If you aren't a global power and have no territorial ambitions there are three primary reasons to spend on military in my mind:  Domestic defense, subsidization of military industries, and international diplomacy.

Canadians have spoken loudly that they aren't interested in military economic sectors and Canada already has one of the highest reputations in the world.  That only really leaves domestic defense as an area where we could get any value out of increased military spending.

I feel we should actually increase spending on domestic defense.  Defending and exerting control over a geographic area as big as Canada is a tall order in itself given our small population.  However, we can't rely on the isolation of our land-masses forever.  The world is getting warmer and more crowded with each passing year.