Canada's defence spending dropped over last year

Ottawa spending 1.27 per cent of GDP on defence in 2022; 1.36 per cent in 2021

On the same day NATO's chief chided allies over not meeting the alliance's defence spending benchmarks, new numbers show Canada's financial commitment fell compared to last year.

Released on Monday, NATO's annual list of members' defence expenditures shows Canada's ratio of defence spending to its Gross Domestic Product (GDP) fell from 1.36 per cent last year, to 1.27 per cent in 2022.

This continues a downward trend in defence spending that began in 2020, which saw Canada's defence spending reach a five-year peak of 1.42 per cent.

That places Canada six from the bottom in terms of national defence commitments, between the Czech Republic and Slovenia.

The numbers were released shortly before NATO Secretary-General Jens Stoltenberg admonished members for treating the two per cent number as a goal instead of a baseline.

“Nine allies now reach or exceed the two per cent target, 19 allies have clear plans to reach it by 2024, and an additional five have concrete commitments to meet it thereafter,” Stoltenberg said on Monday as the alliance prepares to kick off this week's summit in Madrid.

“Two per cent is increasingly considered a floor, not a ceiling.”

He said members will agree to invest more resources in the alliance, for the benefit of world security.

NATO's numbers for 2022 are based on data collected as of June 20, and include estimated forecasts.

Of the 29 NATO member states (Iceland has no armed forces,) nine countries have defence spending ratios above two per cent — Greece (3.76 per cent,) the United States (3.47 per cent,) Poland (2.42 per cent,) Lithuania (2.36 per cent,) Estonia (2.34 per cent,) the United Kingdom (2.12 per cent,) Latvia (2.10 per cent,) Croatia (2.03 per cent,) and the Slovak Republic (two per cent.)

The Slovak Republic's 0.27 per cent spending increased the ranks of this year's “two per cent club” to nine.

NATO's calculations of defence spending include factors such as research and development, equipment expenditures, and benefits paid to retired armed forces members.

NATO members will collectively spend US$1.051 trillion (C$1.353 trillion) on national defence.

Funding forecasts show defence spending in Canada increasing to $41.5 billion next year, peaking at $51.1 billion in FY 2026-27 — predicted to only get Canada to 1.46 to 1.60 per cent of defence spending to GDP.

This year's federal budget was vague on how the Liberals plan to spend Canada's defence dollars, citing the volatile world situation as well as plans to review of Canada's defence policy.

Questions also surround Canada's commitments to NORAD, and where the nearly $5 billion Ottawa's promised to modernize the joint North American defence partnership will come from.

Emily Desrochers, spokesperson for the office of Defence Minister Anita Anand, maintains that Canada's current defence policy, 2017's Strong, Secure, Engaged, will increase defence spending “by over 70 per cent” between 2017 and 2026.

“This plan is fully-costed and fully-funded — allowing our military and our allies to count on predictable, sustained investments,” Desrochers said.

Experts say current commitments, however, won't be enough to meet NATO's minimum expectations.

Earlier this month, Canada's Parliamentary Budget Officer said Canada needed to increase defence spending by $75.3 billion over the next five years just to meet NATO's two per cent benchmark.

In his report, PBO Yves Giroux said Canada needed to increase this year's spending by $18.2 billion to meet NATO's target, decreasing from $15.5 in 2023-24 to just $13 billion after five years.

In his speech, Stoltenberg described this week's NATO meeting as “transformative” as the world faces the new reality of Russia and China as looming threats to international security.

“Our new (strategic concept) will guide us in an era of strategic competition, I expect it will make clear that allies consider Russia as the most significant and direct threat to our security,” he said on Monday.

“It will address China for the first time, and the challenges that Beijing poses to our security, interests, and values.”

Stoltenberg also spoke of strengthening NATO's forward defences, bolstering the alliance's high-readiness forces to over 300,000 personnel — including increasing eastern European battlegroups to “brigade” levels.

While most countries define their own military echelons, a standard NATO brigade consists of between 3,000 to 5,000 troops organized into several battalions.

Canada has lead NATO's Enhanced Forward Presence (EFP) battle group in Latvia since 2017, consisting of roughly a third of NATO troops and 700 Canadian Armed Forces members.

“In February, we announced the expansion of Operation REASSURANCE, including additional land based capabilities to Latvia,” Desrochers said.

“In March, we announced the multi-year extension of this mission and more recently, we announced that Canada will contribute a General Officer and Staff Officers to the leadership of Multinational Division-North Headquarters in Latvia.”

Questions by Postmedia about how much Canada plans to increase its Latvian presence, as well when this was going to take place, went unanswered.