Cash Rules Everything Around Me

It feels like the introduction is the always the same: the Canadian Armed Forces (CAF) is experiencing a personnel crunch. Over the past few months, we have been seeing announcements after announcements on how the CAF is modernizing recruitment in order to fill its personnel gap.

The interest for personnel related matters became significant, to the point that the hopefuls for the Liberal leadership seat were battling over who would offer the biggest pay raise for service members. We saw the same enthusiasm for personnel matters in the Federal elections, where all major parties agreed to increased pay for our aviators, sailors, and soldiers.

The hope was up.

Then came June 9, 2025, when Prime Minister Mark Carney announced Canada will reach two percent of GDP in defence spending by the end of March 2026. The government earmarked $2.6 billion to “to empower the military to recruit and retain the personnel needed to carry out its mandate,” which included pay raises. Speculations abound, until Defence Minister David McGuinty told the press that the raise will be of 20% – only to nuance that statement a couple of weeks later.

Then, silence.

Came Friday, August 8, 2025.1 The Government outlined how it will increase service members’ compensation package – the biggest increase since 1998.

So let’s dive in.

To get started, let me highlight that a service member’s compensation is heavily layered and includes a series of allowances, duty pay, deployment pay, specialty pay etc. This new package does not increase everything, and we will talk about that later. [p’;;;;;;;;0p-[mn2

At the core of this pay onion (paynion?) is basic pay. There is nothing basic about it, and I cannot even give you a basic table of what that entails. But if you are curious, visit this page (note that this was last updated in May 2025): https://www.canada.ca/en/department-national-defence/services/benefits-military/pay-pension-benefits/pay/regular.html

Here are the changes made:

• Full-time Privates and Sailors 2nd Class, 1 increment (i.e., in their first year of service), get a raise of 20%.

• Reserve Privates and Sailors 2nd Class, 1 increment get a 13% increase.

• The rest of the non-commissioned corps from Private and Sailors 2nd class to Chief Warrant Officers and all officers from Officer/ Naval Cadet to Lieutenant-Colonel to Commander (both Regular and Reserve Forces) get a raise of 13%.

• Colonels and up get an 8% pay increase.

Because it is not mentioned in the Backgrounder, I am assuming that this applies to all pay, meaning that even those with Specialist pay get the raise.

Now that basic pay is handled, we get into “Military Service Pay,” the nom de plume for retention bonuses. These would take the form of annual lump sums, based on the years of service and enrolment date:

• 5 to 10 years of service

  • Regular Force: $2,000

  • Reserve Force: $400

• 11-15 years of service

  • Regular Force: $3,500

  • Reserve Force: $700

• 16 to 20 years of service

  • Regular Force: $5,000

  • Reserve Force: $1,000

• 21+ years of service

  • Regular Force: $6,000

  • Reserve Force: $1,200

Then, the government introduced new allowances and increased current ones:

1. Instructor allowance: as the military is trying to get to 101,500 people (Regular and Reserve Forces combined) by 2029, it needs to retain instructors in order to limit bottlenecks at basic and occupational training.

   1. Members posted to a “designated training school” will get an additional $300/month.

   2. Members at the Canadian Forces Leadership and Recruit School will receive an extra $35 on the days they instruct, capped at $12,000/ year.

   3. Other instructors will receive an extra of $20 on the days they instruct, capped at $8,400/ year

2. Environmental Allowances: the Land Duty, the Sea Duty, and the Submarine Duty Allowances will go from an additional pay for the days spent in the environment received on a monthly basis to a $100/day flat rate, received when in the environment.

3. Domestic Operations and Arctic Allowances: to recognize the hardships related to being deployed during a domestic operation or being posted in the Arctic, members will get

   1. an extra $45/day “when deployed on a named domestic operation (e.g., Op LENTUS)” (emphasis by yours truly)

   2. an additional 50% to the land duty allowance or 25% to the sea duty allowance when in the Arctic.

4. Posting Frequency Allowance: If you are remotely familiar with the military, you know that the job involves moving – a lot. The military used to support a member’s move by giving them a month’s pay worth of support. Now, it is giving a lump sum based on how many times a member has had to move for their postings:

   1. 1-3 moves: the lump sum will be of $13,500 per move.

