The Canadian Armed Forces are facing another round of internal budget cuts, even as the federal government pours billions of dollars into defence, CBC News has learned. The Treasury Board Secretariat is examining defence operational spending with an eye to reducing expenses by 10 per cent, according to two confidential sources.
The cuts stem from a 2023 Trudeau-era budget directive, enacted in the 2024 federal budget, that mandated an $810-million reduction in the first year and $908-million cuts each following year. A federal official said that schedule remains unchanged and the directive has not been rescinded.
About three weeks ago, the vice-chief of the defence staff told military leadership that internal savings must be found and that aggressive growth plans will have to be tempered, according to a third source with knowledge of the presentation.
Prime Minister Mark Carney’s government, which took office in 2025, imposed a sweeping expenditure review across federal departments but largely exempted the Department of National Defence (DND). However, DND has been told to reduce its use of outside consultants, like the rest of the government.
Defence spending is set to rise from the current $75 billion annually to $95.6 billion by 2030, according to the Parliamentary Budget Office. But much of that new money is already committed to promises and a military pay raise, said Dave Perry, president of the Canadian Global Affairs Institute.
“I think it’s created this impression that there’s gazillions of dollars that could be allocated to any number of new initiatives in the near-term window,” Perry said. “And I think that’s not really the case.”
The latest federal budget puts the military’s overall operational readiness at 61.3 per cent. Military readiness has suffered in the past from a lack of operations and maintenance funding.
John Fragos, press secretary to Finance Minister François-Philippe Champagne, said the government intends to protect DND as much as possible.
“We have however asked DND, as with every other department, to reorient its spending such that it prioritizes capital expenditures — mechanisms that grow and modernize the Canadian Armed Forces, improve its readiness in an increasingly dangerous world and render it more competitive — and spends less on operating expenditures,” Fragos said in a written statement.
Sources said legacy equipment costs and planned IT projects are among areas that could generate internal savings if stopped.
Sources: CBC Politics