NATO spending pledge—federal government faces lose-lose situation

for Canada to meet the target and maintain it through 2026/27, it must increase defence spending by $57.1 billion

During his recent visit to Poland, when asked about Canada’s responsibility to NATO, Prime Minister Trudeau acknowledged that “there is still more to do.” Indeed, at the Vilnius Summit last summer, the 31 member countries of NATO, which includes Canada, once again pledged to spend a minimum of 2 per cent of their gross domestic product (GDP) on defence. Unfortunately, with no plan to reach this benchmark, the Trudeau government is in a lose-lose situation—accumulate billions more in debt or further disappoint its allies.

According to NATO, the 2 per cent minimum pledge will ensure the alliance’s military readiness and improve the credibility of the organization.

Yet Canada (a founding member of NATO) has failed to reach this target every year since first making this pledge in 2006. In 2022, the latest year of available spending data, Canada’s defence spending measured 1.29 per cent of GDP—fifth-lowest in NATO and well short of the 2 per cent target. And much of Canada’s recent progress towards the spending target is due to a 2017 change in NATO’s definition of “defence spending.” Consequently, Canada has been branded a “military free-rider.”

Although most NATO countries haven’t reached the spending benchmark either, this is changing as the war in Ukraine continues. Seven members spent more than 2 per cent of GDP in 2022, and it’s estimated that 11 members will meet the target in 2023. With more members fulfilling their pledge, Canada likely will fall further behind it allies without higher defence spending. Yet according to the Parliamentary Budget Officer, for Canada to meet the target and maintain it through 2026/27, it must increase defence spending by $57.1 billion.

Unfortunately, due to the Trudeau government’s record-high spending, Ottawa is in a weak fiscal position. From 2014/15 to 2023/24, the federal government increased per-person program spending from $9,064 to $11,395 (adjusted for inflation), primarily by borrowing. As a result, the government has racked up substantial debt and projects more borrowing in the coming years, with no balanced budget in sight.

Without a plan to restrain spending in other areas to accommodate a $57.1 billion increase in defence spending, the government would have to rely on debt to meet the 2 per cent target. This would significantly increase future deficits. In 2023/24 alone, the deficit would increase from $40.0 billion to $55.5 billion. The next several years would also see deficits increase by no less than $13.0 billion. In total, from 2023/24 to 2026/27, cumulative budget deficits would increase from $143.8 billion to $200.9 billion. Such an increase would substantially weaken an already shaky fiscal position.

Despite this, it’s unlikely the Trudeau government would rework its spending to avoid such debt accumulation. Since 2014/15, the majority of spending increases have gone towards expanding or implementing new programs such as the Canada Child Benefit or $10-a-day daycare, rather than core government functions such as defence or justice.

In fact, the government increasingly treats defence as an area to find additional savings. It recently cut the defence budget by $210 million, and it’s rumoured additional cuts of $1 billion are on the way. Clearly, spending on new programs takes precedent for this government, leaving Canada in arrears on its NATO commitment.

If the Trudeau government intends to uphold its recent defence spending pledge, but is unwilling to change its priorities, then Canadians will likely see Ottawa’s mountain of government debt grow even higher. But should the government again fall short of the NATO target, Canada’s reputation among its allies will continue to deteriorate.

Authors:

Grady Munro

Policy Analyst, Fraser Institute

Jake Fuss

Director, Fiscal Studies, Fraser Institute

Related Topics:#CAF #CanadianArmedForces #FraserInstitute #GradyMunro #JakeFuss #NATO #NATOSpendingPledge

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Mark Carney Thinks He’s Cinderella At The Ball

Published on June 26, 2025

Todayville

Trish Wood is Critical

And we all pay when the dancing ends

How to explain Mark Carney’s obsession with Europe and his lack of attention to Canada’s economy and an actual budget?

Carney’s pirouette through NATO meetings, always in his custom-tailored navy blue power suits, carries the desperate whiff of an insecure, small-town outsider who has made it big but will always yearn for old-money credibility. Canada is too young a country, too dynamic and at times a bit too vulgar to claim equal status with Europe’s formerly magnificent and ancient cultures — now failed under the yoke of globalism.

