Language selection

Government of Canada / Gouvernement du Canada

Search

Spending

Our North, Strong and Free

  • In response to the Government’s Budget 2022 commitment to review our defence policy, I recently announced a renewed vision for Canada’s defence – Our North, Strong and Free.
  • This Policy prioritizes the defence of Canada, with a focus on the Arctic.
  • One example is the establishment of Northern Operational Support Hubs, which will enable the Canadian Armed Forces to better assert Canadian sovereignty and a greater year-round military presence across the Arctic and the North.
  • It also includes important initiatives that will support our military members.
  • We will establish a Canadian Armed Forces Housing Strategy to rehabilitate existing housing and build new housing.
  • We will further provide Canadian Armed Forces members with greater access to affordable childcare at bases.
  • At the core of Our North, Strong and Free is the commitment to invest more and to invest right, by ensuring that we are regularly reviewing our progress and course-correcting, as needed.
  • For example, we will increase our defence spending by $8.1 billion over the next five years and $73 billion over the next twenty years.
  • This represents a significant downpayment on Canada’s commitment to reach expenditures of 2% of gross domestic product and fulfil our pledge to NATO.
  • To deliver on these commitments, we recognize that we need to adapt our defence procurement process to a faster, more competitive age.
  • That is why this policy establishes a four-year review cycle, to ensure our defence capabilities can grow and remain up to the task in a fluid and changing world.
  • We will further change how we work with industry, innovators and researchers to build strategic partnerships founded on transparency and trust.
  • For example, we will seek to accelerate the establishment of a new Canadian artillery ammunition production capacity to meet the ammunition demands of the CAF and our allies.
  • Taken together, I am proud that we continue to invest in our world-class Defence team, who serve Canada with great courage and devotion.

Key Facts

Our North, Strong and Free is laid out in three sections:

  • Section I assesses the current geopolitical context and the implications for Canadian interests;
  • Section II articulates an updated vision for our miliary, focused on ensuring the CAF is ready, resilient, and relevant in the new security environment; and
  • Section III and IV outline our plan to deliver on this vision, focused on strengthening the foundations of our military, modernizing existing capabilities and acquiring new ones, improving our capacity to implement through building civilian capacity, reforming procurement, digitalizing the military, leveraging innovations, and developing a stronger relationship with Canada’s defence industrial base.

Investments:

  • $8.1 billion over the next five years.
  • $73 billion over the next twenty years.

Review Cycle:

  • Defence will undertake strategic policy reviews every four years, as part of an integrated update to Canada’s National Security Strategy.
  • This deliberate approach will lay the foundations for sustainable, long-term success and continued growth in our defence capabilities.

Details

1. Strengthen the foundations of the CAF

  • Investing $10.2 billion over 20 years in current and new infrastructure to support the required tempo of training, operations, and day-to-day military activities.
  • $9.9 billion over 20 years to improve the sustainment of our naval fleets, including the extension of the Halifax-class frigate and the interim at-sea replenishment capability.
  • $9.5 billion over 20 years to accelerate the establishment of new artillery ammunition production capacity in Canada and invest in a strategic supply of ammunition.
  • $9.0 billion over 20 years to sustain military equipment under the National Procurement Program to ensure the CAF can continue to receive the critical updates necessary to preserve its ability deploy on operations.
  • $1.8 billion over 20 years to increase the number of civilian specialists in priority areas to accelerate and improve the purchase of new equipment, recruit, and train new soldiers, and upgrade our infrastructure, among others.
  • $497 million over 20 years to accelerate development of an electronic health record platform to improve the continuity of care as CAF members move between provinces and territories.
  • $295 million over 20 years to establish a CAF housing strategy, build new housing and rehabilitate existing housing.
  • $107 million over 20 years for Canada’s participation in NATO Innovation Fund.
  • $100 million over five years to improve childcare access for CAF personnel on bases across Canada.

2. Acquire new capabilities to deal with new threats

  • $18.4 billion over 20 years to acquire a more modern, mobile, and effective tactical helicopter capability.
  • $5.5 billion over 20 years to acquire a comprehensive worldwide satellite communication capability.
  • $2.8 billion over 20 years to stand up a joint Canadian cyber operations capability with the Communications Security Establishment.
  • $2.7 billion over 20 years to acquire long-range missile capabilities for the army.
  • $1.4 billion over 20 years to acquire specialized maritime sensors to conduct ocean surveillance.
  • $307 million over 20 years for airborne early warning aircraft.
  • $222 million over 20 years to build a new satellite ground station in the Arctic.
  • $218 million over 20 years for Northern Operational Support Hubs. These will better ensure Canadian sovereignty by establishing a greater year-round presence across the Arctic and the North, and investing in multi-use infrastructure that also meets the needs of the territories, Indigenous peoples, and Northern communities.

