A lot riding on Carney’s budget

When the Government of Canada finally delivers a financial statement on Nov. 4, Prime Minister Mark Carney will reveal his priorities and decide his destiny. The Interim Parliamentary Budget Officer, Jason Jacques, has announced an expected $68 billion deficit for fiscal year 2025, up from $51 billion in 2024. The Liberals would like to blame U.S. President Donald Trump for these horrific numbers, but the previous government racked up these deficits before Trump regained the presidency. Tariffs, shifting trade rules, and economic uncertainty don’t help, but as Ted Morton pointed out in the National Post (September 25, 2025 – First Six Months of Disappointment), “Let’s start with the big numbers. Unemployment sits at 7.1 percent, with 66,000 jobs lost in August and 41,000 jobs lost in July. Grimmer still, youth unemployment is off the charts, hovering around 14 per cent. After a decade with almost no economic growth, 2025 has seen the economy actually start to shrink.” These numbers demand bold steps and immediate action. Instead, Carney is approaching the problems facing Canada’s economy with timidity and modesty. 

As Lorrie Goldstein of Sun News observed, Carney finds the Trudeau numbers revolting, but he can change them. He does not have to add to the mess. At one point, Carney stated that immigration had occurred too quickly, resulting in spending that increased at a nine per cent annual rate. As a banker, he understood the problems these policies posed. As he has transitioned from being a banker to a politician, he sounds vague, less determined, and uncertain about what to do. Succeeding a government that brought Canada the worst economic growth since the Great Depression, Carney knows that growing deficits and a contracting economy are bad news for individual investors, workers, and the country at large.  

Still, it’s rare to find a cabinet minister who admits their ministry needs to rein in spending. According to Brian Lilley in a recent Sun News segment, debt servicing costs are now $53 billion, and the growing deficit will add to this. These are numbers approaching the amount of money spent on provincial transfers for healthcare. Do liberals and progressives feel comfortable with this? How can these voters demand more for programs while they know so much of it will go to pay for high deficits and debt servicing? Fiscal anchors appear to have vanished.

Unfortunately, the truth dates back to the Trudeau years, and Carney, who recognizes the need for changes, refuses to respond as a banker. His transition to a politician has blinded him to fiscal realities he knows exist. His party, after a fourth straight election victory, continues to grow fatter and more complacent. If convincing Canadians to vote Liberal after ten years of Trudeau is this easy, then voters must carry a powerful torch for the nation’s natural governing party, they reason. What else explains their financial irresponsibility? 

Take the immigration file. If they didn’t know, they do now. A nation cannot welcome immigrants at a pace faster than the economy can grow. Has the Carney government moved to reduce immigration? While they’ve feigned support, there’s not much sign of change. Overall budget numbers tell the same story. Under Trudeau, costs rose at nine per cent per year, and Carney has done nothing to address the problem. The numbers tell us that Trudeau’s economy grew at the worst rate since the Great Depression. As Goldstein pointed out, deficits remain higher than predicted, and Canada has a contracting economy. He suggests a couple of remedies that Carney may attempt. First, he can break down the provincial trade barriers to stimulate growth and increase demand for goods internally. Second, and this one demands sacrifice, he can reduce the cost of public service down to two percent and balance the budget in three years. These acts could lead to internal revolt within. Carney lacks the stomach for a bloody budget battle with his caucus or the party insiders. Unless things become more desperate, expect more of the same. He would rather try to use smoke and mirrors, hiding expenses, playing shell games with the numbers, and prescribing short-term solutions that avoid tough choices.  

Carney may default to an old accounting trick. He could divide capital project costs from the operating budget and make the deficit appear smaller. That will be obvious, but will the opposition be the only ones to identify the problem? Will the media make the Conservatives’ objections into politics as usual? If Carney gets a pass from the House once Conservative Leader Pierre Poilievre has taken them to task, and the media continue to cheerlead because Carney stands against Trump, where will that leave Canada fiscally? 

The country still needs to beef up its defence spending after making pledges earlier this year. That will not happen if the public service cuts wait on attrition. Nor will a gun buy-back program work. It will be costly and unhelpful, another dizzy progressive scheme to feel good while accomplishing nothing. Definitive and extraordinary steps need to be taken to get Canada’s financial house in order. If Carney continues to vacillate about developing the resource economy in Canada, he will jeopardize his political future. He will abandon Canadians’ need for strong leadership and betray his promise to renew our national vision. The natural resources sector faces declining growth. In the second quarter of 2025, forestry dipped by almost five percent and energy by over two. These are not good numbers. Job creation faces challenges, and the prime minister’s actions have not matched his words. 

Back to Jacques, who, when asked at a committee meeting if this concern about the deficit was not exaggerated, called the numbers “stupefying” and “serious.” In the 1990s, the Jean Chrétien government put the financial house in order. Brian Mulroney’s Progressive Conservatives created a huge fiscal mess, resulting in hard steps and decisions for provinces and municipalities. Three decades later, Carney promised coherence and clarity in the economy. So far, he sounds muddled and acts tentatively. Canadians expected more when they gambled on the Liberals and their new leader in the spring. Carney has a lot riding on the budget he presents in the House next month. And so do Canadians, eager to see the changes they voted for manifested.