Torys on defence: implementing Canada’s Arctic and infrastructure goals

Canada’s first Defence Industrial Strategy (the Strategy) places a strong focus on strengthening Arctic defence capabilities. Receding sea ice has opened new routes in Canada’s Arctic region, tripling vessel traffic between 1990 and 2015¹, and has given the Canadian Security Intelligence Services (CSIS) reason to believe that adversaries are actively seeking to exploit the region². Increasing geopolitical tensions may further accelerate the urgency to establish Arctic defence for projects of national importance³. At the same time, the Strategy frames Canada’s defence policy as an industrial opportunity—one that requires government and industry to collaborate and jointly invest in capabilities that advance sovereignty, economic prosperity, and northern and Indigenous community resilience.

As explored in our introductory bulletin, Pillar V of the Strategy underscores the importance of Canada’s position in the Arctic Circle, asserting sovereignty and strengthening northern defence capabilities⁴. New emphasis has been placed on partnering with industry to develop and invest in dual-use infrastructure, deepening and sustaining collaboration with Indigenous peoples and northern communities, and bolstering a resilient northern workforce.

While the Strategy creates momentum for Arctic infrastructure, federal interest in these types of projects has been steadily progressing in recent months. Budget 2025 proposed the $1B Arctic Infrastructure Fund (the Fund) over four years for major northern transportation projects⁵. The Fund formally launched its calls for proposals on March 4, emphasizing a need for transportation infrastructure with dual-use defence and civilian benefits (described further below). In June 2025, NATO members committed to a Defence Investment Pledge to invest, by 2035, 5% of GDP annually on core defence (minimum 3.5%) and defence-adjacent spending (up to 1.5% or about $45-$50B annually at a national level)⁶. Preceding those more recent announcements, National Defence Canada’s 2019 Arctic and Northern Policy Framework had also highlighted the importance of dual-use infrastructure to enhance both security and community resilience⁷.

The Strategy builds upon and re-energizes these efforts, breathing new life into Canada’s Arctic vision and reaffirming industry’s role as a partner in advancing it. To build on this momentum—and for defence industry participants to fully recognize the market signals the Strategy provides—we outline three ideas on how Canada can decisively realize its Arctic defence and infrastructure goals.

Getting dual-use infrastructure right

The Strategy calls for dual-use infrastructure: projects that lie at the intersection of Canada’s defence and nation‑building priorities, serving strategic military purposes and benefitting commercial enterprises or the local community. As noted by the Canadian Institute for Arctic Security, it should be thought of as “everyday infrastructure Northerners rely on that can simultaneously contribute to effective military operations”⁸.

This call has since been reinforced by the formal launch of the Fund’s call for proposals on March 4, 2026⁹. Aiming to advance strategic northern transportation infrastructure, Canada is now inviting infrastructure proposals that meet the Fund’s objectives, which include strengthening defence readiness, improving transportation links that enable economic development, enhancing community connectivity and access to essential goods and services, and advancing Indigenous reconciliation. The Fund’s two streams both emphasize transportation infrastructure for Canada’s North that provides dual-use benefits, with Stream 1 explicitly supporting “large-scale projects that serve both defence and civilian needs”, including infrastructure that bolsters operational readiness for the Canadian Armed Forces¹⁰.

An example of dual‑use infrastructure is the Arctic Economic and Security Corridor (AESC), which spans the Northwest Territories and Nunavut—and is a potential project for referral to the Major Projects Office (MPO). The AESC includes a fortified deep‑water seaport at Grays Bay, all‑season roads connecting Yellowknife to the Nunavut coast, and supporting telecommunications systems. Together, these investments would enhance Canada’s military mobility and sovereignty in the North while linking northern communities and critical mineral deposits in the Slave Geological Province to southern transportation networks. Other examples of dual-use infrastructure include airports, ports, telecommunications systems, and emergency‑response systems.

A project like AESC faces many hurdles. First, substantial investment is required. The $1B Arctic Infrastructure Fund’s call for proposals emphasizes dual-use infrastructure, yet this funding may not be sufficient to address the region’s infrastructure gap. As noted by the Canadian Council for Public-Private Partnerships, the Grays Bay port and road project alone is estimated to cost nearly $1B, even before considering additional Arctic priorities¹¹. Budget 2025 also signaled that Canada’s broader infrastructure agenda—not limited to the North—will require roughly $500B in private co‑financing¹². Relatedly, dual-use infrastructure projects typically involve different components, diverse risk profiles, and multiple unique financing sources from both public and private entities. To realize such projects, more sophisticated, blended financing structures will be necessary to mobilize public and private capital at scale.

Large, dual‑use projects must also navigate extensive regulatory hurdles. Despite its strategic importance, the Grays Bay project is unlikely to begin construction before 2030¹³. The MPO can help coordinate financing and regulatory pathways, which in the latter case may include acceleration measures beyond those provided in the Building Canada Act. The Impact Assessment Act and other federal approvals legislation have, for years, granted Cabinet authority to provide exemptions and other forms of process relief for projects that relate to national security¹⁴. These tools could be well‑suited for expediting some of the Arctic infrastructure central to protecting Canadian sovereignty.

