Question Period Note: NATO SPENDING (2025-26)

• Veteran benefits represent a direct and significant contribution to achieving Canada’s NATO target.
• For 2025-26, $7.3B in benefits and services for Veterans will be included as part of Canada’s contribution to NATO spending target.
• The total 2025-26 budget for Veterans Affairs Canada is $7.9 billion.
• 94% of Veterans Affairs Canada’s budget represents benefits or services provided to Veterans, their families and other program recipients.

NATO countries had previously committed to spending 2% of GDP on defence.
Recently, Canada has agreed to a new NATO defence investment pledge to spend 5% of its GDP on defence by 2035. This commitment was made at the 2025 NATO Summit.
Per NATO accounting methodology, program payments to Veterans—particularly Disability benefits—are counted as part of eligible defence spending.
VAC’s contribution is based on the number of clients receiving VAC benefits and VAC production levels. As these fluctuate, so too will VAC’s contribution to the NATO commitment.
Below is a summary of VAC’s contributions by year:
o 2020-21 - $3.3B
o 2021-22 - $3.8B
o 2022-23 - $3.8B
o 2023-24 - $4.2B
o 2024-25 - $5.5B
o 2025-26 - $7.3B

QUICK FACTS & FIGURES
VAC’s Contribution to NATO
• VAC’s contribution to NATO spending has increased rapidly due to the growing volume of benefits and services provided to Veterans.
• NATO countries recently agreed to a new NATO defence spending target of 5% (previously 2%). Below is a summary of VAC’s contributions to NATO targets by year:
o 2020-21 - $3.3B
o 2021-22 - $3.8B
o 2022-23 - $3.8B
o 2023-24 - $4.2B
o 2024-25 - $5.5B
o 2025-26 - $7.3B
• Trend: Contributions will continue to rise as more Veterans access benefits and services.
Included Programs
• Most of Veterans Affairs Canada’s benefits and services are included, such as:
o Pain and Suffering Compensation
o Income Replacement Benefit
o Veterans Independence Program
• Planned spending for 2025–26: $7.3B
Excluded Programs
• Only a small number of VAC programs are excluded from NATO reporting. Examples include:
o Research programs
o Cemetery/Grave maintenance
o Departmental operations
• Exclusions are limited to items that do not represent direct benefits to Veterans.
Eligible Programs
• NATO and the Department of National Defence (DND) decide which programs and services qualify as NATO spending.
• Ensures consistency across countries in reporting contributions.