Strong, Secure, Engaged Implementation

  • National Defence has made significant progress in advancing the capital projects and initiatives in Strong, Secure, Engaged.
  • In fact, 78 percent of the projects outlined in SSE are in the implementation phase, near completion, or completed.
  • This includes the delivery of 4 Arctic and Offshore Patrol Ships, 30 Armoured Combat Support Vehicles, and two CC-330 aircraft under the Strategic Tanker Capability Project, to Canada.
  • I also recently announced a renewed vision for Canada’s defence - Our North, Strong and Free.
  • It confirms additional investments, above and beyond what we have committed through Strong, Secure, Engaged, and puts us on complementary paths.
  • We will continue delivering on our landmark investments under Strong, Secure, Engaged, such as the delivery of the first of 88 CF-35s to Canada in the 2026 timeframe – all while we break new ground through Our North, Strong and Free

Key Facts

  • Through Strong, Secure, Engaged (SSE), National Defence committed to increasing defence spending by 70% over ten years.
  • Our North, Strong and Free commits an additional $8.1 billion over five years, and $73 billion over the next 20 years.
  • This is projected to increase our defence spending to GDP ratio to 1.76% in 2029-30.

Back to top

Resource Management:

  • National Defence’s flexible model allows National Defence to manage changes in project development such as:
  • lower contract amounts;
  • changes in required capabilities;
  • additional time needed to analyse options; and,
  • delays in the delivery of goods and/or services by industry.

Regional Economic Benefits:

  • Progress on SSE represents an important investment in the Canadian economy and the creation of jobs for Canadians from to coast to coast.
  • Major procurement initiatives such as the National Shipbuilding Strategy have directly benefited Canadians by contributing $17 billion to the economy since 2012.
  • Shipbuilding contracts will also have created or maintained over 15,500 Canadian jobs annually between 2012 and 2022.

Details

Status of SSE Projects

  • Total number of Open Capital Projects: 196 of 362 (167 projects closed)
  • Total number of Open Non-Capital Initiatives: 50 of 87 (37 initiatives closed)
- Capital Projects Non-Capital Initiatives
Planning / Identification 6 17
Options Analysis 33 N/A
Definition 39 N/A
Implementation 117 33
Close-Out / Completed 167 37
Total 362 87

SSE Commitment for 1,150 New Civilian Hires

  • To date, the Department of National Defence has authorized the hiring of 1,022 civilians. The remaining 128 will be authorized by FY 28/29.
  • ADM(HR-CIV) does not track trends on the staffing of SSE positions. After a position is created it becomes a part of the recurring business for an L1.
  • The workforce population of the implicated L1s (those linked to the SSE positions) has increased by an approximate count of 1,375 over the last five fiscal years.

Parliamentary Budget Officer

  • The Parliamentary Budget Officer (PBO) released an updated report entitled Planned Capital Spending Under Strong, Secure, Engaged – Canada’s Defence Policy: 2024 Update – on February 28, 2024.
  • According to this report, from 2017-18 to 2022-23, there was a cumulative shortfall nearing $12 billion between what National Defence spent towards capital and what was originally planned under SSE. This funding has been reallocated to support investments in future years.
  • The forecasted 20-year capital spending envelope increased from $163.3 billion to $214.8 billion, a $51.5 billion increase on a cash basis since the last PBO report in 2022.
  • This increase is mainly attributed to the modernization of facilities and capabilities associated with NORAD, new projects, changes to existing projects under SSE, and vote transfers related to accounting reclassifications.
  • SSE expenditures are forecasted to reach a peak in 2027-28, with $18 billion in planned expenditures for that fiscal year, an increase of $1.7B compared to the March 2022 PBO report.
  • Given the complexity of the projects in question, National Defence adjusts spending as project schedules and timelines are refined and lessons are learned.
    • For example, the accelerated spending resulting from the purchase of P-8A Poseidon aircraft was not factored into the 2024 PBO report. This project alone will result in an increase to the forecasts by roughly +$0.6B in fiscal year 2024-25, +$6.0B in fiscal year 2025-26, +$1.9B in fiscal year 2026-27, +$0.8B in fiscal year 2027-28 and +$0.5B in fiscal year 2028-29, with offsetting decreases in years beyond.
    • It should be noted that the forecasted spending for other capital projects is also likely to shift over time, and that that these are not reflected in the 2024 PBO report. Spending profiles have and will continue to be revised through normal governance approvals.
  • As National Defence continues to advance and deliver on all SSE projects, flexibility in our funding model will in fact allow us to redistribute funds effectively.

