Budget 2025: A “historic moment” for the arms industry 

After two weeks of high-stakes negotiations, the Liberal government’s first budget has passed the House of Commons.  

Prime Minister Mark Carney may be leading a minority government, but with the Conservatives embroiled in internal disputes and the NDP leaderless, the opposition has had very little role in shaping this budget. Fear of an election trumped the fear of letting the austerity budget pass.

So what’s in Budget 2025? The budget is notoriously murky about what is new and what is already announced spending, what is getting the axe and what will remain, but the overall direction is clear. Big spending on a massive military procurement binge, and big cuts to virtually everything else – From climate action to foreign aid, health care to services for migrants. Add in a welter of tax cuts new and old coming into effect and a growing deficit, Budget 2025’s deep cuts to social programs and public services may be just the beginning. 

This blog post will look at the “generational investments” in militarism that Budget 2025 makes, while in the next few days we will dive into the budget’s cuts to social programs and public services and the tax cuts.  

“Unprecedented” spending on weapons of war 

The single biggest item spending item in the budget is an unprecedented peacetime military buildup. Under Budget 2025, defence spending will immediately soar from $41 billion to $64 billion, a 56% year-over-year increase to what is already the federal government’s largest single program expenditure. And with $81.8 billion allocated to defence over the next five years, military spending will see substantial annual increases each year thereafter.  

Nothing like it has been seen since the 1940s and 1950s, leaving even proponents of higher military spending stunned at the pace of spending. David Perry, president of Canadian Global Affairs Institute – a think tank with deep ties to the arms industry – told the Globe & Mail that the defence spending increases are “eight times more ambitious in the near term” than previously planned for under the Trudeau government. “It’s completely different than what we’re used to seeing.”  

(Trudeau had already substantially increased the defence budget and programmed in even more increases before he stepped down, though this didn’t stop the media and pundits from perpetually criticizing the Liberals for being cheap with the military.) 

Budget 2025 touts this defence spending ramp-up as necessary to “protect our sovereignty” and “support our troops.” But it’s not clear the military buildup will do either of these things. Of the $81.8 billion, three-quarters is devoted to procurement of new weapons systems, boosting production in the arms industry, and building defence and digital infrastructure. Just one-quarter is to be spent on Canadian Forces personnel.  

The largest chunk of this money will go towards a procurement binge, for everything from new submarines, aircraft, ships, armoured vehicles and artillery to new radar, drones and sensors, and cyber warfare capabilities. In a report released just before the budget went public, the Parliamentary Budget Office (PBO) showed that while annual spending on these kinds of “defence capital” purchases has in recent years hovered at $4 billion to $5 billion, it will jump to $25.7 billion by 2030-31 and remain well above historic levels thereafter. Budget 2025 provides very few details about exactly how much will go to procurement, but according to the PBO, “the scale of the planned investments [in military hardware] is unprecedented in recent decades.”  

How much of these unprecedented billions will go to pay for Lockheed Martin’s F-35s – a $27.7 billion contract that despite being under review is going “full steam ahead” according to defence officials? How much will pay for Canadian participation in Trump’s Golden Dome anti-missile weapons system, in which the Liberal government has pledged to be a “constructive partner”? How many contracts will go to firms supplying arms to Israel’s genocidal assault on the Palestinian people? The budget provides no clarity about any of this. 

Champagne: “Every company in the country should have a defence strategy” 

Canada’s military establishment now has more money than it knows what to do with. “The scale of the planned increase raises questions about the Government’s capacity to manage a higher volume of procurement activity and the domestic defence industry’s ability to support it over an extended period,” the PBO’s research note observes dryly. And corporate Canada is more than willing to help the military to find ways to spend this money. 

Finance Minister François-Philippe Champagne, who held key economic portfolios under Trudeau and was consistently one of the most lobbied ministers in Ottawa, gave away the game in comments to media after the budget was released. “Every company in the country should basically have a defence strategy,” Mr. Champagne told reporters. Defence stocks are soaring and companies are salivating at the opportunities for profit they see in this huge jump in military outlays. 

Buried in the annexes is a revealing series of tables that show where Minister Champagne’s budget has placed the most resources, above and beyond what was previously committed. Budget 2025’s single biggest item of net new spending is for the military at $55.8 billion, offset by $52 billion in new cuts (beyond the cutbacks that had already begun under Trudeau) over the next five years. The other “generational investments” in housing and infrastructure, by contrast, are largely repacked funding already allocated under the Trudeau government.  

For the two major non-military investments, Build Canada Homes ($50 billion) and Build Communities Strong Fund ($110 billion), only $6.7 billion and $9 billion respectively appears to be new money, spread over the next five years. (Annex 6, p. 14-15) Budget 2025 therefore devotes eight times more new money on military “investments” than for Build Canada Homes, and 6 times more than for the Build Communities Strong Fund.  

The arms industry, represented by its peak lobby group, the Canadian Association of Defence and Security Industries, is celebrating the budget as “a historic moment for defence.” Canada’s CEOs, represented by the Business Council of Canada, have endorsed Mark Carney’s military splurge as proof that “their orientation is right.” The military spending spree is thus the one area of the budget that actually lives up to the hype. And it is ordinary Canadians who will be paying the price. 

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