Hysterical foreign policy, unchecked immigration, burgeoning censorship and massive income disparity have conquered much of the continent that many of us used to admire and were even somewhat intimidated by. But we’ve moved on. And yet Carney seems stuck, seeking approval and direction from modern Europe — a place where, for most countries, the glory days are long gone.

Carney’s irresponsible financial commitment to NATO is a reckless and unnecessary expenditure, given that many Canadians are hurting. But it allowed Carney to pick up another photo of himself glad-handing global elites to whom he just sold out his struggling citizens.

From the Globe and Mail

“Prime Minister Mark Carney has committed Canada to the biggest increase in military spending since the Second World War, part of a NATO pledge designed to address the threat of Russian expansionism and to keep Donald Trump from quitting the Western alliance.

Mr. Carney and the leaders of the 31 other member countries issued a joint statement Wednesday at The Hague saying they would raise defence-related spending to the equivalent of 5 per cent of their gross domestic product by 2035.

NATO Secretary-General Mark Rutte said the commitment means “European allies and Canada will do more of the heavy lifting” and take “greater responsibility for our shared security.”

For Canada, this will require spending an additional $50-billion to $90-billion a year – more than doubling the existing defence budget to between $110-billion and $150-billion by 2035, depending on how much the economy grows. This year Ottawa’s defence-related spending is due to top $62-billion.”

You’ll note that spending money we don’t have in order to keep President Trump happy is hardly an elbows up moment, especially given that the pledge followed Carney’s embarrassing interactions with Trump at the G7. I’m all for diplomacy but sick to my teeth of Carney’s two-faced approach to everything. There is no objective truth to anything our prime minister touches. Watch the first few minutes of the video below.

Part of the NATO top-up we can’t afford is more billions for Ukraine which is pretty much considered a lost cause. NATO must keep that conflict going in order to justify its existence and we will all pay dearly for it.

The portents are bad. This from the Globe:

We are poorer than we think. Canadians running their retirement numbers are shining light in the dark corners of household finances in this country. The sums leave many “anxious, fearful and sad about their finances,” according to a Healthcare of Ontario Pension Plan survey recently reported in these pages.

Fifty-two per cent of us worry a lot about our personal finances. Fifty per cent feel frustrated, 47 per cent feel emotionally drained and 43 per cent feel depressed. There is not one survey indicator to suggest Canadians have made financial progress in 2025 compared with 2024.

The video below is a basic “F”- you to Canadians from a Prime Minister who smirks and roles his eyes when questioned about his inept money management.

He did spill the beans to CNN with this unsettling revelation about the staggering numbers we are talking about:

Signing on to NATO’s new defence spending target could cost the federal treasury up to $150 billion a year, Prime Minister Mark Carney said Tuesday in advance of the Western military alliance’s annual summit.

The prime minister made the comments in an interview with CNN International.

“It is a lot of money,” Carney said.

This guy was a banker?

We are witnessing the political equivalent of a vain woman who blows her entire paycheque to look good for an aspirational event even though she can’t afford food or rent. Yes, she sparkled for a moment, but in reality her domaine is crumbling. All she has left are the photographs of her glittery night. Our Prime Minister is collecting his own album of power-proximity photos he can use to wallpaper over his failures as our economy collapses.

The glass slipper doesn’t fit.

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armed forces

It’s not enough to just make military commitments—we must also execute them

Published on June 26, 2025

Todayville

From the Fraser Institute

By Jake Fuss and Grady Munro

To reach 2 per cent of GDP this year, the federal government is committing an additional $9.3 billion towards the military budget. Moreover, to reach 3.5 per cent of GDP by 2035, it’s estimated the government will need to raise yearly spending by an additional $50 billion—effectively doubling the annual defence budget from $62.7 billion to approximately $110 billion.

As part of this year’s NATO summit, Canada and its allies committed to increase annual military spending to reach 5 per cent of gross domestic product (GDP) by 2035. While this commitment—and the government’s recent push to meet the previous spending target of 2 per cent of GDP—are important steps in fulfilling Canada’s obligations to the alliance, there are major challenges the federal government will need to overcome to execute these plans.

