In a bid to address the military’s devastating retention and recruitment crisis, Prime Minister Mark Carney announced pay increases for Canadian Armed Forces members and billions in new defence spending, pledging to meet NATO’s old two per cent of GDP target.
The announcement still falls short of the new five per cent defence spending target adopted by NATO members this year.
Speaking Friday in Trenton, Ontario, Carney said the changes mark a “generational shift” in compensation and investment aimed at revitalizing recruitment, improving retention and strengthening Canada’s readiness in an “increasingly dangerous and divided world.”
Effective retroactively as of April 1, 2025, all ranks will see pay increases: 20 per cent for privates in the regular force, 13 per cent for lieutenant-colonels and below, and eight per cent for colonels and above.
The hikes will be accompanied by a new military service pay benefit tied to years served, higher allowances for multiple relocations, and increased pay for high-risk training, combat deployments and domestic disaster response.
“We have not seen something like this since the late 1990s,” Carney said, adding the measures will also bolster financial stability for military families.
The government will also direct more than $9 billion in defence spending this year, which Carney said will push Canada to the NATO spending benchmark by 2025, half a decade earlier than planned.
Ottawa also intends to meet the alliance’s new Defence Investment Pledge of five per cent of GDP on security and defence by 2035, quadrupling spending from 2023-24 levels by the end of the decade.
Carney outlined plans to modernize aging equipment, noting that only one of Canada’s four submarines is currently seaworthy and less than half of the maritime fleet and land vehicles are operational.
A new defence procurement agency is being created to accelerate acquisitions, with a focus on sourcing from Canadian industries, including steel, aluminum, critical minerals, cyber technology and lumber.
“Our investments will expand Canada’s industrial capacity so we can equip the Canadian Armed Forces using Canadian materials and expertise,” Carney said. “By protecting Canada, we protect NATO’s western flank.”
The prime minister also highlighted partnerships with European allies through the EU-Canada Security and Defence Partnership signed in June, aimed at improving access to suppliers and creating opportunities for Canadian defence firms under Europe’s rearmament plans.