Domestically, discussions about Canada’s defence spending are generally focused on the Department of National Defence (DND), including the Canadian Armed Forces (CAF).
However, in reporting their defence spending to the North Atlantic Treaty Organization (NATO, or the Alliance), Canada and other NATO member states can also include expenditures relating to other departments and agencies.
Moreover, calculations of defence spending as a percentage of gross domestic product (GDP) vary, depending on the data source for GDP. For instance, NATO’s calculations use Organisation for Economic Co-operation and Development amounts, and Canada’s Parliamentary Budget Officer calculates GDP in a way that is similar to Finance Canada.
This HillNote provides information to help understand the amount of DND spending that is included in the parliamentary estimates and the amount of defence expenditures reported to NATO.
Canada’s Defence Budget
DND receives an annual appropriation from Parliament through the parliamentary financial cycle, which comprises the main estimates and up to three supplementary estimates.
Figure 1 indicates the annual spending authorities for, and the actual spending by, DND between 2013–2014 and 2023–2024. The table hyperlinked in the notes to Figure 1 provides the precise amounts for each year.
Figure 1 – Department of National Defence Budget, 2013–2014 to 2023–2024 ($ billions)
Notes: In this figure, references to the Department of National Defence (DND) include the Canadian Armed Forces.
“Spending authorities” is the total amount that Parliament, through the parliamentary estimates process, authorized DND to spend during the fiscal year.
“Actual spending” is the amount that DND spent during the fiscal year.
The precise amounts can be viewed by consulting this table.
Source: Figure prepared by the Library of Parliament using data obtained from the Public Accounts of Canada for the years 2013–2014 to 2023–2024. See Public Works and Government Services Canada, Public Accounts of Canada (PDF). Click on the year, then choose “Volume II: Details of expenses and revenues.”
In 2024–2025, DND’s main estimates totalled $30.58 billion, representing approximately 6.8% of the Government of Canada’s total main estimates of approximately $449.18 billion.
The North Atlantic Treaty Organization’s Definition of “Defence Expenditure”
When reporting defence expenditure amounts to the Alliance, NATO member states use a common definition of the term “defence expenditure.” This definition is broader than what most member states might consider to be their defence expenditures. It includes expenditures by member states’ defence departments and armed forces, as well as by eligible other government departments. NATO uses these amounts when calculating the percentage of GDP that each member state allocates to defence spending annually.
According to the NATO definition, “defence expenditure” includes spending in the following areas:
- armed forces and other paramilitary forces, such as national police forces, gendarmeries and coast guards;
- retirement pensions to military and civilian personnel of military departments;
- stockpiling of military equipment and supplies;
- military operations, missions, engagements and other activities;
- peacekeeping and humanitarian operations;
- destruction of weapons, equipment and ammunition;
- defence research and development;
- contributions to eligible NATO-managed trust funds;
- expenditures relating to the military component of mixed civilian–military activities;
- military or financial assistance to support the defence of another member state; and
- expenditures for NATO’s common infrastructure.
Canada’s Reported Defence Expenditures
The annual defence expenditure amount that Canada reports to NATO is higher than the actual spending indicated for DND in the main and any supplementary estimates or the public accounts.
The Parliamentary Budget Officer has stated that, in 2014–2015, the Government of Canada started to include “elements other than pure DND spending” in the defence expenditure amount reported to NATO. The reported amount now includes spending related to eligible other government departments (eligible OGDs).
According to DND, these include the following eligible OGDs:
- Canadian Coast Guard – Canadian Coast Guard defence-related activities;
- Global Affairs Canada – Expenses related to United Nations and NATO contributions, peacekeeping, and support to DND and the CAF;
- Shared Services Canada – Information technology support to DND and the CAF;
- Treasury Board Secretariat – Spending related to centrally funded personnel costs;
- Veterans Affairs Canada – Direct payments to retired CAF members; and
- Other Government Organizations – Expenditures by several departments and agencies that are unnamed for reasons of national security.
Table 1 provides detailed defence spending amounts by Canada’s eligible OGDs from 2015–2016 to 2023–2024. Among the eligible OGDs, Veterans Affairs Canada’s defence expenditures have been the highest over this period.
