Question Period Note: PBO Report on Military Expenditures as Defined by NATO

The Parliamentary Budget Officer just published a report showing how far behind Canada is when it comes to meeting the 2% NATO target for defence spending. Why isn’t Canada pulling its weight when it comes to contributing to NATO?

• National Defence welcomes the Parliamentary Budget Officer’s report and appreciates the work of his team on behalf of Canadians.

• Canada is unwavering in itss actively commitment to the NATO Alliance and is contributing to NATO’s deterrence and defence efforts, including through Operation REASSURANCE.

• We are committed to making investments in defence, so that alongside our NATO Allies, we are agile in the face of evolving threats.

• That is why Budget 2022 allocates $8 billion in additional defence spending.

• This includes $6.1 billion to increase defence capabilities, improve continental defence, and support commitments to our allies.

• We will continue to make important contributions to global peace and stability alongside our NATO Allies.

Quick Facts

Parliamentary Budget Officer Report

• PBO released a report on June 9, 2022 on total Canadian military expenditures and the NATO 2% target which notes

  • The gap between military spending as a percentage of GDP and the 2% benchmark will narrow over the next five years

  • Canadian military expenditure has increased significantly between 2014-2021; rising approximately 40% in nominal terms across this period.

  • An increase in total military spending from $36.3 billion in 2022-23 to $51.0 billion in 2026-27

  • Canada’s military expenditure as a percentage of GDP is projected to increase from 1.33 percent to 1.59 percent over the same period

Defence Spending

• Fiscal Year 2021-22: Canada spent 1.32% of its GDP on defence.

• Canada is the 6th largest contributor to NATO’s common funded budget.

• Canada spent 13.7% of defence spending on major equipment in 2021-22.

Canadian Support to NATO Operations

• March 8, 2022 – The Prime Minister announced that Canada will renew its multi-year commitment to Operation REASSURANCE. This announcement is a year ahead of schedule and responds to the changing security situation in Eastern Europe.

  • Approximately 1,375 Canadian Armed Forces members employed on Operation REASSURANCE.

• In addition, Canada has almost 400 CAF personnel in NATO headquarters in Europe and North America making important contributions to Alliance security.

• Operation IMPACT: 16 Canadian Armed Forces members deployed to NATO Mission Iraq to support training and capacity building of the Iraqi military.

• Operation KOBOLD: 5 Canadian Armed Forces members deployed to support NATO’s Kosovo Force, a NATO-led peace-support operation.

Background

Parliamentary Budget Officer Report on Canadian Military Expenditures

• The PBO highlights that the gap between military expenditures as a percentage of GDP and the 2% benchmark will decrease over the next five fiscal years.

• PBO also notes the following:

  • Canadian military expenditure has increased significantly between 2014-2021; rising approximately 40% in nominal terms across this period.

  • PBO projections of military expenditure show an increase in total military spending from $36.3 billion in 2022-23 to $51.0 billion in 2026-27

  • Canada’s military expenditure as a percentage of GDP is projected to increase from 1.33 percent to 1.59 percent over the same period

  • In order for Canada to reach the 2% of GDP benchmark suggested by NATO, the government would need to spend between $13 and $18 billion more per year over the next 5 years.

Contributions to NATO Budgets

• Canada is the 6th largest contributor to NATO’s common funded budget. Allies make direct and indirect contributions to the costs of running NATO and implementing its policies and activities. NATO common-funded budgets and programmes are funded by direct contributions. All 30 Allies contribute to the NATO budget on an agreed cost-share formula based on Gross National Income. The top 6 contributors include the United States, Germany, the United Kingdom, France, Italy, and Canada.

Canada’s Contributions to NATO-related Operations:

• Operation REASSURANCE

  • Approximately 1,375 Canadian Armed Forces members employed on Operation REASSURANCE.

    • Approximately 240 sailors onboard HMCS Montreal, operating with NATO Maritime Group Two

    • A second frigate, HMCS Halifax, joined NATO’s Standing Naval Forces on April 9, 2022;

    • 700 soldiers leading a NATO enhanced Forward Presence Battle Group in Latvia with an additional battery of M777 artillery guns with forward observers and an electronic warfare troop to bolster the Canadian-led enhanced Forward Presence Battle Group in Latvia;

    • CP-140 Aurora long range patrol aircraft previously assigned to operations in and around Iceland, which now operates in the Euro-Atlantic Area under NATO command and control.

    • Two C-130J transport aircraft providing material transportation support to NATO and Allies across Europe.

    • Task Force Poland consisting of approximately 130 Canadian Armed Forces members working with Polish Armed Forces to operate reception centers assisting Ukrainian refugees.

  • Battle Group Latvia: Canada is the lead nation for the multinational NATO Battle Group in Latvia comprised of approximately 1,500 soldiers from 10 Allied nations.

  • Air Task Force: September to December 2021, 6 Canadian Armed Forces CF-18 Hornets and approximately 140 members supported NATO Air Policing in Romania.

    • Most recent deployment: September to December 2021.

    • Additional rotations are scheduled for summer 2022 and 2023.

  • In addition, Canada has almost 400 CAF personnel in NATO headquarters in Europe and North America making important contributions to Alliance security.

• Operation IMPACT: Under this operation, the CAF deploys members to NATO Mission Iraq to support institutional and ministerial-level reform in the Iraqi military. Canada commanded the NATO training and capacity building mission in Iraq from 2018-2020.

  • Then-Major-General Jennie Carignan held command of NATO Mission Iraq (NMI) from November 2019 to November 2020, the first woman to do so.

• Operation KOBOLD: Canada contributes CAF personnel to the Kosovo Force (KFOR) as part of the NATO-led peace-support operation. Canada’s personnel are providing logistical and headquarters support to NATO’s Kosovo Force. Should operational requirements change, the authorities are in place to surge deployment of up to 15 personnel to Op KOBOLD.

• GBA+:

  • One Gender Advisor is deployed on Operation REASSURANCE Land Task Force and one Gender Advisor on NATO Mission Iraq to ensure GBA+ aspects are integrated when planning, and running operations.

  • November 2019 – November 2020: Lieutenant-General Carignan commanded NATO Mission Iraq.

  • 2019: Commodore Josée Kurtz was the first woman to command Standing NATO Maritime Group Two.

NATO Centre of Excellence on Climate and Security

• 14 June 2021: Prime Minister Trudeau announced Canada’s proposal to establish and host a new NATO Centre of Excellence (COE) on Climate and Security and work with Allies as the Centre’s framework nation.

  • Centre of Excellences are international military organizations that are established, run, and funded by individual NATO Allies or groups of Allies. NATO COEs train and educate personnel from Allied and Partner nations on specialized topics of relevance to the Alliance.

The Centre of Excellence would facilitate the exchange of expertise among Allies, build capacity to address the security implications of climate change, and help advance ongoing efforts to reduce the climate impact of military activities.

Responsible Principal: Assistant Deputy Minister (Policy), Assistant Deputy Minister (Finance).