By Dave Perry, 14 February 2025
To see the full and final version of this column, go to the current issue of CNR at https://www.navalreview.ca/wp-content/uploads/public/vol20num3/cnr_vol20_3_Perry.pdf
Dating back to the release of Strong, Secure Engaged in 2017, followed by the NORAD modernization plan and now Our North, Strong and Free, along with a smattering of smaller budget announcements, the government of Justin Trudeau has made progressively larger funding commitments to the Department of National Defence (DND). Based on the nature of how the government of Canada now operates, all of these commitments have had varying degrees of back-end loading to that spending. Presently, when the government announces a new policy like Our North, Strong and Free that only represents the firing of the starter’s pistol when it comes to the race of converting the policy decision underpinning the policy into actual expenditures. In some circumstances, funding decisions to provide the money to enact the policy have to be secured after the policy is released. Similarly, even once funding is secured, expenditure authority – the actual ability to access and use the funds for their intended purpose – has to be obtained from the relevant authority. That comes from either the Treasury Board of Canada or the Minister of National Defence, although for smaller value items, sometimes the Deputy Minister can provide that approval.
In a unique feature of the last several years, DND has often needed to secure expenditure authority to access funds that have been provided as what is essentially seed money. This means that DND has to secure authority for funding to conduct option analysis activity that helps move projects to the point when they are ready to enter the definition or implementation phases when they require expenditure authority. Securing that seed funding is often a multi-month process. The process of securing expenditure authority for projects is roughly six months from the Minister of National Defence and upwards of a year when required from the Treasury Board.1 All of this means that for many of the initiatives that might be announced in a new defence policy, if everything goes perfectly from the day a new policy is released, much of the spending is multiple years away from happening. Perhaps these dynamics will change once the results of the government’s procurement review are enacted, but at the time of writing, no public results from that process have been released.
These dynamics, along with wider implementation delays and the impacts of the pandemic, have created a situation in which for several years now, Canadian defence has perennially been on the cusp of a significant spending increase. In 2017, for instance, in nominal dollars the plan was for spending to increase from roughly $20 billion in 2017/2018 to about $30 billion by 2023/2024. That magnitude of overall defence spending increase has finally arrived. The total Estimates for 2023/2024 ended up at $30.3 billion, although we don’t yet know how much of that allocated funding was actually spent. So far, in 2024/2025 defence spending is tracking to a significant increase over the previous year, with the allocated funds as of the publication of Supplementary Estimates B for 2024/2025 on 18 November 2024 standing at $34.6 billion.
A significant reason for this increase is that DND is now finally starting to ramp up spending on capital expenditures. As of Supplementary Estimates B, the allocation of capital funds was just under $9 billion. In 2022/2023, two fiscal years ago, the total allocation of funds was $5.9 billion, of which $4.9 billion was actually spent at year’s end. On a nominal basis, that’s a roughly 50% increase in allocated funding in just two years.
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Image: A Boeing graphic showing a P-8A in Canadian livery. Credit: Boeing
