Defence industry, allies call for Canada to increase military investments

Canada's announcement of an $11.2-billion contract to improve training platforms for the military is getting a lukewarm reception at the country's largest defence trade show, as allies and military industry companies want to see more investment from the federal government.

Bill Blair detailed the contract, which includes the purchase of 70 training aircraft, in a keynote speech at the Canadian Association of Defence and Security Industries' annual defence industry tradeshow (CANSEC) in Ottawa.

The announcement is part of money already allocated from the government, meaning Canada is still committed to spending 1.76 per cent of its gross domestic product (GDP) on national defence by 2029-30.

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"You have some disappointment in how much Canada has done," Charles Davis, chief of the Office of Defence Cooperation from the U.S. Embassy in Canada, told CTV News.

The former U.S. army colonel says it's important for all NATO allies to meet the commitment of investing two per cent of total GDP on national defence.

Last week, a letter written by a bipartisan group of 23 U.S. senators to Prime Minister Justin Trudeau urged Canada to live up to the NATO commitment. "In 2029, Canada's defence spending is estimated to rise to just 1.7 percent, five years after the agreed upon deadline of 2024 and still below the spending baseline," the letter said.

Davis says that letter is proof of the disappointment on the American side.

However, he points out the U.S. wants to work with Canada to achieve the goal, "To make sure your (Canada's) investments are effective and get the capabilities that Canada needs, that we the United States needs Canada to have."

Those capabilities include the modernization of the North American Aerospace Defense Command (Norad). Canada committed $38.6 billion over the next two decades to improve surveillance systems, modernize Canadian air weapons systems and ensure a strong military presence in Canada's North among other things.

In response to reporters' questions about NATO spending targets, Defence Minister Bill Blair pointed out military spending is increasing by 27 per cent year-over-year. While Blair admitted Canada needs to do more, he doesn't want to rush money out the door.

"We're going to do our homework, we'll do the research, we're going to make sure the government, on behalf of Canadians, makes a well-informed decision about how to invest their hard-earned tax dollars," Blair told reporters.

While the money spent on defence often gets a lot of the attention, Canada's commitment to build up industrial capacity in the defence sector is often overlooked. "Compared to other nations we're a bit slower in our ability to produce and respond as Europe right now," says Christyn Cianfarani, president and CEO of the Canadian Association of Defence and Security Industries (CADSI).

Following Russia's invasion of Ukraine in 2022, European nations ramped up production in their own defence sectors. Cianfarani also says the Canadian procurement process leaves a lot of uncertainty compared to how things are done in the U.S.

"You will never see America not buy an American fighter plane, and very fast they (the U.S. government) invest in it. They expect to buy it and that is just something we all understand," Cianfarani said.

"We don't do that in Canada, which means that the industry doesn't get the signals to do early investment to prepare itself for an eventual purchase, because it never knows whether the government is going to invest in Canada or not."

The announcement and renewed pressure to meet the NATO target come weeks before the prime minister is set to meet allies at the Summit on Peace in Ukraine, which is being held Lucerne, Switzerland, from June 15 to 16.