A further challenge is that the Strategy does not define “dual-use”, leaving ambiguous what qualifies as a military versus non‑military use for funding and procurement purposes. For example, some federal investments that support defence personnel or broader community needs could be characterized as dual‑use in a broad sense, but may not be if eligibility is narrowly interpreted, as they may differ from infrastructure like deep‑water ports designed to support military operations.

Facilitating Indigenous communities’ role in Arctic sovereignty

The success of the Strategy’s efforts to enhance security and promote Canadian sovereignty in the Arctic is inextricably linked to Indigenous communities. First, Indigenous peoples, most notably Inuit, are the principal inhabitants of many communities in the high Arctic, which facilitates assertions of sovereignty. Second, the Strategy prioritizes defence infrastructure and industrial growth that is sustainable and geographically balanced¹⁶. As traditional stewards of the land, Indigenous community knowledge will be vital to ensuring that the military investments are both strategically located and climate resilient¹⁶. Third, Indigenous community support and partnership are critical to the success of the rapid military build-up contemplated in the Strategy. That support will be forthcoming if the legal duty to consult and accommodate is met¹⁷, and if Indigenous peoples in the North derive benefits from the new focus on the region.

Indigenous benefits may arise in various formats:

• Energy infrastructure. Increased defence presence in the North will require enhanced energy infrastructure to serve the needs of new bases/military installations. In this regard, the proposed 100% Inuit-owned hydroelectric facility in Iqaluit, which has been submitted to the MPO for consideration¹⁸, may take on increased prominence and potentially be expedited.
• Economic benefits. The Strategy contemplates dramatically increased economic activity, which will engage Indigenous businesses. It stipulates that the “government will promote Indigenous participation in supply chains, infrastructure development, and procurement, supporting Indigenous-owned firms through direct contracting, public-private partnerships, and regional investment initiatives”¹⁹.
• Engagement on dual-use infrastructure. As part of the Strategy’s calls for investments that support dual-use purposes, it highlights the need to “balanc[e] operational readiness with socio-economic benefits for northern and Indigenous communities”²⁰. The Strategy notes that “Indigenous engagement will be central” to ensure that “investments respect rights” and “advance reconciliation”²¹.
• Workforce and training. Greater economic activity in the Arctic and North will require a large and well-trained workforce. The Strategy speaks to partnering with First Nations, Inuit, and Métis to build up a skilled workforce within their respective communities that Canada will require to sustain the defence industry’s needs²², with the end goal being the establishment of an inclusive talent pipeline²³ within the defence sector. This is discussed below.

Building out workforce participation and training

At Davos, Prime Minister Carney emphasized that safeguarding Canada’s Arctic sovereignty will require “boots on the ground, boots on the ice”²⁴. While directed at strengthening Canada’s military presence, the message also underscores the need to build and train a workforce capable of delivering Arctic defence infrastructure. The Strategy introduces the Canada Defence Skills Agenda, organized around four priorities: strengthening the defence‑industry talent pipeline; investing in urgent skills needs; growing the skilled labour supply; and partnering with provinces, territories, and Indigenous rights holders²⁵. Proposed measures include modernizing federal upskilling programs, creating a new Apprenticeship Service to support defence‑related construction, improving labour mobility through faster credential recognition, and using Budget 2025 funding to establish sectoral alliances with employers, unions, and industry groups²⁶. Budget 2025 also includes broader workforce measures, such as restricting non‑compete clauses in federally regulated workplaces and investing $97M over five years to accelerate credential recognition for internationally trained workers, particularly in construction²⁷.

As with Budget 2025, the Strategy’s workforce actions face significant structural challenges. A 2025 Deloitte report²⁸ estimates that Canada will need 410,000 to 520,000 additional construction workers by 2030 to address the anticipated swell of project volume; an increase by one-third over the current 1.7M workforce. Defence infrastructure projects in the Arctic will compete directly with other national‑priority projects for scarce labour. Attracting workers to the North remains difficult due to limited housing, services, and amenities²⁹.

At the same time, northern regions have a younger and growing workforce, but training capacity is limited. Employment is expected to grow by 5% in Northern Ontario, 10% in Yukon, and 18% in Nunavut between 2024 and 2045, with growth in the defence and public administration sector being a key driver³⁰. Regular evaluation will be essential to determine whether Canada’s workforce initiatives are sufficient to meet the unique and labour‑intensive demands of Arctic defence infrastructure.

The road ahead

The Strategy signals a clear plan for strengthening Arctic sovereignty while advancing Canada’s broader defence and industrial objectives. Its success will depend on whether government and industry can mobilize capital, accelerate infrastructure approvals, create meaningful relationships with Indigenous and northern communities, and build the workforce talent needed to execute complex, northern‑built projects.