New Canadian Government Gets Serious About Defense

NordSpace founder Rahul Goel remembers that only about seven months ago, it was still difficult to be vocal in Canada about entering the defense market.

Goel, an aerospace engineer turned entrepreneur, founded the orbital launch company in 2022 to provide a sovereign space transportation option to support Canada’s commercial satellite companies. Late last year, he saw an opportunity to capitalize on a new wave of interest in national security.

• Canada seeks to join Europe’s ReArm plan
• F-35 acquisition remains on hold pending review

“It was pretty hard to talk about defense—and that being something that we’re interested in as Canadians in NordSpace—without sort of getting people squinting at us,” Goel told an audience in Ottawa at the Canadian Space Launch Conference on April 29.

Those days appear to be gone. In response to President Donald Trump’s repeated proposals to annex Canada as the “51st state,” defense spending has suddenly become a popular issue. Prime Minister Mark Carney, the Liberal Party leader, won the election on April 28 on a platform that emphasized Canada’s defense responsibilities to maintain its sovereignty.

The question now is whether Ottawa will follow through on Carney’s election rhetoric. Canadians have heard politicians make big promises on defense spending that then fail to materialize fully.

Two years after taking office in 2015, then-Prime Minister Justin Trudeau released the “Strong, Secure, Engaged” policy to ramp up defense spending over a decade. Several elements of the plan eventually came to fruition, including the acquisition of new fighters, maritime patrol aircraft and uncrewed aircraft systems.

But the defense budget Carney inherited for this year is projected to represent only 1.37% of GDP, ranking Canada as the fifth-lowest spender as a share of GDP among the 32 members of NATO. The country’s defense industry also complains about a tediously slow acquisition process (AW&ST April 22-May 5, 2024).

Despite the government’s track record, Canadian suppliers have noticed a difference this time. “I felt it today, honestly, in the meetings I’ve had with uniformed people,” Thales Canada CEO Chris Pogue said in a May 29 interview during the Cansec convention here. “I could feel them having a different conversation than they would have had a year ago.”

A meeting with one Canadian military officer in particular was telling, Pogue said. “A senior officer in the air force was very clear on changing the way they approve projects deeper and deeper down in the organization to give more authority to move faster,” he explained. “That wouldn’t have been a conversation we would have had a few years ago.”

The final proof of Canada’s commitment to national security should come soon. Carney pledged on May 27 to complete an agreement with the European Union by Canada Day, July 1, to join the ReArm Europe Plan, which aims to create a $1 trillion war chest for financing acquisitions of military equipment. He also unveiled a plan to release his government’s first budget in the fall.

Canada’s National Defense Department faces several major decisions. One of Carney’s first acts as prime minister was to launch a review of the Royal Canadian Air Force’s acquisition of 88 Lockheed Martin F-35As, opening the door to reviving a competition to replace an aging fleet of Boeing F/A-18A/Bs. The country must also consider Trump’s invitation to join the Golden Dome air and missile defense shield, which comes with a $61 billion price tag. An $8.1 billion contract to deliver a new lead-in trainer for the air force is up for grabs as well.

Finally, the Royal Canadian Air Force is developing requirements to acquire its first fleet of airborne early-warning and control aircraft. The U.S.-built Boeing E-7A faces competition from two platforms based on the Bombardier Global 6500: the Saab Global Eye and the L3Harris-Israel Aerospace Industries system.

Previous Canadian governments had outsourced most of the direct work generated by defense contracts to other countries, but therein lies another sign that times have changed.

“Now is the time to scale up our production here at home,” Defense Minister David McGuinty told the Cansec audience. “Now is the time for your government to invest in you—to capitalize on the immense and growing defense opportunities.”