The Parliamentary Budget Officer revealed on Wednesday that the cost of the defense plan laid out by the Liberal government nearly seven years ago has jumped by more than $50 billion – mostly due to expected work on continental defense modernization and delays in projects that should be underway.

The Parliamentary Budget Officer issued an update to its forecasts regarding the impact of the 2017 defense policy document, Strong, Secure, Engaged.

The new assessment shows that the expected cost to purchase new equipment under the plan over 20 years has increased to $214.8 billion, compared to the previous PBO estimate of $164 billion.

When the federal government initially unveiled its plan, it did not include expected costs for NORAD modernization. In 2023, then-Defence Minister Anita Anand announced that Canada would invest more than $38 billion in improving air and naval defense alongside the United States.

These figures have now been incorporated into the PBO estimates, along with $12 billion attributed to the increased cost of new equipment – partly resulting from delays in acquiring new fighter jets, frigates, and drones.

The PBO’s annual report stated, "The combined effect of introducing new capital and delays in reshaping some pre-existing projects leads to a high and sustained level of capital spending, with planned capital expenditures reaching at least $10 billion per fiscal year after 2022-2023.

In its previous 2022 analysis, the Budget Officer anticipated that equipment purchase balances would be evenly weighted over the policy’s 20-year lifespan. Now, the PBO says $62 billion of expenditures will occur in the final ten years of the policy.

The report notes that since 2017, the government has not spent nearly $12 billion allocated for equipment purchases, which are now deferred to the future.

The report said the sharp acceleration in capital spending "raises questions about the government's capacity to manage increased procurement activity."

It also raises concerns about whether the Canadian defense industry can ramp up production to meet demand.

One aspect not covered by the PBO report is the fact that the Liberal government is reviewing its defense policy in response to the Russian invasion of Ukraine.

The revised policy has not yet been published, although it was ordered on an urgent basis two years ago to address escalating international tensions.

There have been calls from some quarters to increase ammunition production, and suggestions that the navy will need to replace its submarine fleet – projects not included in the original defense policy cost.