Canada Meets NATO’s 2% Defence Spending Target

The Government of Canada has confirmed the achievement of the North Atlantic Treaty Organization defence spending target of 2% of gross domestic product for the current fiscal year, marking a significant shift in national security investment. The announcement was reinforced on April 1, 2026, during a visit by Veterans Affairs Minister Jill McKnight to Canadian Forces Base Esquimalt in British Columbia, where specific infrastructure projects were unveiled to support the expanded defence mandate.

According to a news release issued by Veterans Affairs Canada, the federal government has moved to deliver on a plan to rebuild, rearm and reinvest in the Canadian Armed Forces. This strategic pivot aims to strengthen national defence, protect Canadians, assert sovereignty, and support Allies and partners within a rapidly evolving global security environment. The achievement of the 2% expenditure target was reached half a decade ahead of the previous government’s schedule.

Infrastructure Investments in British Columbia

During the announcement in Esquimalt, Minister McKnight detailed specific capital investments intended to support Royal Canadian Navy operations and future fleet requirements. A total of $1.1 billion will be invested to replace the aging A and B jetties in Esquimalt, British Columbia. The project is designed to deliver modern, seismically resilient infrastructure on the Pacific Coast.

The Esquimalt jetty project is expected to support approximately 1,280 jobs during the construction phase. In addition to naval infrastructure, the government announced expanded access to military housing. This includes 7,500 new units to be built at 25 locations across Canada, including Esquimalt and Comox, British Columbia. This initiative coincides with the launch of the second phase of a national housing construction program valued at over $3.7 billion.

Defence Spending and Economic Impact

The broader defence investment plan involves significant fiscal commitments across multiple departments. Approximately $63 billion in 2025–26 was spent on defence across the Department of National Defence, the Canadian Armed Forces, the Canadian Coast Guard, and other government departments. Officials state these investments deliver tangible progress across personnel, infrastructure, equipment, and operational priorities.

Beyond enhancing military readiness, the historic defence investment is generating economic benefits by driving innovation and growing the defence industrial base. The Canadian defence industry currently contributes nearly $10 billion to the gross domestic product and supports over 81,000 jobs. Atlantic Canada plays a critical role in this sector, home to nearly 10,000 direct aerospace and defence jobs, representing 20% of Canada’s defence industry employment.

Meeting the 2% target is described by the government as a foundation for an even stronger, more independent, and more secure country. We see not considered an end point, but rather the beginning of a sustained, whole-of-government effort. Over the next decade, Canada plans to deliver half a trillion dollars in defence investment. This puts the country on a clear path toward meeting the new NATO Defence Investment Pledge to invest 5% of gross domestic product by 2035.

Role of Veterans Affairs

Veterans Affairs Canada is identified as the second largest contributor to Canada’s NATO spending, accounting for $7.8 billion for 2025-2026. Over 90% of the Department’s budget represents benefits or services provided to Veterans, their families, and Veteran-serving organizations. Budget 2025 provides funding that will further allow Veterans Affairs Canada to support NATO contributions, including $184.9 million over four years starting in fiscal year 2026-2027 and $40.1 million ongoing.

These funds are designated to stabilize processing capacity for disability benefits applications and modernize the operational processes and IT infrastructure supporting this program. The government intends to advance this long-term investment plan to strengthen defence and security, supporting a Defence Team that remains prepared, resilient, and reliable in an increasingly complex world.

Ministerial Statements

This investment ensures the Canadian Armed Forces have the modern infrastructure and capabilities required to operate effectively in today’s security environment. It strengthens readiness, supports our members and their families, and delivers real economic benefits through job creation and partnerships with Canadian industry. It is a clear demonstration of Canada’s commitment to contribute to NATO and to safeguard our country and our interests at home and abroad.

The Honourable David J. McGuinty, Minister of National Defence

Minister McKnight emphasized the human element of the defence spending targets. She noted that meeting NATO’s 2% target is about more than defence spending, stating it is about investing in the people who defend Canada. Her office affirmed that the government is committed to standing with all those who have worn the uniform, including Veterans and the active service members who continue to serve today.

Historical Context and Future Targets

The current investment levels represent a substantial increase from previous years. By 2014, Canada’s defence spending had fallen to just 1% of GDP, half of its obligations as a NATO member at the time. The new government released an ambitious plan to rebuild the forces six weeks after the election. For the past 10 months leading up to the announcement, the government worked across over a dozen federal departments and agencies to execute the spending increase.

Increasing investments in core military capabilities, building up Canadian industry, and dual-use investments are putting Canada on a pathway to meet the new North Atlantic Treaty Organization Defence Investment Pledge. The pathway includes a target of 3.5% on core defence spending and an additional 1.5% of GDP on defence and security-related investments by 2035. The Government of Canada states it will continue to move at unprecedented speed and scale to deliver on these objectives.