The End of the Peace Dividend. The Start of the Defence Dividend
Across the Western world, a generational shift in defence and security policy is underway. The so-called “peace dividend” that followed the Cold War, when countries reduced military spending to invest in domestic priorities, is now history. In the words of UK Prime Minister Keir Starmer, we now need to prepare for the defence dividend.
This week, Starmer committed the United Kingdom to raising defence spending to 2.5% of GDP, framing it as a necessary response to a more volatile world and as a way to strengthen British industry and rebuild national resilience. It’s a message with clear relevance here in Canada, where Prime Minister Mark Carney’s first international meeting with Donald Trump included a firm declaration that Canada’s defence investments represent a “step change” in our role within NATO.
That phrase matters. It signals not just an increase in defence spending, but a shift in posture towards credible deterrence, increased industrial self-sufficiency, and a deeper recognition that economic security and national security are now one and the same.
The Liberal Party’s 2025 platform expands on that vision. It commits to reaching NATO’s 2 percent defence spending target, modernizing NORAD, upgrading Arctic infrastructure, and growing our domestic industrial capacity. For a country that has long relied on geography and American goodwill to shield us from global threats, this is a long-overdue correction. Not to mention a chance to build something lasting.
We’ve already seen how defence investments can generate real returns. The National Shipbuilding Strategy has revitalized Canada’s shipyards, trained a new generation of skilled workers, and supported thousands of jobs from coast to coast to coast. At the centre of this transformation is Halifax, where the shipyard has become a cornerstone of Canada’s industrial base.
But Halifax is far more than just a navy or shipyard town. It is a defence and marine innovation hub unlike any other in the country. Within a few blocks, you’ll find CFB Halifax, the Royal Canadian Navy’s Atlantic Fleet, the Canadian Coast Guard, major defence prime contractors, marine research institutes, and world-class universities. It is a rare concentration of talent, infrastructure, and strategic capability. And it is exactly the kind of ecosystem Canada needs to replicate and expand as we prepare for the future.
Prime Minister Carney’s plan builds on this success. His government has committed to deepening partnerships with Canadian industry, streamlining procurement, and ensuring that public investments in defence translate into private-sector jobs and innovation. The Liberal government has also set a clear goal: to make Canada the fastest-growing economy in the G7. Strategic defence investments can help deliver on that ambition by building industrial capacity, driving innovation, and expanding export potential. Defence spending should not be seen as a sunk cost, but as a national investment in resilience, growth, and long-term prosperity.
The benefits aren’t theoretical. Skilled trades training programs are creating pathways for young Canadians. Research partnerships are advancing technology with dual-use potential. Indigenous-owned businesses are finding new opportunities in the defence supply chain. This is what the defence dividend looks like in practice: economic development, community impact, and national strength, all at once.
As Starmer’s United Kingdom and Carney’s Canada move in parallel toward serious, sustained investments in defence, our allies are taking note. Credibility in NATO isn’t just about what you say. It’s about what you build, deploy, and sustain. Canada is finally moving in the right direction, but we need to keep going.
The peace dividend may be over. But if we stay the course, Canada stands to gain something just as valuable: the defence dividend.
Greg is a Partner at NorthStar Public Affairs where he advises leading defence clients.