   2. 4-6 moves: the lump sum will be of $20,050 per move.

   3. 7+ moves: the lump sum will be of $27,000 per move.

The Government also announced it will increase the Imposed Restrictions (IR) support. Members can apply for IR status when they get posted to a location where their family cannot join them. Under this situation, the military helps the member manage the costs of having 2 household by offering financial support. The new IR benefits will look as follows:

• food allowance: $7,000/ year

• transportation allowance: $4,200/ year

• incidental allowance: $2,400/ year

Note: I tried to simplify how the IR benefits worked before, and it is way too complex for me to break it down here – it is also 9:24 pm on a Sunday night when I am working on this section. If you want to delve into it, read: https://www.canada.ca/en/department-national-defence/corporate/policies-standards/compensation-benefits-instructions/chapter-208-relocation-benefits.html#sec-208-997

Last but definitely not least, the recruitment allowance. I kept this one for last as I see if more as a recruitment tool as the other measures (although I do not think they will hurt…). For stressed occupations (i.e., trades that are staffed at a less than 90%– and there are 63 of them), the government created additional bonuses for new recruits and incentivize them to go to the finish line:

• $10,000 upon completion of basic training

• $20,000 once full qualified

• $20,000 when the first contract has been completed, upon signing for another period of service (this “first contract” depends on how you join; for Officer/ Naval Cadets at the Royal Military College of Canada, it is 9 years – 4 years of university and 5 years of full-time service).

Out of the $2.6 billion promised for personnel related, this new money represents $2 billion. Note that this is $2 billion on top of the +/- $7.5 billion budgeted in the 2025-26 main estimates. All this money will be rolled out in the Fall and retroactively applied to 1 April 2025.

Hefty, and nifty.

While I have seen service members extremely excited about the announcement (you should have a look at the r/caf and r/CanadianForces Reddit thread – the mood has changed), some have had some questions about the rest of their compensation package.

We have talked about the LDA (Land Duty Allowance), but let us talk about CFHD (or Canadian Forces Housing Differential).

I attended the technical briefing offered by the Department for stakeholders (and I apparently do hold that stake), and I asked specifically about CFHD. I was told that, because CFHD is reviewed in July, there will not be any changes to members’ CFHD amounts this fiscal year. The CAF leadership (I am not at liberty to say who, as the contents of the meeting are non-attributable) told me that they are aware that people’s CFHD will change as a result of the pay raise; but at this stage, it is unclear what the future of CFHD when it is reviewed next year.

Then, a friend of mine who is a Major asked whether the move allowance will be tied to Occupational Function(al) Point/ completion of Developmental Periods. This is the case for the BOOTFORGEN, for example. Answer is that I do not know, I did not know about this nuance in allowances/ reimbursement program until now. I will ask when I get the chance.

In all, though, this is good. Service members needed and wanted more money, and they got it. Certain occupations that have a civilian equivalent were not very competitive – now they are.

One question that a journalist asked me – and I could see popping up as it is a common criticism of personnel-related spending – was:

Why spend that money on personnel rather than on equipment?

I am so glad he asked, and because he did not quote my full response, I am giving myself the permission to put it here (this is the night of learning, folks, and it turns out I am petty). I’ll do it bullet points because it is now 10 pm and Betty is aggressively meowing at me:

1. The Government has committed to spending an additional $1 billion (on top of Our North, Strong and Free and Strong, Secure, Engaged earmarked money that totals $73 and a bit billion over 20 years on an accrual basis) for capabilities.

2. New equipment is just shiny new toys for the military if it lacks the people to operate and maintain it.

3. People are a capability. Do we need more equipment and capabilities? Yes. But presenting defence spending as a people v. equipment calculus (with usually a very tooth to tail ratio kind of way) is anathema to the real concept of readiness.

Well, you know me: I have thoughts (God forbids a girl has a hobby).

Recently, I have argued that pay should not be the Government’s priority when it comes to retention. I still stand by this take. Not because service members do not need or deserve more money; rather, because I think that there are policy changes that need urgent addressing.

