OTTAWA — Canada will release its inaugural defence industrial strategy after the federal budget on Nov. 4, with a commitment to make it public by Christmas, according to Defence Minister David McGuinty. The strategy aims to outline the nation’s defence needs and sovereign capabilities while identifying domestic sectors with a competitive edge in the defence market.

During a speech at the Empire Club of Canada in Toronto, McGuinty emphasized that the strategy will prioritize dual-use technologies that can serve both civilian and military purposes. Industry experts are closely monitoring the development of the strategy, particularly its potential to favor certain sectors over others. Craig Stone, an emeritus associate professor of defence studies at Canadian Forces College, noted, "If the government’s serious about this, it means there’s going to be winners and losers."

Stone highlighted Canada’s strengths in information technology and quantum computing but cautioned that many small and medium-sized enterprises may hesitate to share their intellectual property for military applications.

Industry Minister Mélanie Joly has indicated that the strategy will adopt a broad definition of defence spending. In a recent speech, she stated, "When I talk about defence, let’s be very clear. It means, obviously, land, sea, and air. It means cyber. It also means threats to our health, like pandemics, or even climate change impacts, such as wildfires."

Prime Minister Mark Carney has committed to significantly increasing defence spending to meet NATO obligations, aiming for two percent of Canada’s GDP annually, rising to five percent by 2035. This five percent target allocates 3.5 percent for core defence needs and 1.5 percent for related areas, such as infrastructure.

Anessa Kimball, a professor specializing in defence economics at Laval University, noted that NATO allies agreed to the new spending target partly because the 1.5 percent allocation is vaguely defined. As NATO countries evaluate their expenditures, they may find they are already meeting a substantial portion of the required spending.

Carney’s government is also focused on advancing major projects to mitigate the impacts of the U.S. trade war, with new ports and mining developments seen as crucial for boosting Canadian exports. Kimball suggested that collaboration with NATO partners in areas like the Arctic could align with broader objectives, stating, "Let’s test and develop equipment there, with maybe Canadian firms and our firms in NATO countries."

The government appears to be adopting a "total defence" approach, integrating civilian resilience projects with traditional defence spending. Kimball pointed out that countries like Norway and Finland have established emergency preparedness measures that could serve as models for Canada.

Despite the anticipation surrounding the strategy, its specific details remain unclear. Christyn Cianfarani, CEO of the Canadian Association of Defence and Security Industries, remarked, "We’ve seen all the ingredients out on the table, but (has Ottawa) baked a vanilla cake or a chocolate cake? I could not tell you."

For the strategy to be effective, Cianfarani emphasized the need for clear targets, whether based on GDP share or revenue goals in the billions. She also highlighted the importance of a list of "sovereign capabilities" essential for Canada’s territorial integrity and nation-building.

The federal government has established a new Defence Investment Agency to streamline military procurement processes, which have been criticized for being slow and risk-averse. However, skeptics like James Fergusson, a senior research fellow in defence at the University of Manitoba, warn that reforming the procurement system is challenging due to competing interests.

Gaëlle Rivard Piché, head of the Conference of the Defence Associations Institute, believes that political will is crucial for changing defence procurement practices. She stated, "Historically, if we look at when Canada’s really increased defence spending and acquired capability rapidly, it was in the face of a clear threat."

Rivard Piché pointed to Russia as a significant threat, citing its violations of NATO allies' airspace. She stressed the need for the Canadian government and defence community to effectively communicate the necessity of increased defence spending to the public, beyond external pressures.

This report was first published on Oct. 24, 2025.