Bill C-7 Appropriations No 2 Defense Spending

An Act for Granting to His Majesty Certain Sums of Money for the Federal Public Administration for the Fiscal Year Ending March 31, 2026

Short Title:  Appropriation Act No. 2, 2025-26

Bill Type: House Government Appropriation Bill

Bill Sponsor: President of the Treasury Board

Status: Royal Assent — June 26, 2025. This Bill is now Law.

What is this Bill For?

Bill C-7 authorizes $8.58 billion in supplementary Federal spending for the fiscal year ending March 31, 2026. It covers expenses not included in the primary appropriation under Bill C-6. Nearly all of the funding — $8.21 billion — goes to National Defense. It received Royal Assent on June 26, 2025, but was deemed effective April 1, 2025 — retroactively authorizing spending already committed before Parliament voted.

WHO GAINS POWER

  • The Minister of National Defense gains authority over $8.21 billion in supplementary spending across three votes — operating expenditures, capital expenditures and grants and contributions — with a total multi-year commitment authority of $86.76 billion, of which $52.95 billion is payable in future years
  • The Communications Security Establishment gains $370 million in program funding plus authority to use revenues from its own operations to offset its costs — a self-funding mechanism that reduces Parliamentary visibility into its actual spending levels
  • Treasury Board retains authority to make accounting adjustments to departmental accounts after the fiscal year ends but before Public Accounts are tabled in Parliament — meaning the final numbers can be adjusted outside the Parliamentary calendar

WHO LOSES POWER

  • Parliament votes yes or no on the full $8.58 billion as a single block — no ability to scrutinize, amend or redirect individual line items within the Defense or CSE allocations
  • The retroactive effective date of April 1, 2025 means spending was already committed before Parliament voted — the same structure as Bill C-6

WHO GAINS MONEY

  • National Defense — $8.21 billion: operating expenditures ($3.97 billion), capital expenditures ($804.6 million) and grants and contributions ($3.44 billion, which may be paid as cash or delivered as goods, services or facilities)
  • Defense contractors, equipment manufacturers and service providers receive funding through the grants and contributions vote — which explicitly includes defense equipment transfers and defense services provision
  • Communications Security Establishment — $370 million in direct program funding, plus authority to generate and retain revenue from operations — reducing dependence on annual Parliamentary appropriations for a portion of its budget

WHO LOSES MONEY

  • Taxpayers authorize $8.58 billion in a single vote with no line-item review available to Parliament
  • Future taxpayers bear the cost of $52.95 billion in defense commitments already payable in future years — authorized through multi-year commitment authority that extends well beyond the current fiscal year

THE CATCH

Bill C-7 is the second Appropriation Bill layered on top of Bill C-6's $149.7 billion for the same fiscal year — with no requirement to explain why these expenses were not included in the primary Appropriation.

The structural gaps in plain language:

  • Parliament votes yes or no on $8.58 billion as a single block — same structure as C-6, no line-item review
  • Spending was already committed before Parliament voted — retroactive approval is the only mechanism
  • Grants and contributions can be paid in goods, services or facilities rather than cash — reducing transparency around what is actually transferred and to whom
  • CSE's revenue offset authority reduces the portion of its spending subject to annual Parliamentary scrutiny
  • Post-year-end accounting adjustments can be made before Public Accounts are tabled — outside the Parliamentary review window
  • $52.95 billion in future-year defense commitments are already authorized — future Parliaments inherit the obligation with no ability to revisit it

⚠️ No Explanation for Supplementary Spending — Bill C-7 covers expenses not included in the primary Appropriation. There is no requirement to explain to Parliament or the public why these expenses were omitted from Bill C-6 and added through a second Bill instead.

⚠️ Non-Cash Grants and Contributions— The grants and contributions vote allows payment in goods, services or facilities — not just cash. This reduces transparency around what is actually transferred, to whom and at what value. The language explicitly includes defense equipment transfers and defense services provision — which is the same mechanism used to deliver military aid to foreign recipients. Parliament approves the category and the dollar amount. It does not approve the destination or the specific items transferred.

⚠️ CSE Revenue Offset Authority — The Communications Security Establishment can use revenues from its own operations to offset its costs. The portion of CSE spending funded this way is not subject to annual Parliamentary appropriation scrutiny.

⚠️ Post-Year-End Accounting Adjustments — Treasury Board can adjust departmental accounts after the fiscal year ends but before Public Accounts are tabled in Parliament. Final spending numbers can change outside the Parliamentary calendar with no vote required.

⚠️ Future Parliament Obligation — $52.95 billion in defense commitments payable in future years is already authorized. Future Parliaments inherit this obligation — they cannot revisit or reverse it through the normal appropriations process.

⚠️Pre-Election Spending Without a Mandate 😱

Spending under Bill C-7 began April 1, 2025 — 27 days before the federal election on April 28, 2025. That spending was authorized through Orders in Council during the caretaker period, when Government is expected to limit itself to essential operations and avoid committing future Governments to major new expenditures.

The newly elected Government then sought Parliamentary approval for spending that started BEFORE voters went to the polls, BEFORE the new Parliament sat and BEFORE the new Government presented its own budget.

Parliament's role was to ratify decisions made BEFORE it existed.

Canadians voted on April 28 — but the spending framework they were electing a Government to oversee was already in motion BEFORE a single ballot was cast.