Canada’s Defence Moment: Reading the Signals Ahead of Budget 2025

By: Ari Laskin, Principal - Massey Advisory, Ltd.

The Government of Canada’s 2025 federal budget, set for release on November 4, 2025, will mark one of the most consequential spending cycles in recent memory. Ottawa has signalled its intent to re-anchor national priorities around generational investments. Chief among these priorities is defence readiness and Canada’s role within allied security frameworks.

As the government prepares to move defence spending toward the NATO benchmark of 2% of GDP, the implications extend well beyond procurement. They point to a whole-of-nation approach linking military modernization, domestic industry, and long-term workforce development. The biggest issues will now be whether the Government of Canada can get out of its own way, engage industry, get money out the door and actually start buying equipment the Canadian Armed Forces (CAF) desperately needs as well as recruiting the soldiers, sailors and aviators necessary to restore the CAF to greatness.

Signals Beneath the Surface

Several signals already outline the contours of this shift. A $9 billion in-year funding increase sets the stage for sustained growth in core readiness and procurement. The newly launched Defence Investment Agency is expected to streamline acquisitions and bridge the long-standing gap between defence policy and industrial strategy. Together, these measures move Canada toward a model where procurement, innovation, and national resilience are integrated under a single strategic umbrella.

The Department of Finance’s decision to shift the federal budget to the fall cycle reflects this ambition, providing fiscal room for multi-year appropriations and forward-funding envelopes. Simultaneously, the Department of National Defence has advanced investments in NORAD modernization, shipbuilding, and CAF housing, while signalling deeper alignment with the Our North, Strong and Free strategy.

Turning Ambition into Architecture

To turn intent into impact, the 2025 budget must reinforce five strategic pillars:

1. Infrastructure Modernization: Multi-year capital commitments to renew bases, expand on-site housing, and pilot modular construction will unlock private-sector delivery capacity.
2. Procurement Reform: Funding and authority for the Defence Investment Agency must enable faster, more flexible contracting models that open doors for mid-tier suppliers and innovators.
3. Industrial Capacity: Dedicated support for Canadian defence manufacturing and critical-minerals processing will build the resilient supply chains our allies expect.
4. Northern Readiness: Explicit funding for NORAD infrastructure, logistics hubs, and Arctic runway modernization will signal that sovereignty and security are one and the same.
5. Workforce and Skills: Linking defence investment to education and trades training will ensure the talent pipeline keeps pace with new technologies and production demands.

Innovation is the New Arsenal

Beyond traditional defence spending, complementary fiscal measures are poised to strengthen Canada’s innovation and industrial ecosystem. Investments such as $13 billion for the Build Canada Homes Agency, $2 billion for small modular nuclear reactors, and $5 billion for a Strategic Response Fund illustrate the government’s recognition that energy, housing, and industrial resilience are part of national security.

Programs supporting reskilling, foreign credential recognition, and gender equality in policing and defence roles highlight an equally vital dimension: people. National defence in the twenty-first century depends as much on human capacity as it does on hardware.

Devil is in the Details

As Budget 2025 takes shape, several watch-points will define its real significance: the structure of cash versus accrual funding within the 2 percent commitment; the operational authorities granted to the Defence Investment Agency; and the clarity of line-item allocations for NORAD modernization, naval shipbuilding, and CAF housing.

Equally important will be how Ottawa defines “multi-year.” Strategic credibility depends on more than headlines, it rests on predictable, long-term frameworks that allow Canadian industry to plan, invest, and deliver.

Execution is the New Strategy

This budget offers a chance to reposition Canada as a credible, innovative, and reliable partner in the evolving global defence landscape. By connecting policy ambition with industrial capability and workforce readiness, Canada can strengthen both its sovereignty and its economic resilience.

As noted in the first paragraph, the government needs to get out of its own way. The Prime Minister has set the tone that the government needs to start moving at lightening speed and deliver on the announcements. Hopefully the public service has gotten the memo. The new Defence Procurement Agency needs to be given a wide berth to start buying equipment fast and be given the opportunity to make mistakes. Move fast and break things needs to be the name of the game going forward, and that may mean euthanizing sacred cows in the defence procurement process.

At Massey Advisory, we continue to monitor these developments closely, helping clients align with emerging opportunities in defence, infrastructure, and technology. The coming year will test how well Canada can match strategic intent with execution and whether our policy frameworks are ready to meet the scale of global demand.