Since 2014, members of the North Atlantic Treaty Organization (NATO) have committed to spend at least 2 per cent of GDP (a measure of overall economic output) on national defence. Canada had long-failed to fulfill this commitment, to the ire of our allies, until the Carney government recently announced a $9.3 billion boost to defence spending (up to a total of $62.7 billion) that will get us to 2 per cent of GDP during the 2025/26 fiscal year.

However, just as Canada reached the old target, the goal posts have now moved. As part of the 2025 NATO summit, alliance members (including Canada) committed to reach an increased spending target of 5 per cent of GDP in 10 years. The new target is made up of two components: core military spending equivalent to 3.5 per cent of GDP, and another 1.5 per cent of GDP for other defence-related spending.

National defence is a core function of the federal government and the Carney government deserves credit for prioritizing its NATO commitments given that past governments of different political stripes have failed to do so. Moreover, the government is ensuring that Canada remains in step with its allies in an increasingly dangerous world.

However, there are major challenges that arise once you consider how the government will execute these commitments.

First, both the announcement that Canada will reach 2 per cent of GDP in military spending this fiscal year, and the future commitment to spend up to 3.5 per cent of GDP on defence by 2035, represent major fiscal commitments that Canada’s budget cannot simply absorb in its current state.

To reach 2 per cent of GDP this year, the federal government is committing an additional $9.3 billion towards the military budget. Moreover, to reach 3.5 per cent of GDP by 2035, it’s estimated the government will need to raise yearly spending by an additional $50 billion—effectively doubling the annual defence budget from $62.7 billion to approximately $110 billion. However, based on the last official federal fiscal update, the federal government already plans to run an annual deficit this year—meaning it spends more than it collects in revenue—numbering in the tens of billions, and will continue running large deficits for the foreseeable future.

Given this poor state of finances, the government is left with three main options to fund increased military spending: raise taxes, borrow the money, or cut spending in other areas.

The first two options are non-starters. Canadian families already struggle under a tax burden that sees them spend more on taxes than on food, shelter, and clothing combined. Moreover, raising taxes inhibits economic growth and the prosperity of Canadians by reducing the incentives to work, save, invest, or start a business.

Borrowing the money to fund this new defence spending will put future generations of Canadians in a precarious situation. When governments borrow money and accumulate debt (total federal debt is expected to reach $2.3 trillion in 2025-26), the burden of this debt falls squarely on the backs of Canadians—likely in the form of higher taxes in the future. Put differently, each dollar we borrow today must be paid back by more than a dollar in higher taxes tomorrow.

This leaves cutting spending elsewhere as the best option, but one that requires the government to substantially readjusts its priorities. The federal government devotes considerable spending towards areas that are not within its core responsibilities and which shouldn’t have federal involvement in the first place. For instance, the previous government launched three major initiatives to provide national dental care, national pharmacare and national daycare, despite the fact that all three areas fall squarely under provincial jurisdiction. Instead of continuing to fund federal overreach, the Carney government should divert spending back to the core function of national defence. Further savings can be found by reducing the number of bureaucrats, eliminating corporate welfare, dropping electric vehicle subsidies, and many other mechanisms.

There is a fourth option by which the government could fund increased defence spending, which is to increase the economic growth rate within Canada and enjoy higher overall revenues. The problem is Canada has long-suffered a weak economy that will remain stagnant unless the government fundamentally changes its approach to tax and regulatory policy.

Even if the Carney government is able to successfully adjust spending priorities to account for new military funding, there are further issues that may inhibit money from being spent effectively.

It is a well-documented problem that military spending in Canada is often poorly executed. A series of reports from the auditor general in recent years have highlighted issues with the readiness of Canada’s fighter force, delays in supplying the military with necessary materials (e.g. spare parts, uniforms, or rations), as well as delays in delivering combat and non-combat ships needed to fulfill domestic and international obligations. All three of these cases represent instances in which poor planning and issues with procurement and supply chains) are preventing government funding from translating into timely and effective military outcomes.

The Carney government has recently made major commitments to increase military funding to fulfill Canada’s NATO obligations. While this is a step in the right direction, it’s not enough to simply make the commitments, the government must execute them as well.