2 weeks Ago By [email protected] (David Olive)
Mark Carney has given himself a tall order: to make Canada the best-performing economy in the G7. And Carney has only a few weeks before a federal election to present Canadians with a compelling strategy to achieve that goal. There is uncommon urgency to the task.
“These are dark days, dark days brought on by a country we can no longer trust,” Carney said of the U.S. in his Liberal leadership victory speech last Sunday.
Canadians want a Trump-proof economy that can better withstand America’s not-infrequent bouts of protectionism. To bolster our economic sovereignty, we need a rapid approval process to accelerate housing, resource and infrastructure projects, a recurrent theme of Carney’s. Future megaprojects on Carney’s watch could include new pipelines to get Alberta oil and gas to European and Asia-Pacific markets.
That would alter the north-south flow of Canadian energy to east-west corridors, reducing reliance on the U.S. market.
In a break from the Trudeau government’s oilpatch antagonism, Carney said he aspires to make Canada an “energy superpower in both clean and conventional energy.” It’s also now obvious that we must diversify our export markets , taking maximum advantage of Canada’s remarkable free-trade agreements with the European Union (EU) and some of the world’s fastest-growing economies in Asia-Pacific . And whoever becomes PM needs to energize a business community that for years has underinvested.
Modern capital equipment per employee in Canada must increase to the U.S. level.
As recently as 2014, Canada outpaced the U.S. in business investment.
But in 2024, U.S. business investment equalled 15.
1 per cent of GDP to Canada’s 10.9 per cent. That chronic underinvestment, along with internal trade barriers among provinces, are prime culprits in Canada’s laggard productivity growth, a measure of standard of living.
Carney’s campaign slogan is “Spend less. Invest more.” To achieve that, Carney proposes to split the federal budget in two.
There would be an operating budget for day-to-day spending on Old Age Security, transfer payments to the provinces and the like, which Carney promises to balance in three years . And there would be a capital budget for long-term assets like defence equipment purchases and transportation and energy infrastructure whose growing value over time, Carney says, justifies deficit financing. That approach to government budgeting has been criticized by Tory leader Pierre Poilievre as a shell game.
The money is coming from the same taxpayers, after all. But Carney’s proposal is not so different from the way most households manage their money, with a weekly budget for groceries and longer-term budgeting for tuition, down payments for a new house and other major expenses. Greater transparency might come with that practice, and Carney has promised more resources for the independent Parliamentary Budget Officer (PBO) to scrutinize government spending.
Carney’s approach would force governments to continually reassess the economic viability of projects as they proceed to completion. With Carney’s proposed capital budget for major projects, more attention might have been paid, for instance, to the escalating cost of expanding the Trans Mountain pipeline, originally budgeted at about $7 billion. The final cost was $34 billion.
Carney also needs to expedite the dismantling of internal trade barriers . With a burst of patriotism, provinces vowed to remove those barriers to interprovincial trucking, government procurement, labour mobility and much else. But that process has bogged down.
Experts estimate that scrapping those barriers would boost per capita Canadian GDP by as much as four per cent. For perspective, Trump’s tariffs could depress Canadian GDP by an estimated three per cent. Carney has promised a middle-class tax cut and will scrap the Trudeau government’s proposed tax increase on capital gains.
The new PM needs to go further in tax reform, perhaps by reducing the corporate tax rate for enterprises that reinvest more heavily in their businesses and that venture beyond the U.S. in cracking export markets.
Canada needs friends. And the world needs Canada. Canadian troops are already guarding the Baltic States from Russian aggression from their base in Latvia.
And our warships have been patrolling the South China Sea and the Taiwan Strait. Prior to the election, Carney could visit his counterparts in Europe and Asia-Pacific to remind them of Canada’s tangible commitment to their security. European leaders need to hear from Carney that he intends to boost Canadian defence spending faster than his predecessor and redirect it to Canadian and European suppliers from the U.
S. And with stops in Seoul and Tokyo, where Carney was once stationed as an investment banker, Carney could promote more Canadian joint ventures with giant local enterprises from Samsung to Toyota. He could ask South Korea’s Hyundai when it will follow the examples of Toyota and Honda with its own vehicle assembly plant in Canada.
Carney would do better strengthening ties of friendship with our allies than schlepping to Mar-a-Lago. That in itself would be a statement of Canadian autonomy..
