Canada Unveils $81.8 Billion Defence Investment in Budget 2025

Canadians are now aware of the financial commitment behind the federal government’s defence agenda, as unveiled in Budget 2025. The Canadian government has allocated a substantial **$81.8 billion** over five years to enhance the capabilities of the Canadian Armed Forces (CAF), marking a significant shift in national defence strategy.

The renewed focus on defence comes in response to shifts in the global landscape. Prime Minister **Mark Carney** has outlined a commitment to spend **5% of Canada’s GDP on defence by 2035**, a promise made to NATO earlier this year. Budget 2025 lays the groundwork for achieving this target, with billions earmarked for innovation, procurement enhancements, and the establishment of new defence-related agencies.

Key Investments in Defence Strategy

Among the highlights of the budget is a **$6.6 billion** investment in the long-anticipated Defence Industrial Strategy (DIS). This initiative aims to improve access to capital, foster research and innovation, and strengthen domestic supply chains. Notably, significant funds are directed towards quantum computing, showcasing Canada’s commitment to advancing cutting-edge technologies in defence.

Another crucial component of the DIS is the **$1 billion** allocated to the Business Development Bank of Canada (BDC). This funding will establish a new Defence and Security Business Mobilization Program designed to provide financial support and advisory services to small and medium-sized enterprises. BDC President and CEO **Isabelle Hudon** has emphasized the bank’s proactive approach to supporting the defence technology sector, stating it will operate in a “less shy” and “more aggressive way.”

Industry experts have highlighted the potential of this funding to catalyze further investment in defence technology. **Matthew Lombardi** from the defence newsletter The Icebreaker remarked that this program is essential for bridging the procurement gap in the sector. **Eliot Pence**, CEO of Dominion Dynamics, noted that the commitment could encourage other financial institutions to consider defence lending.

Broad Financial Commitment to Innovation

The DIS also allocates **$656.9 million** over five years to develop dual-use technologies that serve both civilian and military applications. This investment aims to bolster sectors such as aerospace, cybersecurity, artificial intelligence, and life sciences. Additionally, a **$334.3 million** commitment specifically targets the quantum industry, with funding designated for research and development.

The establishment of the Bureau of Research, Engineering and Advanced Leadership in Innovation and Science (BOREALIS) is another significant element of the budget. The DIS allocates **$68.2 million** over three years to this initiative, which seeks to promote Canadian technological sovereignty. Lombardi compared BOREALIS to the United States’ Defence Advanced Research Projects Agency (DARPA), aiming to foster collaboration between private sector innovation and national defence.

Finance Minister François-Philippe Champagne emphasized that the budget goes beyond merely enhancing military hardware. He stated that it aims to utilize research and development to bolster Canadian industry, urging companies across the country to adopt a defence strategy as substantial investments are on the horizon.

The budget also sheds light on the Defence Investment Agency (DIA), which Carney announced in June. The government has allocated **$30.8 million** over four years to establish the DIA, which will streamline military procurement processes for contracts exceeding **$100 million**. Additionally, **$52.5 million** is dedicated to modernizing the security clearance program necessary for defence contracts.

Further investments include **$1 billion** for the Arctic Infrastructure Fund, which will enhance transportation projects in Canada’s North. Pence remarked on the importance of infrastructure in the Arctic, especially as climate change opens new trading routes, heightening the region’s strategic significance.

The budget also prioritizes digital defence capabilities, with **$10.9 billion** allocated over five years to upgrade digital infrastructure for the Department of National Defence (DND) and the CAF. This includes investments in cyber defence and **$182.6 million** to develop a sovereign space launch capability, although specific plans for a new spaceport remain unclear.

As the government proceeds with its ambitious defence agenda, the commitments outlined in Budget 2025 reflect a decisive step towards enhancing Canada’s military capabilities and technological innovation. The full details of the Defence Industrial Strategy, anticipated in the coming weeks, will likely provide more clarity on the government’s long-term vision for national defence.