Question Period Note: NATO SPENDING (2025-26)

• Veteran benefits represent a direct and significant contribution to achieving Canada’s NATO target.
• All expenditures within Veterans Affairs Canada (VAC) contribute to Canada’s NATO target.
• For 2025-26, VAC programs represented over $7.8B of Canada’s contribution to the NATO spending target.
• Over 90% of VAC’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 - $7.8B

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.
• All 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
• 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 - $7.8B
o Planned spending for 2026–27: $7.9B
• Trend: Contributions will continue to rise as more Veterans access benefits and services.