Budget 2024

  • Budget 2024 reaffirms our commitment to long term investments in our members, our capabilities, and our support to the international community.
  • Notably, we will increase our members’ access to affordable housing, through an investment of $6.9 million over 5 years with $1.4 billion in future years to build up to 1,400 homes and renovate 2,500 existing units on bases and wings.
  • We are also exploring options to redevelop and divest National Defence properties that have the potential for housing development.
  • Through Budget 2024, we are further investing $1.2 billion over 20 years to support the ongoing procurement of critical capabilities, military equipment, and infrastructure through the National Defence Capital Investment Fund, which is also known as the CIF.
  • Through the CIF, we have moved away from the traditional approach of investing in individual projects - based on the availability of funding - to longer term portfolio and investment planning, supported by secured funding to deliver outcomes.
  • In terms of support to the international community, starting this fiscal year, we are investing $1.6 billion over five years, to continue providing non-lethal and lethal aid to Ukraine. 
  • Ultimately, Budget 2024 builds on our approach and investments – from SSE to Our North, Strong and Free  - to ensure that Canada is ready to respond to global threats and to protect the well-being of our military members.

Key Facts

  • In line with Canada’s renewed defence policy, Our North, Strong and Free, Budget 2024 also proposes foundational investments of $8.1 billion over five years, starting in 2024-25, and $73 billion over 20 years to National Defence, the Communications Security Establishment, and Global Affairs Canada.

Budget 2024 Housing Commitments:

  • National Defence is working with Canada Lands Company and other partners to divest 14 surplus properties that have potential for housing in Amherst (NS), Quebec City (QC), Ottawa (ON), Windsor (ON) and Vernon (BC).
  • The Government is also exploring the redevelopment of National Defence properties in Halifax, Toronto and Victoria that could be suitable for military and civilian uses.

Details

  • The 2024 Federal Budget was introduced on April 16, 2024, and focuses on three key themes, including building more affordable homes, cost of living and economic growth.
  • Defence items were related to three core areas, including 1) Affordable housing 2) strengthening National Defence (through areas such as, investments in capabilities, creating strategic reserve of ammunition, and enhancing cyber operations); and 3) supporting Ukraine.

Spending Reductions

  • As one of the largest federal departments, National Defence is committed to finding ways to work more efficiently, and to ensure that our dollars are concentrated on achieving our top defence and government priorities.
  • For example, targeted National Defence spending reductions for 2023-24, totaled $211 million in reduced spending on professional services and travel.
  • It is important to note that these spending reductions have not resulted in job losses outside of normal attrition or reallocation.
  • Looking to this fiscal year, of the $810 million in planned reductions,$613 million are implemented in these Main Estimates, ensuring that we are optimizing value for money even as we increase funding overall.
  • Any potential reductions in spending are being considered carefully.
  • Minimizing the impact on military readiness is a key consideration behind every such decision.
  • In parallel with spending reductions, we continue to increase military capabilities to ensure Canada can continue to contribute meaningfully to peace and stability around the world.
  • In fact, these Main Estimates represent a 15 percent (or $4.1B) to increase National Defence spending year-over-year.
  • This includes funding for major capital projects such as the Canadian Surface Combatant, the Strategic Tanker Transport Capability project, as well as Canadian Multi-Mission Aircraft, among others.
  • In addition, Our North, Strong and Free will increase our defence spending by $8.1 billion over the next five years and $73 billion over the next twenty years.
  • While we continue to maintain our fiscal responsibility toward Canadians, we remain steadfast in our efforts to defend their safety and security, at home and abroad.

Back to top

Key Facts

Spending Reductions

  • Budget 2023 announced the goal of refocusing $14.1 billion over 5 years (2023–24 to 2027–28) and $4.1 billion ongoing thereafter across all departments. Spending is being refocused from 2 categories:
    • Professional services and travel ($7.1 billion over five years and $1.7 billion ongoing)
    • Operations and transfer payments ($7 billion over four years and $2.4 billion ongoing)
  • The DND/CAF share of these spending reduction efforts amounts to approximately $900M per year.

Details

Spending Reductions

  • Efforts are underway to reduce National Defence’s spending to meet targeted reductions of approximately $900M per year. Reductions will be phased in over three years and are not expected to result in job losses outside of normal attrition, or reallocation, ensuring that National Defence’s work is focused on high-priority initiatives.
  • Additional spending reduction targets are planned for 2024-25 and ongoing, as outlined in the Departmental Plan:
2024–25 2025–26 2026–27 and after
$810.4M $851.4M $907.5M

Savings measure 1: Travel

  • Reduce spending on travel by $58.6M in 2024-25, and ongoing.
  • Funding available for travel will be closely related to defence policy priorities and Government-directed activities.
  • Travel reductions will not affect deployments of CAF personnel.
  • The Department is focusing on discretionary travel – for example, travel related to governance and planning that can be done in another format.

