Publication
2025 Canadian Federal Budget
As expected, Budget 2025 is focused on managing the forecasted fiscal deficit while also targeting investments in infrastructure, manufacturing, defence, and housing.
Canada’s New Defence Policy
Canada | Publication | November 2025
In light of longstanding deficiencies in military equipment and the imperative to fortify Canada’s defence sector, the Government of Canada has announced in the 2025 Canadian Federal Budget (Budget 2025), an accelerated investment strategy pursuant to its obligations under the North Atlantic Treaty Organization (NATO). Below are highlights of the defence measures announced in Budget 2025 on November 4, 2025.
Budget 2025 offers a sizable top-up in defence spending of $81.8 billion over five years inclusive of the $9 billion top-up to get to the North Atlantic Treaty Organization (NATO) target of 2% of GDP (announced earlier this year). This is estimated to drive defence spending to $73 billion a year by 2030 on the way up to 5% of GDP by 2035, an estimated $150 billion-plus per year. Of this 5%, 3.5% is allocated to core military needs, and 1.5% to broader defence and security investments across federal, provincial, territorial, and municipal levels.
| Amount | Purpose |
|---|---|
| $20.4 billion | Recruitment, retention, pay raises, health care, strong fighting force |
| $19.0 billion | Defence infrastructure, ammunition, training infrastructure |
| $10.9 billion | Digital and cyber defence upgrades |
| $17.9 billion | Expanded military capabilities (vehicles, counter-drone, precision strike, domestic ammunition production) |
| $6.6 billion | Defence Industrial Strategy |
| $6.2 billion | Defence partnerships, expanded military assistance to Ukraine, increased military training, international policy programming |
| $805 million | Complementary initiatives (Canadian Coast Guard, Canadian Security Intelligence Service, Public Services and Procurement Canada) |
The Government of Canada has articulated two foundational undertakings, each substantiated by dedicated funding allocations: the establishment of the Defence Investment Agency (DIA) and the implementation of the Defence Industrial Strategy. The former is intended to enhance the efficiency and transparency of defence procurement processes, while the latter seeks to fortify domestic defence industrial capabilities through targeted support and strategic development initiatives.
Defence Investment Agency (DIA)
The DIA is established to centralize and streamline defence procurement. The DIA gets $30.8 million over four years with $7.7 million ongoing, to staff up and work towards the defence industry’s goal of reducing the multi-departmental complexity of defence procurement under a one-stop-shop for major procurements and expedite procurements.
Defence Industrial Strategy
The Defence Industrial Strategy is launched to strengthen domestic procurement, drive innovation, and create high-paying jobs. Initial investments of $4.6 billion over five years will support research, innovation, supply chain resilience, and critical resource stockpiling.
| Amount | Purpose |
|---|---|
| $68.2 million | Establish the Bureau of Research, Engineering and Advanced Leadership in Innovation and Science (BOREALIS) |
| $1.0 billion | Create a new Defence and Security Business Mobilization Program at the Business Development Bank of Canada |
| $656.9 million | Develop and commercialize dual civilian-military technologies in industries including aerospace, automotive, marine, cybersecurity, artificial intelligence, biodefence, and life sciences |
| $334.3 million | Help anchor quantum technology companies in Canada and provide pathways to technology adoption in defence-related applications and industries |
| $443.0 million | Support development of innovative critical minerals processing technologies, support joint investments with allies in Canadian critical minerals projects, develop a critical mineral stockpiling mechanism to strengthen Canadian and allied national security |
| $182.6 million | Establish a sovereign space launch capability |
Also, the Government of Canada has introduced a series of strategic investments to enhance national security, border integrity, and emergency preparedness.
In the domain of border and community protection, these include:
- A $1.7 billion allocation over four years to the Royal Canadian Mounted Police aimed at combating transnational organized crime, financial crimes, and national security threats alongside a commitment to recruit 1,000 new RCMP personnel.
- A Financial Crimes Agency to be established by spring 2026, consolidating law enforcement and civilian expertise to address money laundering and fraud, and;
- A $617.7 million to the Canada Border Services Agency to strengthen its capacity to intercept illicit goods and defend Canadian industries.
In the domain of emergency management, the Meteorological Service of Canada is set to benefit from $2.7 billion over nine years to modernize its forecasting infrastructure. Additionally, $55.4 million over four years, with $13.4 million in ongoing funding, will support a new National public alerting system model to improve Amber Alerts and climate-related warnings. Finally, $257.6 million will be directed toward expanding aerial firefighting capabilities to address escalating wildfire risks.
Key Points
- The measures outlined in Budget 2025 reflect a legislative intent to modernize Canada’s defence and security apparatus and enhance compliance with international obligations (notably NATO).
- The significant allocation of resources to defence, law enforcement, and emergency management underscores the government’s prioritization of public safety, national security, and economic resilience.
If you’d like to discuss the legal implications around Canada’s New Defence Policy, or if you have any related questions, do not hesitate to contact a member of our team.
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