KPMG: Canada’s defence ambitions face shortfalls in procurement, talent, and capital

Canada’s lofty defence sector ambitions face hurdles in procurement, workforce readiness, and access to capital, according to a recent study from KPMG Canada.

The Big Four accountancy’s “National Interest and Defence Study” (NDIS) drew on insights from 70+ leaders in defence, capital, infrastructure, and other areas.

Two-thirds of surveyed Canadian business leaders said that complex procurement and funding processes are delaying major capital projects. Meanwhile, smaller firms in particular are facing shortages in skilled talent and limited access to capital and tax incentives – making it difficult to deliver projects.

The study arrives as rising geopolitical instability and higher Nato spending commitments have spurred the federal government to address an historically anemic domestic defence sector. The 2025 federal budget and Defence Industrial Strategy (DIS) have signaled a shift toward strengthening domestic industrial capacity and reducing strategic dependency on an antagonistic USA.

“Defence spending can be a powerful economic driver, especially if it is used to build Canada’s domestic industrial base and boost long-term productivity,” said Ali Jaffery, chief economist at KPMG Canada. “The government’s direction is encouraging, but delivery is the real test. The next step is turning ambition into action.”

The study stresses that implementation of the DIS and access to new capital from initiatives like the Nato Defence, Security and Resilience Bank (DSRB) will be key to accelerating delivery and closing execution gaps. The KPMG research also highlights that Indigenous participation will be a foundational condition for delivery.

“Global demand for secure supply chains, critical minerals, energy, and defence capacity is growing quickly,” said Tim Prince, managing partner, clients and markets, KPMG Canada. “Canada is well positioned to play a larger role in delivering this demand but capturing that opportunity will require government, industry, and other national stakeholders to align around faster and more effective project delivery.”