Table 1 – Canada’s Defence Expenditures by Eligible Other Government Departments, 2015–2016 to 2023–2024 ($)
|
Fiscal Years |
Canadian Coast Guard |
Global Affairs Canada |
Shared Services Canada |
Treasury Board Secretariat |
Veterans Affairs Canada |
Other Government Organizations |
Total |
|---|---|---|---|---|---|---|---|
| 2015–2016 |
48,374,384 | 468,938,800 | 267,868,923 | 1,067,306,519 | 2,064,290,164 | 900,626,150 | 4,817,404,941 |
| 2016–2017 |
49,100,000 | 488,724,010 | 268,213,923 | 688,455,739 | 2,067,257,000 | 876,267,698 | 4,438,018,369 |
| 2017–2018 | 47,824,800 | 654,247,310 | 262,309,430 | 1,253,271,739 | 3,436,360,458 | 817,243,211 | 6,471,256,948 |
| 2018–2019 | 48,542,180 | 700,761,630 | 268,844,020 | 689,434,622 | 3,305,844,001 | 891,562,588 | 5,904,989,041 |
| 2019–2020 | 178,605,060 | 499,790,000 | 348,798,880 | 342,239,216 | 3,331,569,205 | 931,848,381 | 5,632,850,743 |
| 2020–2021 | 192,265,844 | 430,594,000 | 390,207,687 | 371,723,898 | 3,285,441,548 | 954,905,731 | 5,625,138,708 |
| 2021–2022 | 315,987,452 | 438,608,000 | 405,804,955 | 368,959,042 | 3,808,379,187 | 992,217,410 | 6,329,956,046 |
| 2022–2023 | 337,125,199 | 343,456,404 | 489,133,755 | 382,240,770 | 3,765,049,061 | 1,191,642,744 | 6,508,647,932 |
| 2023–2024 | 559,608,293 | 367,570,184 | 553,644,009 | 412,708,825 | 4,170,691,000 | 1,297,679,107 | 7,361,901,418 |
Note: According to the Department of National Defence, “for reasons of national security and to protect operational integrity, detailed information on contributions from Other Government Organizations cannot be provided in an unclassified manner without compromising national security.”
Source: Table prepared by the Library of Parliament based on data obtained from House of Commons, “Detailed Breakdown of Military Expenditures from Other Government Departments (OGDs),” Sessional Paper 8555-441-3054, 22 November 2024.
Figure 2 provides DND’s actual spending and Canada’s defence expenditure amounts reported to NATO – which comprises spending by DND and eligible OGDs – from 2013–2014 to 2023–2024. The table hyperlinked in the notes to Figure 2 provides the precise amounts in each year, as well as Canada’s defence expenditure amount reported to NATO as a percentage of the country’s GDP and DND’s actual spending as a proportion of the defence expenditure amount reported to NATO.
Figure 2 – Department of National Defence’s Actual Spending and Canada’s Defence Expenditures Reported to the North Atlantic Treaty Organization, 2013–2014 to 2023–2024 ($ billions)
Notes: In this figure, references to the Department of National Defence include the Canadian Armed Forces.
For detailed spending amounts, see this table.
Sources:Figure prepared by the Library of Parliament using data obtained from North Atlantic Treaty Organization (NATO), Defence Expenditure of NATO Countries (2014-2024), News release, 12 June 2024, pp. 7–9 and 11; NATO, Defence Expenditure of NATO Countries (2008-2015), News release, 28 January 2016, pp. 4–7; and Public Works and Government Services Canada, Public Accounts of Canada (PDF). Click on the year, then choose “Volume II: Details of expenses and revenues.”
Between 2014–2015 and 2023–2024, DND’s share of Canada’s total defence expenditures was, on average, 80.4%, with eligible OGDs accounting for the remaining 19.6%.
According to NATO, Canada’s defence expenditures as a percentage of GDP rose from about 1.00% in 2013–2014 to 1.31% in 2023–2024, and the Alliance projects that Canada will allocate 1.37% of its GDP to defence spending in 2024–2025. The Alliance has also stated that, in 2024–2025, Canada’s defence spending was the seventh highest among NATO’s 32 member states.
At NATO’s 2024 Summit, Canada and the other NATO member states reiterated their 2014 pledge to allocate at least 2% of their GDP to defence spending annually.
In 2024, the Government of Canada announced its intention to increase Canada’s defence spending to 2% of GDP in the coming years. When that occurs, the country’s defence spending as a percentage of GDP will again be at the proportion that existed in 1990, at the end of the Cold War.
By Martin Auger and Andrés León, Library of Parliament
Categories: Economics and finance, Government, Parliament and politics, International affairs and defence