In hindsight, I understand where the limitations of my stance are. The government can roll out pay a lot faster than it can procurement and policy change.

But now that the paynion (I am making it a thing now) has been addressed, allow me to re-emphasize some of the challenges the government will have to take on if it wants that money to really have effects for service members in the mid- to longer-term:

On the recruitment side, advertising. If you want to attract people, the CAF has to do a lot better to advertise the variety of career option in the CAF and the fact that a military salary is indeed competitive, even compared to the private sector (and it was even before the changes, except for very specific occupations). I keep on getting the same LinkedIn ad to become a gunner, which means that there is an issue in the advertising algorithm. I should not be the targeted audience for this type of position in the CAF. Also I only see it on LinkedIn, but very little on Reddit and nothing on Instagram. I also talk a lot to local radio stations about the wide variety of careers available in the CAF – the lack of information remains an issue.

Training. It has been discussed to death, but the basic and occupational training bottlenecks are massive and problematic. I know this is being addressed, hopefully more is being done (and I look forward to hearing more about it).

The rest are retention issues:

Housing. Obviously, the housing crisis will take a while to be properly addressed, and there is an issue of authority. But the government has power in changing the Treasury Board policies around Government-owned housing. I have written about it more in a previous Stackie, and my argument still stands:

1. The Canadian Forces Housing Agency (CFHA) does not have the proper structure to function effectively, and its shared responsibilities with Military Personnel Command (MILPERSCOM), the services, and ADM (Infrastructure and Environment) are contributing to the problem.

2. The underfunding of CFHA paired with the policies that surpluses have to be removed from the portfolio and that any government-owned housing ought to be rented at market price means that:

   1. the CFHA’s units have not been able to keep pace with the evolving demographics of the CAF (most units are studios/ 1-bedrooms)

   2. The CFHA’s portfolio has kept on decreasing over the years

   3. The CFHA has been running behind on renovation of units, meaning that service members have to pay prices akin to new/ renovated units for ones that have not been renovated in a while.

Kit. Let me go ‘woke B.S.’ on you. But as long as women do not have the proper equipment to do their jobs, there are more likely to get injured – which creates a strain on operational readiness, but also retention, in two ways. First, injuries. Second, belonging: how would you feel if you served in a job that is dangerous and none of the safety equipment fits you, putting your job, body, and life at risk? Would you feel safe? This is laughing in the face of esprit de corps and cohesion. The fact that the CAF still does not have flak jackets, boots, rucksacks, even helmets that fit women is a shame. Let’s spend that some of that remaining $0.6 billion on some of that.

Culture. If the recent Blue Hackle Mafia Facebook group, the explosion of hateful conduct cases, and the arrest of veterans on suspicion of terrorism do not ring your alarms that there is something afoot with the Canadian military’s culture, then let me point you to recent comments made by the Commander of the Army and the CAF Chief Warrant Officer around cultural and toxicity issues. When your organization’s functioning operates on trust, cohesion, and esprit de corps, organizational climate and conduct does matter.

Postings. The reason why service members and their families are more vulnerable to the housing and health care crisis is because they move very frequently. But the strain is not simply related to access to health care and housing – it is also about the difficulty to be a dual-income household, the constant uprooting of one’s family for the job, which has an impact on both children and partners alike. The question then quickly becomes: is it that critical for service members to move that often? Is frequent geographical posting that necessary? In the longer run, it is something the CAF really needs to assess. This goes hand in hand with career management, which is a significant factor of discontent within the CAF.

Those are things that I would advise the Minister of National Defence and MILPERSCOM to turn their attention to next. Some those are decisions that Cabinet needs to make, others are more internal to the CAF, and then a couple are both.

The point is to ensure that money actually pays dividends. But also, we are too familiar with the boom and bust cycles of defence spending. Even if it looks like we have turned the page, let us make sure that, should they return, the peace dividends do not negatively impact service members to the point of creating another personnel crisis.

It is self-evident that it does (Wu Tang Clan would not have written such a classic of 1990s rap if it was not true, right?).

But it is also not the sole factor for retention. So we will need to see the effects of the announcement, both on retention and recruitment. Let’s see the personnel numbers at the end of Fiscal 2025-26 and later.