Like many interested observers, I was curious to see how the Carney government plans to navigate the next few years of their mandate.

Budgets are always a useful window

into government plans to resource their disparate and often conflicting priorities.

I will leave the broader commentary about the political or socio-economic aspects of the latest budget to others. Needless to say, there is plenty to comment on, in many respects due to what is unsaid as much as what is explicit in the plan itself.

Considering the sheer scale and scope of the challenges the government is trying to manage, the substantive commitment to

rebuild the Armed Forces

is truly remarkable and I continue to be cautiously optimistic.

The extensive investments planned over the coming years are staggering. I would never have imagined seeing a budget in Canada that explicitly committed to

spending well over $80 billion

— of new money! —

on defence

, with ever-increasing expenditures in the coming decade. This is definitely a step in the right direction, but we are only just at the beginning of this important reinvestment strategy.

The exact breakdown of the planned spending is slowly emerging, but funding allocations to defence are complex and fall into several different categories.

For capital expenditures (i.e., new equipment), for example, the government uses a version of accrual accounting akin to amortization, which spreads the cost of the equipment over its intended life.

For other expenditures such as training, spare parts, recruiting, salaries, operations and cyber-defence, the government allocates funds to what is essentially a cash account. Suffice it to say that there appears to be a reasonable distribution of both cash (approximately $80 billion in new funds) and accrual (approximately $30 billion) over the next five years. In aggregate, this is a lot of money!

A big chunk of the new funds are going towards recruiting and HR, including the long-overdue pay raises announced earlier this year. Other big spends include new equipment, critical infrastructure upgrades, support to communications and cyber-security as well as other appropriate priorities.

Notwithstanding the somewhat opaque plan for the new money, it is encouraging to see more than $6 billion directed towards investments in support of the (as yet un-promulgated) Defence Industrial Strategy. Included in this amount is an interesting allocation of $1 billion to the Business Development Bank of Canada to provide loans and capital to small- and medium-sized defence companies.

I’m not sure how this industrial stimulation money will be used, but I’m pleased to see funds explicitly allocated to mitigate risks associated with commercializing, retooling or producing capabilities that would otherwise not be commercially or financially viable for manufacturers.

I would also like see funds specifically used to incentivize the production and commercialization of dual-use technologies in emerging domains such as AI, robotics and autonomous systems to help Canadian companies bridge the “valley of death” that defeats many otherwise promising ventures.

Beyond the significant injection of new defence money in this budget, there appears to be continued evolution of how government accounts for spending towards its NATO obligations. In June, the Carney government committed to meet the current target of two per cent of GDP by the end of this fiscal year. That is an ambitious and laudable goal that will require the rapid expenditure of an additional $9 billion (above their initial plan) before the end of March 2026. The jury is still out on whether this goal will be achieved or not, but the clock is ticking.

Further, NATO is considering increasing that spending target to five per cent of GDP in the coming years. That five per cent would include a distribution of 3.5 per cent for general expenditures and 1.5 per cent for infrastructure. Apparently, ongoing investments in emergency preparedness and telecommunications resilience — including those by provincial and municipal agencies — will be included in the calculus. That’s an encouraging sign as it means these important and often overlooked investments will count towards our NATO contributions.

Aside from the understandable focus on the numbers, a recurring concern is how the government intends to implement the significant structural and procedural changes that are required to allow the money to actually flow. The recent creation of the Defence Investment Agency (

as previously discussed

) is an excellent initial step, but many of the impediments reside outside of DIA’s current authorities.

We also have yet to see exactly how the government plans to explicitly prefer Canadian suppliers as they advance on this unprecedented defence spending spree. Absent clarity regarding these two critical enablers, I must temper my full endorsement of the government’s proposed plan.

Lastly, it is worth commenting on the directed cuts that are intended to offset some of the increased spending. We certainly need to aggressively attack burgeoning government expenditures, and defence is not immune to wasteful behaviour. I’m not sure whether the government will find the $13 billion in savings they are expecting, but putting the public service on notice is a good start.

I am somewhat concerned, however, that DND/CAF might once again find itself having to save on one side of its ledger while trying to increase spending on the other, as we saw last year. Both can be true, but it does make it a challenge and sends conflicting signals, which are never a good thing in a military organization.

Successful implementation of the government’s stated intent will require a clearly articulated plan and strong leadership. Although I remain skeptical, I want to believe that we can do this because the alternative — not doing it — is even more frightening.

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Mark Norman is a retired vice-admiral who commanded Canada’s Navy and was vice-chief of Defence. He advises several Canadian defence companies.