Hold the North | Politics
Canada has agreed to spend roughly $159 billion a year on defence by 2035. That is almost triple what we spend now. The Prime Minister has not told Canadians how he plans to pay for it. The budget does not say either.
All three of those statements are factual. All three can be checked against the public record. All three should be the story.
Instead, the conversation has stayed on the part Mark Carney clearly wants emphasized — the announcement, the alliance solidarity, the dual-use infrastructure benefits, the language of “investment.” All real. None of which answers the question any household-budget Canadian would ask first.
Where is the money coming from.
The math is not hidden. It has just been left on a shelf.
The arithmetic, in plain English
In early May, the C.D. Howe Institute walked through the numbers. Meeting NATO’s new 5% target — 3.5% on core military spending plus 1.5% on “dual-use” infrastructure — means core defence spending nearly triples in a decade. By 2035, the bill approaches $150 billion a year. That single line item would surge past total federal direct non-defence program spending and could rival what Ottawa transfers to the provinces.
The Parliamentary Budget Office put the number a touch higher: $159 billion by 2035-36. The PBO also noted that the government’s public projections did not account for all of it.
Which raises the unavoidable question. How.
C.D. Howe’s answer was modest and pragmatic. A one-point GST increase, from 5% to 6%, generating about $17 billion a year by 2035, combined with slower growth in non-defence spending and tighter scrutiny on what Ottawa sends to the provinces and territories.
Those transfers fund healthcare and education.
That sentence is doing a lot of work.
The trade-off no one wants to name
Canada cannot triple defence spending on a flat tax base without doing one of three things. Raise taxes. Run sustained deficits. Slow the growth of the money flowing to the provinces to pay nurses, teachers, and long-term care workers. Almost certainly some mix of all three.
C.D. Howe says so. The PBO says so. The IMF said so back in April, warning that two-thirds of past military buildups have been financed by higher deficits — fuel for inflation — and that roughly one in four have ended in sharp cuts to social programs.
You would not know any of that from reading the budget.
The 2025 federal budget tabled by Finance Minister François-Philippe Champagne presented defence spending as lump-sum projections over five years. There is no year-by-year breakdown for the fiscal horizon. CBC reporters asked federal officials for the 2026-27 figure. They were told the breakdown could not be provided.
That is not a small thing. The single largest sustained financial commitment Canada has made since the Second World War is currently described in the official budget document as a five-year lump sum, with no annual receipts on offer. C.D. Howe’s own analysis of that same budget concluded that despite the size of the new injection, Canada is not on track to hit even the 3.5% core target by 2035.
Net additive, then trade-offs. Same scrum.
The Prime Minister himself has said two different things in public, on the same day, in the same press scrum.
At The Hague on June 25, asked what sacrifices Canadians would need to make, Carney said: “We’re not at a trade-off, we’re not at sacrifices in order to do those, these will be net additive.”
Then, minutes later, in the same exchange: “Those trade-offs — I’m going to give you false precision around this — but those trade-offs happen towards the end of the decade into the next decade.”
Net additive, then trade-offs.
Both quotes are on the public record. Both came out of the same microphone, into the same reporters’ recorders, on the same Wednesday in the Netherlands.
The money does not run itself
There is one more piece nobody is pricing into the headlines, and it has nothing to do with arithmetic.
It has to do with whether the Canadian Armed Forces can actually absorb the money.
The CAF Regular Force currently sits at around 65,700 personnel against an authorized target of 71,500. That is nearly 6,000 bodies short before a single new aircraft, submarine, or radar station is acquired. The Parliamentary Budget Office documented an $18.5 billion shortfall in budgeted defence capital spending over the fiscal years 2017/18 to 2023/24, and expected the pattern of lapses to continue.
You can vote the money. Getting it out the door — into trained boots, working equipment, fielded capability — is a separate problem nobody at the summit lectern wanted to dwell on.
The conversation Canadians have not been asked to have
None of this is an argument against rebuilding the Canadian Armed Forces. The capability gaps are real. The threat environment is not theoretical.
The point is narrower than that, and harder to dodge.
The Prime Minister has signed Canada up for the largest sustained spending commitment in a generation. The official budget documents do not show where the money will come from. The independent fiscal watchdog says the bill is bigger than the government has admitted. The country’s leading economic think-tank says paying for it will mean a tax increase, slower provincial transfers, or both. The IMF says historically, this kind of buildup tends to end with social spending taking the hit.
A reasonable Canadian, asked to absorb that, might want to know which one. Or, more likely, which combination.
Carney has acknowledged the answer involves what he called “social licence” — a polite term for the conversation Canadians have not yet been asked to have.
It would be useful to start that conversation before the bill arrives.
Sources: C.D. Howe Institute (May 5, 2026); Parliamentary Budget Office (May 2026); IMF World Economic Outlook (April 2026); CBC News (April 2 and November 5 reports); Government of Canada Budget 2025; Prime Minister’s press scrum, NATO Summit, The Hague, June 25, 2025.
