Canadian defence plan costs increase by CAD51.5 billion, says PBO

Changes to the projected spending profile for Canada's Strong, Secure, Engaged defence policy over time. (Canadian Office of the Parliamentary Budget Officer)

Projected capital spending under Canada's Strong, Secure, Engaged (SSE) defence policy has increased by CAD51.5 billion (USD38 billion) since 2022, according to the Office of the Parliamentary Budget Officer (PBO), a nonpartisan agent of the Canadian Parliament.

The SSE policy, unveiled in June 2017, projected CAD553 billion in spending over a 20-year period ending in 2036–37. This included CAD164 billion for capital acquisitions. The PBO's report in 2022 put the capital spending envelope at CAD163.3 billion, which increased to CAD214.8 billion in the report published on 28 February.

The new report said it used updated figures from all SSE capital projects provided by the Department of National Defence (DND) as of August 2023.

The CAD51.5 billion increase is attributed to new North American Aerospace Defense Command (NORAD) modernisation projects and delays in existing projects, causing some short-term expenditures to be pushed into later years.

The long-term funding to upgrade Canadian NORAD infrastructure and capabilities was announced in June 2022. Most of the capital expenditures are planned for the 2030s, with minimal funding anticipated over the next few years.

The report found 62% of total anticipated expenditures are now scheduled for the latter half of the 20-year period, up from a near 50/50 split between the first and second 10-year periods. Annual capital expenditures are expected to peak in fiscal year (FY) 2027–28 (Canada's fiscal year runs from 1 April to 31 March) at CAD18 billion, a CAD1.7 billion increase over the 2022 PBO report.