By Scott Taylor
At last week's NATO alliance annual leaders' summit in The Hague, Netherlands, Canada's Prime Minister Mark Carney pledged to boost Canada's defence budget to meet the spending objective of 5% of Gross Domestic Product (GDP).
Carney was of course just going with the flow, as the 32 NATO member states vowed to make 5% of GDP their goal for defence spending.
Now for those keeping track of such things, back in 2014 then Conservative Prime Minister Stephen Harper noted he would move Canada toward meeting the then agreed to NATO spending objective of 2% of GDP on defence. At that time the Harper Conservatives were actually spending less than 1% of GDP on defence.
While the Trudeau Liberals did announce several increases following their election victory in 2015, in 2025 Canada's defence spending still stood at just 1.3% of GDP with an expectation of meeting the 2% GDP goal by 2032.
Then came US President Donald Trump's threats of annexing Canada into becoming the 51st US State and vowing not to come to the aid of any NATO partner not paying their fair share on defence.
As a result, during the federal election campaign in Canada, Liberal leader Carney vowed to bring that 2% of GDP spending forward to 2030. Then, on June 9, with the NATO leaders' summit looming, Carney made the ambitious promise that Canada will reach the 2% of GDP defence goal within the current fiscal year.
To leap from the originally allocated $42 billion defence budget for 2025 - 2026, to Carney's revised expenditure of $62.7 billion prior to March 31, 2026 will be no easy feat.
The Canadian Armed Forces are woefully under strength in terms of personnel and decades of underfunding will make the absorption of such a cash infusion difficult to digest.
To be fair, $9 billion of Carney's projected increase will actually be new money.
The remaining funds will be accredited from existing agencies affiliated with Canada's defence and security. The largest such accounting adjustment would put the Canadian Coast Guard's budget under DND rather than the Fisheries department.
So, just days after handing this steep challenge to the braintrust at DND, Carney suddenly found himself agreeing to NATO's new goal of 5% of GDP on defence.
Shortly after that announcement Carney told CNN that given Canada's robust GDP that figure would amount to $150 billion on defence annually. Reminiscent of Captain Obvious, Carney admitted to CNN host Christine Amanpour "It is a lot of money".
The little wiggle room that exists in this newly proposed spending goal is that NATO member states will have until 2035 to meet that target. It is also defined as 3.5% of GDP on core defence capabilities such as weaponry, munitions and combat platforms. The remaining 1.5% of GDP can be applied to defence related infrastructure.
Carney indicated that one such defence infrastructure investment could include such things as the development of Canada's critical minerals.
“A little less than a third of that overall number is spending on things that quite frankly we’re already doing to build the resilience of our economy,” Carney said. “So, it would be domestic resilience, it would be defending the areas that are important to defend, but also supporting critical minerals development.”
One potentially golden opportunity that could emerge from such a refocus and broader interpretation of 'defence spending' could be the development of Canada's tungsten deposits. Just last December the US Defence Department and Canada's critical minerals infrastructure fund invested a combined $65 million into Fireweed metals to redevelop the Mactung mining site in the Yukon. The rationale for the US Defense department to invest in this Canadian tungsten resource is the military applications for this rare metal. The incredible density of Tungsten makes it particularly effective in armour piercing projectiles. While the Mactung mine is believed to possess the “world’s largest high-grade tungsten deposit.”
However due to the remoteness of the site, the cost to mine this deposit is prohibitive during peacetime. As a result, the world, including the US and NATO members continue to rely on China, the world's largest producer of Tungsten, as a source for this rare mineral.
With Canada now signed up to the EU-Canada security and defence partnership, such an investment in Tungsten production could benefit all of our NATO allies, allowing them to source Canadian Tungsten rather than Chinese Tungsten. It's a win win.
