Defence department reallocating $810M, in part to fund major equipment purchases

The Department of National Defence (DND) will reallocate $810 million in the coming budget as part of the Liberal government's overall austerity drive, according to Federal Treasury Board documents tabled in the House of Commons.

Some of those savings are to be redirected into major equipment purchases.

While some spending is being reduced, the department's overall budget is expected to be slightly higher in comparison to the current budget year forecast.

On Thursday, Treasury Board President Anita Anand tabled the main estimates for the new budget year, which begins on April 1.

The estimates say that, going forward, DND is expected to find $851 million in savings in the 2025-26 budget year and $907 million thereafter.

The estimates, which will form the basis of Finance Minister Chrystia Freeland's upcoming budget, show the department is expected to see an allocation of $30.5 billion in 2024-25 — about $300 million higher than what the department is forecast to spend in the current fiscal year.

But the estimates show a series of significant internal reductions and reallocations.

The biggest hits relate to infrastructure and bases ($174 million) and funds set aside for "ready forces" ($79.6 million).

The capital budget for the department is increasing slightly, as are payments involving NATO. 

Canada has been under heavy pressure from allies to increase defence spending to meet NATO's benchmark target of two per cent of the national gross domestic product. That would require an additional $15 to $18 billion on top of what the federal government is spending now.

A political storm erupted last fall when the country's top military commander, Gen. Wayne Eyre, warned about spending reductions.

"There's no way that you can take almost a billion dollars out of the defence budget and not have an impact," he said.

Defence Minister Bill Blair has said the Liberal government is still committed to investing in defence, but not at the same pace that previously had been expected.

Critics of the government have called on it to invest more in national defence because of heightened international tensions related to the war in Ukraine and China's increasingly assertive posture in the Pacific. 

Anand, a former defence minister, defended the changes to DND's budget.

"We will continue to invest in the Canadian Armed Forces and the defence of our country," Anand told reporters Thursday.

"That is the responsible thing to do and that is what the Canadian public expects, but they also expect us to make sure that we are not spending money on things like external contracts [and] unnecessary or executive travel."