Canada spent more than $63 billion on defence in fiscal 2025-26 and met NATO’s 2% of GDP guideline. Allies have now committed to 5% by 2035, including up to 1.5% for infrastructure and resilience. The money is arriving. The harder question for the Department of National Defence (DND) is whether the system that turns budgets into runways, jetties, ranges and housing can absorb it.
What changed
The shift happened fast. NATO’s figures put Canada at 1.01% of GDP in 2014 and 1.33% in 2023. Its 2025 estimate is 2.01%, about $62.7 billion. On March 26, 2026, National Defence confirmed that Canada had reached 2% in fiscal 2025-26 with more than $63 billion spent.
At the June 2025 Hague Summit, NATO allies agreed to a new target of 5% of GDP by 2035. At least 3.5% goes to core defence. The rest, “up to 1.5% of GDP annually,” covers critical infrastructure, networks, civil preparedness and the defence industrial base. Allies must show a credible path each year.
The infrastructure pipeline is already large:
- Budget 2025 committed $81.8 billion over five years (cash basis), including $19.0 billion for repair and sustainment of defence infrastructure such as ammunition and training facilities.
- National Defence’s March 2026 update reported more than $8 billion in active infrastructure contracts through Defence Construction Canada (DCC) and about $59 billion in infrastructure investment over ten years.
- Named projects include $1.2 billion for power and municipal services at CFB Halifax, $648 million for two aviation facilities at 14 Wing Greenwood, $871 million to recapitalize the Gagetown range and training area, and $1.1 billion for the Esquimalt A and B jetties.
- Military housing Phase 2, announced in February 2026, is valued at more than $3.7 billion across all 25 Canadian Forces Housing Agency locations.
- NORAD modernization includes $15.68 billion for infrastructure and support over 20 years, according to a DND briefing note.
View the data
| Year | % of GDP | $ millions (current) |
|---|---|---|
| 2014 | 1.01% | 20,076 |
| 2015 | 1.20% | 23,900 |
| 2016 | 1.16% | 23,474 |
| 2017 | 1.44% | 30,761 |
| 2018 | 1.30% | 29,025 |
| 2019 | 1.29% | 29,949 |
| 2020 | 1.41% | 31,289 |
| 2021 | 1.27% | 31,976 |
| 2022 | 1.20% | 33,707 |
| 2023 | 1.33% | 38,385 |
| 2024e | 1.47% | 44,277 |
| 2025e | 2.01% | 62,713 |
The gap: delivery capacity, not funding
History is the warning. Under the 2017 defence policy, Strong, Secure, Engaged, DND’s actual capital spending fell short of plan every single year. The Parliamentary Budget Officer (PBO) puts the cumulative shortfall at $18.5 billion from 2017-18 to 2023-24, an average of 35% below plan. As interim PBO Jason Jacques put it, “Delays in project delivery have historically led to funding being pushed into the future.” His October 2025 report found the new plan shows “a continuation of this pattern.”
The scale-up ahead is steep. The PBO puts planned capital spending under the 2024 policy, Our North, Strong and Free, at $322.9 billion over 20 years, peaking at $25.7 billion in 2030-31. Historical capital spending ran between $3.8 billion and $6.9 billion a year.
DCC, which delivers most defence construction, is growing fast to meet it. Contract payments rose from $1.2 billion in 2022-23 to $1.9 billion in 2025-26, and the corporation’s plan forecasts $5.8 billion by 2029-30. Its active portfolio jumped from $10.4 billion to $19 billion in a single year. DCC itself reports that recruitment in the construction trades remained increasingly difficult, and the PBO flags the skilled-trades workforce as a key delivery risk.
There’s also a quieter signal in NATO’s data. Infrastructure’s share of Canadian defence spending fell from 3.81% in 2014 to an estimated 1.44% in 2025, as equipment’s share climbed to 22.55%. New ships, aircraft and radars all need facilities to operate from. When the infrastructure lags the equipment, the capability waits.
View the data
| Fiscal year | Below plan | Shortfall |
|---|---|---|
| 2017-18 | 44% | $2.9B |
| 2018-19 | 39% | $2.6B |
| 2019-20 | 25% | $1.4B |
| 2020-21 | 27% | $2.0B |
| 2021-22 | 35% | $2.7B |
| 2022-23 | 34% | $2.7B |
| 2023-24 | 38% | $4.2B |
Where programs slip
On defence programs we’ve supported, the money is rarely the first thing that runs out. These are the constraints that bind first:
- Front-end definition. Requirements that change after design starts are the most expensive delay on any capital program. Defence adds more stakeholders and more approval layers to manage.
- Interfaces between equipment and infrastructure. A new fleet arriving before its hangar, jetty or simulator building is ready is a schedule problem that started years earlier. The Auditor General found in 2025 that new F-35 squadron facilities are expected only in 2031, more than three years behind schedule.
- Market capacity. Specialized trades, security-cleared workers and contractors who can bid on remote northern sites are all limited. DND’s own briefing notes cite remoteness, limited transport and short building seasons in the North.
- Portfolio-level visibility. Individual projects can report green while the program as a whole is short on bidders, consultants or approvals in the same quarter.
What would help
- Plan to the market, not just the budget. Build a portfolio-level view of when packages will tender, by region and trade. Then compare it with what local contractor capacity can realistically absorb, and stagger the peaks.
- Integrate equipment and infrastructure schedules. Tie facility readiness dates directly to equipment delivery milestones in one integrated master schedule, so a slip on either side shows up immediately.
- Front-load definition. Spend more effort in options analysis and definition to lock requirements before design. A month of definition is cheaper than a year of redesign.
- Use delivery models that build capacity. DCC already uses progressive design-build, construction management and integrated project delivery. Matching the model to the market, not just the project, keeps more contractors in the game.
- Report against the original baseline. Track forecast against approved dates and budgets, not only the latest re-baseline, so leadership sees slippage while there’s still time to act.
The bottom line
Canada’s defence infrastructure challenge has moved from “not enough money” to “not enough delivery capacity to spend it well.” The organizations that plan to the market, integrate schedules across equipment and facilities, and invest in definition up front will turn this funding into capability on time. The rest will add to the next PBO shortfall table.
Benjamin R. Consulting brings long-range scheduling and owner-side project controls to defence and public capital programs. Book a 30-minute call to talk about your program.
Sources: NATO, Defence Expenditure of NATO Countries (2014–2025); National Defence, Canada achieves the 2% defence spending benchmark (March 26, 2026); NATO, The Hague Summit Declaration (June 25, 2025); Budget 2025, Chapter 4; National Defence, military housing expansion (February 24, 2026); National Defence, committee briefing note (2026); PBO, Planned Capital Spending under Canada’s Defence Policy: 2025 Update; Defence Construction Canada, 2025–26 Annual Report; DCC, 2026–27 Corporate Plan Summary; PBO, assessment of the Spring Economic Update (2026); Auditor General, Delivering Canada’s Future Fighter Jet Capability (June 2025). This article is general information, not financial or legal advice.