Fact sheet: Funding for Continental Defence and NORAD Modernization

Introduction

In June 2022, the Minister of National Defence announced funding for Canada's continental defence capabilities, including to modernize the North American Aerospace Defence Command (NORAD). This represents the most significant upgrade to Canada's NORAD capabilities in almost four decades.

NORAD modernization is a long term project and these funds will support NORAD and the Canadian Armed Forces' ability to protect Canadians against new and emerging military threats to Canada and North America more broadly. In so doing, they will also help support the Canadian Armed Forces' engagement abroad, while reinforcing NATO's Western flank at a time when autocratic regimes are threatening the rules-based international order.

The minister announced $4.9B on a cash basis for the first six years, and $38.6B over twenty years on an accrual basis.

• The incremental funding for the first six years of NORAD modernization comes from existing, previously announced funding. Planning for NORAD modernization has been underway for several years, and the Government of Canada previously announced funding for elements of continental defence and NORAD modernization in Budget 2022, as well as defence funding in Fall Economic Statement 2020.
• The most recent NORAD modernization announcement provides new funding beginning after year six (in year seven).

Specific investments will include, among other initiatives, new radar stations, command and control upgrades, additional air-to-air refueling aircraft, advanced air-to-air missiles for fighter jets, upgrades to Canadian Armed Forces’ infrastructure in the North, and additional funding to complete and augment key space projects.

The funding for continental defence and NORAD modernization is broken down into five inter-related areas of investment, detailed below.

In Detail: New Investments in Continental Defence and NORAD Modernization

This $38.6 billion on an accrual basis of funding for continental defence and NORAD modernization is broken down into five inter-related areas of investment:

1. Bolstering our ability to detect threats earlier and more precisely by modernizing our surveillance systems.
2. Improving our ability to understand and communicate threats to decision-makers in a timely manner through investments in modern technology.
3. Strengthening our ability to deter and defeat aerospace threats by modernizing our air weapons systems.
4. Ensuring the Canadian Armed Forces can sustain a strong military presence across the country, including in Canada’s North, through investments in new infrastructure and support capabilities.
5. Future-proofing our capabilities to defend North America through investments in science and technology.

Areas of investment	Investments
1. Bolstering our ability to detect threats earlier and more precisely by modernizing our surveillance systems. $6.96B from fiscal year 22/23 – 41/42	We will establish a new Northern Approaches Surveillance system to significantly expand NORAD and Canadian Armed Forces situational awareness of objects entering Canadian airspace from the North. This will represent a dramatic improvement over Canada’s existing 30-year old North Warning System, which was not designed to detect modern weapons and delivery systems, such as long-range cruise and hypersonic missiles. It will include: An Arctic Over-the-Horizon Radar system to provide early warning radar coverage and threat tracking from the Canada-United States border to the Arctic circle; A Polar Over-the-Horizon Radar system to provide early warning radar coverage over and beyond the northernmost approaches to North America, including the Canadian Arctic archipelago; and National Defence will also work with the United States to develop a complementary network of sensors with classified capabilities, distributed across Northern Canada, as another layer of detection. We will also strengthen the Canadian Armed Forces’ space-based surveillance abilities, including of Canadian territory and maritime approaches, by investing additional funds to complete and augment the new state-of-the-art, space-based surveillance project announced in Canada’s 2017 defence policy, Strong, Secure, Engaged (SSE).
2. Improving our ability to understand and communicate threats to decision-makers in a timely manner through investments in modern technology. $4.13B from fiscal year 22/23 – 41/42	We will modernize key Canadian Armed Forces’ command, control and communications capabilities and systems. We will modernize the Canadian Combined Air Operations Centre. We will renew the Canadian Armed Forces’ high and low-frequency radio capability. We will enhance satellite communications in the Arctic through additional funding to complete and augment the polar communications project announced in SSE. We will procure and install new digital radios and network equipment. We will also work with the United States to expand support for the NORAD Pathfinder initiative. This project will take advantage of cloud-based computing and machine learning to ensure that NORAD commanders can make informed, rapid decisions. We will also advance work on a new Positioning, Navigation, and Timing capability to assist with air navigation in remote areas.
3. Strengthening our ability to deter and defeat aerospace threats by modernizing our air weapons systems. $6.38B from fiscal year 22/23 – 41/42	We will procure new, advanced air-to-air missiles with the capability to engage threats from short, medium and long-ranges.
4. Ensuring our Canadian Armed Forces can launch and sustain a strong military presence across the country, including in Canada’s North, through investments in new infrastructure and support capabilities. $15.68B from fiscal year 22/23 – 41/42	We will acquire additional air-to-air refueling aircraft. We will upgrade Canadian Armed Forces’ infrastructure at four locations in Canada’s North. We will upgrade fighter infrastructure and NORAD Quick Reaction Alert capabilities at bases across Canada. We will modernize the Canadian Armed Forces’ air operational training infrastructure.
5. Future-proofing our capabilities to defend North America through investments in science and technology. $4.23B from fiscal year 22/23 – 41/42	We will fund Defence Research and Development Canada to create a science and technology program that will assess new and emerging threats, accessing and co-developing technological solutions with the United States.

The $38.6 billion investment also includes $1.18 billion for internal services.

Note: Figures may not add due to rounding.

Definitions

Accrual basis of accounting

Under the accrual basis of accounting, the cost of acquiring an asset is recorded when the asset is put into service and spread over its useful life, rather than being recorded at the time the bills are paid. The portion of DND's accrual budget records the forecasted depreciation expense of capital assets, like equipment and infrastructure.

Cash basis of accounting

Under the cash basis of accounting, payments related to capital assets and operational funding are recorded in the year during which payments are made. Each year, DND receives a cash appropriation from Parliament and these funds are used to cover salaries, operating and maintenance costs, grants and contributions, purchase of capital equipment, and the construction of real property infrastructure. The cash budget is approved through the Main Estimates and can be revised up to three times per year through Supplementary Estimates.

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