Savings measure 2: Professional Services

  • Reduce spending on professional services by $200.0M in 2024-25, and ongoing.
  • DND/CAF spends about $5 billion annually on contracted services. About half of that amount is in direct support of equipment and fleet maintenance and sustainment, such as engineering services.
  • Our focus on reducing spending in this area is on those services that can be reduced or eliminated while minimizing the impact on CAF readiness and operations.
  • Priority setting exercises are being undertaken throughout the department to determine reductions in this area.

Savings measure 3: General Operating Funds

  • Reduce general operating expenses by $354.8M in 2024-25, $264.3M in 2025-26, and ongoing.
  • The Department has completed the initial phase of this exercise, which has identified several areas for savings and potential long-term efficiencies across the organization. This includes activities that have historically lapsed funding.

Savings Measure 4: Fiscal FrameworkFootnote 1

  • Reduce spending to initiatives yet to be started and earmarked in the fiscal framework by $197.1M in 2024-25, $185.8M in 2025-26, $79.9M in 2026-27, and ongoing.
  • The Fiscal Framework is the financial structure within the Government’s budget agreed upon by Cabinet. Funding is transferred to a department from the Fiscal Framework through approved Treasury Board submissions for initiatives approved by Cabinet.
  • Reductions will be applied to programs where a Treasury Board Submission has yet to be approved and where there is an opportunity to harvest some savings by revising the schedule.

Savings Measure 5: Additional Targeted Spending Reductions

  • The previously described measures do not fully meet targeted saving reductions. Further work is therefore currently underway to identify $142.7M in 2025-26 and $304.8M in 2026-27 (ongoing) to fulfill Department of National Defence targets.
  • The Department is working to identify spending reductions to meet the full ongoing savings target beyond fiscal year 2024-25. A deeper review of targeted programs and activities to identify ongoing reductions is underway.
  • We will continue to ensure that the spending in our budget is directed toward top government and defence priorities, which include increasing military capabilities and supporting our people and their families.

Lapsed Funding

  • National Defence manages a large budget with major equipment and construction initiatives that need funding over many years.
  • As such, Defence uses a flexible funding model to ensure that projects get the money they need when they need it.
  • This allows us to effectively manage resources when delivering procurements over multiple years, and ensures requirements are as accurate as possible before requesting additional funds. 
  • It also allows the flexibility to re-allocate Capital funding between existing projects or move funds forward to support needs in future years.
  • For example, of the $1.6B in funding, which National Defence lapsed in 2022-2023, $1.5B is expected to be made available to us for future years.
  • This includes funding that we can put towards spending for infrastructure as well as capital equipment.
  • At the same time, we are always looking at ways to improve the way in which we manage the Defence portfolio.
  • To help mitigate lapses in funding, National Defence is improving its forecasting – to better anticipate upcoming changes – as well its timing – to better align requests for funding to when we will be spending it.

If pressed on projects that experienced lapses (2022-2023):

  • Canadian Surface Combatant (CSC) - The CSC project lapsed funding largely due to contractor delays, including delays to infrastructure updates at Irving Shipbuilding Inc (ISI) slipping into next Fiscal Year.
  • Joint Support Ship (JSS) - The JSS project experienced delays mainly due to contract deliveries on long lead items.
  • Hornet Extension Project (HEP) - The HEP project experienced lapsed funding due to adjustments to Foreign Military Sales payments to align with deliveries of the aircraft.

Key Facts

Lapsed Funding

  • Of the $1.6B in funding, which National Defence lapsed in 2022-2023, $1.5B is expected to be made available to National Defence for future years. This includes:
    • $1,083.3M for adjustments to Vote 1 and Vote 5 spending on capital equipment and infrastructure
    • $240.3M in Carry Forward (operating expenditures)
    • $122.0M for the Heyder-Beattie Class Action settlement; and
    • $16.2M in proceeds from the disposal of surplus Crown assets.

Details

Lapsed Funding

  • National Defence introduced a flexible funding model in 2017 to re-allocate lapsed funds to support emerging priorities or future needs.
  • This flexibility facilitates the delivery of major projects which require multi-year funding.
  • Despite sound long-term planning, most defence procurement projects do not advance exactly as planned—some progress faster, others slower, for a variety of operational, logistical, and program reasons.
  • To mitigate lapses in funding authorized by Parliament, National Defence is taking the following actions:
    • Improving its capital funding forecast to ensure that the Department does not request more funding authorities from Parliament than required;
    • Funding new projects from surplus in-year funding rather than requesting additional funding from Parliament;
    • Requesting funding for additional military deployments later in the process to ensure only the required funding authorities are requested (to prevent operating lapse); and
    • Monitoring forecasted exchange rates to better forecast their impact on funding estimates (to mitigate grants and contributions lapse).

Back to top

Page details

Date modified: