularly by becoming a participant in ReArm Europe. This will help diversify our military suppliers with reliable European partners and integrate the Canadian defence industry as full participants in 150 billion Euros of Europe’s rearmament program to these ends.”

Following this speech, the Prime Minister’s office released further details of Carney’s plans for DND/CAF. They include:

  • DND’s investment in defence for 2025-26 will be over $9 billion.
  • Better pay for Canadian Armed Forces.
  • New aircraft, armed vehicles, and ammunition, as well as support for projects currently underway.
  • Developing new drones and sensors to monitor the seafloor and the Arctic.
  • Repairing and maintaining existing ships, aircraft, and other assets.
  • More health care funding and staff for Armed Forces personnel.
  • Expanding the reach, security mandate, and abilities of the Canadian Coast Guard and integrating it into our NATO defence capabilities.
  • Bolstering Canada’s defence industrial capacity.
  • Building capacity in artificial intelligence, cyber, quantum, and space.
  • Modern and secure digital infrastructure.

READ: PM Carney Promises Single Procurement Agency for Canada

Below are the planned investments for the Department of National Defence (DND) and the CAF, and the Communications Security Establishment (CSE) in 2025-26.

The figures presented below are on a cash basis, with accrual figures included in parentheses.

Foundational Investments

A Strong Fighting Force

  • $2.6 billion (both on a cash basis and on an accrual basis) to empower the military to recruit and retain the personnel needed to carry out its mandate.
    • Accelerate recruitment and reinforce retention to bring the CAF to 71,500 Regular and 30,000 Primary Reserve members by 2030 (13,000 Regular and Primary Reserve members are needed). This would include investments in recruitment and retention efforts to ensure that the CAF has the personnel it needs to be ready to respond effectively to threats at home and engage meaningfully abroad.
    • Invest in the civilian workforce to enable members of the Defence Team to support operational readiness, fleet maintenance, internal service functions, finance, policy procurement, public affairs, security, accountability, digital, and infrastructure requirements — allowing the CAF to focus on operational requirements.

Repair and Sustain – Equipment and Infrastructure

  • $844 million ($767 million on an accrual basis) to repair and sustain CAF capabilities and invest in revitalizing and optimizing key infrastructure.
    • Leverage Phase 2 of the National Procurement Program to increase funding for the repair and maintenance of CAF equipment. These additional resources will be allocated to critical fleets such as in land, maritime and aerospace domains.
    • Invest in repairing and sustaining existing DND/CAF infrastructure in order to maximize operational readiness and support CAF members. Infrastructure repair and sustainment will ensure that the CAF can continue using existing capabilities and be ready to bring online new capabilities.

Strengthening Digital Foundations

  • $560 million ($376 million on an accrual basis) to strengthen DND and the CAF’s digital foundations to ensure that the Defence Team is a relevant and modern workforce in today’s technological era. This funding will enable the Defence Team to be more resilient to cyber threats and leverage data strategically to improve decision-making, while keeping defence information safe and secure. This amount also includes funding for the CSE.

Expanding and Enhancing Existing and Emerging Military Capabilities

  • $1 billion ($431 million on an accrual basis) to grow existing and introduce emerging military capabilities that will allow Canada to become increasingly self-sufficient in fulfilling its responsibility to defend its territory and citizens, especially in the Arctic. To do so, DND will move forward with commitments made in ONSAF, with a focus on Canadian suppliers.

Strengthening Canada’s Relationship with the Defence Industry

  • $2.1 billion (both on a cash basis and on an accrual basis)to strengthen the Government’s relationship with Canada’s defence industry to lay the groundwork for a comprehensive Defence Industrial Strategy (DIS). These actions focus on immediate needs like reducing obstacles that currently limit industry’s ability to provide critical equipment and support to the CAF. As Canada cannot produce all needed military capabilities independently, the DIS will also strengthen Allied industrial partnerships and leverage joint NATO procurement mechanisms.

Developing Stronger Defence Partnerships

  • $2 billion (both on a cash basis and on an accrual basis) to diversify Canada’s defence partnerships beyond the United States (US). Canada will take advantage of both a strategic opportunity and imperative given changes in the global environment. As part of this effort, Canada will continue to leverage partnerships with the US when it is in Canada’s best interest to do so.

Planned spending for 2025-26 also includes $135 million ($20 million on an accrual basis) for defence-related investments of other government departments and agencies.

READ: Prime Minister Carney strengthens Canada’s security and Arctic sovereignty

The full video of Mark Carney’s speech can be seen here: https://www.facebook.com/MarkJCarney2025/videos/717983947396690

The full text of the news release cited above can be seen here: https://www.pm.gc.ca/en/news/news-releases/2025/06/09/canadas-new-government-rebuilding-rearming-and-reinvesting-canadian

A full Backgrounder on the intended additional spending can be found here: https://www.canada.ca/en/department-national-defence/news/2025/06/canadas-new-government-is-rebuilding-rearming-and-reinvesting-in-the-canadian-armed-forces.html

Statement from Prime Minister Carney and Minister McGuinty on Canadian Armed Forces Day
PM Carney Promises Single Procurement Agency for Canada
Prime Minister Carney strengthens Canada’s security and Arctic sovereignty
Our North, Strong and Free: A Renewed Vision for Canada’s Defence