Cost of Liberal government's defence plan has jumped by $50B, PBO says

The cost of the Liberal government's nearly seven-year-old marquee defence plan has jumped by over $50 billion — mostly due to anticipated work on modernizing continental defence and delays in projects that should be underway — the federal budget watchdog said Wednesday.

The Office of the Parliamentary Budget Officer released an update to its projections for the impact of Strong, Secure and Engaged, the 2017 defence policy document.

The new assessment shows the projected cost of purchasing new equipment under the plan over a 20-year period has increased to $214.8 billion, up from the PBO's previous assessment of $164 billion.

When the federal government initially laid out its plan, it did not include the projected cost of modernizing NORAD. In 2023, then-Defence Minister Anita Anand announced that Canada would invest over $38 billion in improving aerospace and maritime defence alongside the United States.

Those figures are now folded into the PBO's estimate, along with $12 billion attributed to the rising cost of new equipment — brought on in part by delays in acquiring new fighter jets, frigates and drones.

«The combined effect of the introduction of the new NORAD capital and the delays in reprofiling of certain pre-existing projects results in a high and sustained level of capital spending, with planned capital expenditures for each fiscal year after 2022-2023 reaching at least $10 billion annually,» the PBO report said.

In its previous analysis in 2022, the budget officer projected that the balance of equipment purchases was equally weighted over the 20-year lifespan of the policy. Now, the PBO says, $62 billion of the expenditures will land in the last 10 years of the policy's lifespan.

The report notes that since 2017,