In a significant move that underscores its commitment to national security and economic growth, the Canadian government has unveiled a comprehensive defence industrial strategy. This plan, which seeks to bolster domestic defence capabilities, aims to double the country’s defence exports over the next decade, create 125,000 new jobs, and ensure that 70 per cent of defence contracts are awarded to Canadian firms.
A Strategic Shift in Defence Procurement
The federal government’s initiative comes amid pressing global security concerns, particularly in light of Russia’s invasion of Ukraine and the lingering effects of the COVID-19 pandemic. As part of its 2025 fall budget, Ottawa has earmarked an impressive $81.8 billion for defence expenditure over the next five years, with $6.6 billion specifically allocated to the new strategy. This marks a notable shift in how Canada approaches defence procurement, moving towards a more self-reliant model that prioritises local industry.
Defence Minister David McGuinty, along with Industry Minister Mélanie Joly and Secretary of State for Defence Procurement Stephen Fuhr, articulated their vision for a robust Canadian defence sector. They emphasised the necessity of reducing bureaucratic hurdles, thereby facilitating a more efficient procurement process that benefits Canadian businesses.
Economic Implications and Job Creation
The government’s strategy aims to significantly enhance the economic landscape for small to medium-sized enterprises (SMEs) within the defence sector. Officials estimate that the strategy could generate an annual revenue boost of over $5.1 billion for these businesses. This focus on local procurement is not only intended to fortify Canada’s defence capabilities but also to stimulate job creation across the country.
By 2035, the federal government has set ambitious targets, including increasing defence spending to 5 per cent of the nation’s GDP. To meet these goals, the government anticipates allocating $180 billion towards defence procurement, alongside $290 billion for defence-related infrastructure and an additional $125 billion for downstream economic activities. These figures underscore the scale of investment that will be necessary to realise the envisioned transformation of Canada’s defence industry.
Navigating Uncertain Global Contexts
The release of this strategy follows a delay attributed to the recent mass shooting in Tumbler Ridge, B.C., highlighting the complexities of governance in an unpredictable world. The strategy document explicitly acknowledges the shifting global landscape and Canada’s need to adapt to these changes to ensure its sovereignty and security.
In the document’s preface, the authors reflect on the pressing issues of supply chain vulnerability and the importance of establishing a sustainable defence framework. “In this uncertain world, it is more important than ever that Canada possesses the capacity to sustain its own defence and safeguard its own sovereignty,” the strategy articulates, signalling a decisive pivot towards self-sufficiency.
The Path Ahead for Canadian Defence
As the Canadian government moves forward with its strategy, the focus now shifts to implementation. The challenge will lie in translating ambitious goals into tangible outcomes for the defence sector. With a clear commitment to fostering local industry, the government aims to inspire confidence among Canadian businesses contemplating entry into the defence market.
The new strategy, while ambitious, will require robust collaboration between government agencies and private industry to streamline processes and ensure that the projected job growth and economic benefits materialise. As businesses assess their roles within this evolving landscape, clarity around the distribution of funding and prioritisation of projects will be crucial.
Why it Matters
This defence industrial strategy represents a pivotal moment for Canada, as it seeks to redefine its approach to national security and economic resilience. By prioritising local firms and aiming to significantly boost defence-related employment, the government is not only addressing immediate security concerns but also laying the groundwork for long-term economic stability. As global tensions continue to rise, Canada’s commitment to enhancing its self-reliance in defence will be critical in safeguarding national interests and fostering a thriving domestic industry.
