OPINION: Next government must work to strengthen national defence

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Due to U.S. President Donald Trump’s trade war, Canada-U.S. relations are the central issue in the federal election. But a related issue — Canada’s national defence strategy — hasn’t received much attention. But it should.

In the years since Russia invaded Ukraine in early 2022, Canada has faced mounting pressure from its NATO allies to finally uphold its long-sidelined commitment to spend 2% of its gross domestic product (a broad measure of economic output) on defence. According to NATO’s latest estimates, Canada spent just 1.37% ($41.0 billion) on defence in 2024/25. This leaves us as one of only eight NATO countries (out of 31) that still spend less than the 2% target.

To strengthen Canada’s defence in an increasingly unstable world, the next federal government will need to make some tough decisions.

For example, according to the current fiscal plan, defence spending in 2028/29 (the last fiscal year of the next government’s four-year term) will reach $54.9 billion or 1.53% of GDP. To reach the 2% target that year, the next government would need to spend $71.6 billion — which is $16.7 billion more than currently budgeted — on defence. That’s a large spending increase. For perspective, raising the federal GST from 5% to 6.5% would not be enough to pay for such an increase in defence spending.

If the government simply borrowed another $16.7 billion in 2028/29, the projected deficit would grow from $27.8 billion to $44.5 billion — an increase of 60.1% — which would impose real costs on Canadians through increased debt interest (all else equal) and higher taxes in the future for younger generations. And if the next government lowers taxes (which both main parties have promised) it will reduce government revenue (all else equal), meaning the deficit would likely be even larger.

So, how can the next federal government increase spending to reach the 2% NATO target without plunging further into the red?

Simply put, reduce wasteful spending in other areas of government. The best way to do this is through a comprehensive review of all spending, with no exceptions.

In this federal election, the candidates should prioritize national defence in their platforms. But make no mistake — strengthening Canada’s defence will require tough decisions by the next federal government.

Jake Fuss and Grady Munro are fiscal policy analysts at the Fraser Institute