Canada will need to nearly double its military spending to fulfil its NATO commitment of 2% of GDP by 2032 according to the federal budget watchdog.
Additionally, the Parliamentary Budget Officer estimated that Canada would miss the target by even more than the Liberals initially projected.
According to a PBO report released Wednesday, the Liberals’ current forecast falls short, reaching only 1.76% of GDP by 2029-30, which itself is based on flawed GDP growth forecasts.
“The 1.76% figure is based on an erroneous GDP forecast: the nominal GDP growth rates applied in this forecast for fiscal years 2025-26 through 2029-30 average around 1.7%,” reads the report. “Such low growth rates are unlikely to outpace inflation and imply a four-year economic recession, almost twice the length of the country’s longest recession in the last 40 years.”
In reality, the PBO said that military spending will only reach 1.58% of GDP by 2029-30, based on substituting the flawed GDP forecast with more accurate projections from the PBO and Department of Finance, leaving a 0.42% point gap to meet the target by 2032.
Prime Minister Justin Trudeau said at the NATO summit in July that Canada would not meet the 2% target until 2032.
“Despite this announcement, the government has yet to release figures detailing how it will further increase defence spending to reach the 2% target by 2032,” reads the report.
The report highlighted a forecast showing that military spending would need to reach $81.9 billion by 2032, almost double the $41 billion expenditure for 2024. The PBO added that Canada’s defence budget shows spending levels will reach $57.8 billion by 2029-30. To hit the 2% goal, the PBO highlighted that this value should be $73.1 billion by 2029-30.
The new defence plan released by the Liberals prioritized climate change and missed the NATO target. However, the PBO highlighted that even the latest numbers were flawed and that the goal would be missed by more than the Liberals initially claimed.
The Liberals’ original budget called for a $40.1 billion deficit, with no path toward balancing it. However, another recent report from the federal budget watchdog estimated that the deficit would reach $46.8 billion this year.
“The Trudeau government continues to mismanage our finances, and that means more money wasted on interest charges, higher taxes, and more debt that Canadians’ kids and grandkids have to pay back,” said Federal Director of the Canadian Taxpayers Federation Franco Terrazzano.
Canada’s most popular premier, Wab Kinew, called on Trudeau to expedite the spending commitment ahead of the U.S. election.
The call followed 23 U.S. senators penning a letter to Trudeau urging him to do the same.
Canada’s inability or unwillingness to hit the 2% GDP spending target is reflected in its military preparedness.
Conservative defence critic James Bezan highlighted that only 58% of Canada’s military is ready to deploy. He said the country is short 16,000 troops, while 10,000 more are “undertrained and undeployable.”
The party said that the country’s warships are rusting out, the fighter jets are worn out, the army is hollowed, and the air squadrons are being shut down due to a lack of personnel.
Despite the Liberals implementing a plan to boost recruitment by lowering standards and promoting diversity over merit, the Armed Forces’ numbers continue to falter.
In 2022, just 5,242 Canadians joined the military, marking a 35% drop from 8,069 in 2021. This sharp decline persisted despite the Defence Minister’s late 2022 announcement inviting permanent residents to join Canada’s military.
Between Nov. 1, 2022, and Nov. 24, 2023, 21,472 permanent residents applied to the Canadian Armed Forces, but only 77 were accepted.NATO currently has 32 member countries. Based on NATO’s data, of 31 listed countries, Canada has the fifth lowest defence expenditure as a share of GDP % in 2024, at 1.37%. The highest country is Poland, at 4.12%.