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 Shafqat Ali

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

Estimated Read Time: 5 minutes

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 requirements that were not ready for inclusion in the Main Estimates or were later refined. Nearly all of the funding — $8.21 billion — goes to National Defense. It received Royal Assent on June 26, 2025 but its spending provisions are deemed effective from April 1, 2025. The Bill does not state that the full amount was already spent or 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. It can also use money earned from its operations to cover related costs. This reduces the amount it needs from taxpayer-funded Appropriations, but the money it earns and spends must still be reported publicly.
  • The Act allows departments to correct their year-end accounting records before the Public Accounts are presented to Parliament. These corrections cannot authorize new spending or require additional money from the Consolidated Revenue Fund.

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
  • Government planned this supplementary spending before Parliament voted. The April 1, 2025 effective date allows eligible work, expenses and commitments from the beginning of the fiscal year to be charged to Bill C‑7 after it received Royal Assent in June. The Bill does not show how much of the $8.58 billion was already spent or committed before approval.

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
  • Bill C‑7 gives National Defense $8.21 billion in additional spending authority for 2025–26. It also allows National Defense to enter long-term contracts within a larger commitment limit without moving all of the money today. An estimated $52.95 billion in costs may become payable in future years and would require future funding.

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

⚠️ Supplementary Spending — Supplementary Estimates (A) explain the additional funding requested through Bill C‑7. The requirements were not ready for inclusion in the Main Estimates or were later refined. The Appropriation Act itself contains only the broad spending purposes and amounts.

⚠️ 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.

⚠️ April 1 Effective Date — Government planned this supplementary spending before Parliament voted. Bill C‑7 received Royal Assent in June but applies to eligible work, expenses and commitments dating back to the start of the fiscal year on April 1, 2025. The current Government was already in office on April 1, but the new Parliament had not yet been elected or assembled. The Bill does not show how much of the $8.58 billion was already spent or committed before Parliamentary approval.