Defence Budget

Summary

The Department of National Defence (DND) is the second largest department within the federal government in terms of budget and the largest in terms of size. In 2023-24, DND’s budget accounted for approximately 6.1% of the total Main Estimates for Canada.
DND funding is comprised of multi-year reference levels approved by Treasury Board each year and accessed through the Parliamentary Estimates process.
Canada’s current defence policy − Strong, Secure, Engaged − made a long term (20 year) funding commitment that will allow the Canadian Armed Forces (CAF) to grow its force size and enhance the capabilities required to meet Canada’s defence needs.
In Budget 2022 the Government of Canada committed to conduct a review of the defence policy to update it for a world that has become less secure and less predictable. The update (see Defence Policy Update) will build on SSE and will enable the Canadian Armed Forces to meet threats in the changed global security environment.

The Department receives an appropriation from Parliament on an annual basis. The cash budget is approved initially through the Main Estimates and can be revised up to three times per year through the Supplementary Estimates.
This cash appropriation is used to make payments for salaries, operating and maintenance costs, grants and contributions, the purchase of capital equipment, and the construction of real property infrastructure.
DND’s Main Estimates 2023-24 are $26.5 billion, comprised of various votes as well as statutory funding (mainly comprised of funding related to employee benefit plans totalling approximately $1.7 billion). The votes are:
- Vote 1 – Operating ($17.9 billion);
- Vote 5 – Capital ($6.1 billion);
- Vote 10 – Grants and Contributions ($320 million);
- Vote 15 – Payments in respect of the long-term disability and life insurance plan for members of the Canadian Forces ($447 million);

The largest portion of the budget is allocated to Personnel (34%), Operating (34%) and Capital (22%).

Funding sought in fiscal year 2022-23 through the Main Estimates process represented approximately 91% of the Department’s budget with the remaining coming from the Supplementary Estimates, carry forward, and other adjustments. DND leverages the Supplementary Estimates process in order to access funding for CAF military operations and major capital projects as funding requirements are better defined by this point in the year. This also promotes effective financial management of departmental resources in minimizing lapses at year-end.
The Capital Investment Fund is the source of funds for the acquisition, construction or betterment of tangible capital assets by the Department. The current defence policy − Strong, Secure, Engaged − facilitates the long-term financial planning of both capital and operating requirements.

Budget 2023 announced a reduction to organizations’ travel budgets and spending on professional services starting in 2023-24, and a phased in 3% reduction of eligible spending by departments and agencies starting in 2024-25. The impact of these reductions on National Defence’s Budget has not yet been communicated by Treasury Board Secretariat (TBS). For reductions that impact 2023-24, it is expected that TBS will freeze departmental reference levels. For 2024-25 and ongoing, the reductions will be achieved through reductions in departmental authorities.