We Have Had Enough

Key Points

• Research suggests Mark Carney’s Liberal plan lacks concrete implementation details and funding for many proposals.
• It seems likely the plan could increase Canada’s deficit, given past Liberal spending trends and current fiscal challenges.
• The evidence leans toward the plan’s carbon border adjustment mechanism risking trade retaliation, potentially harming Canadian exporters.
• Canada’s economic performance under recent Liberal rule shows high house prices, inflation, and declining GDP per capita compared to the US and China.

Economic Context and Past Performance

Over the last 10 years under Liberal governance, Canada has faced significant economic challenges. House prices have reached record highs, with affordability becoming a major issue for many Canadians. Inflation has been persistent, with headline consumer inflation at 2.0% in October 2024, driven by rising mortgage interest costs and rental prices (Canada Economic Snapshot | OECD). Taxation has also increased, with debt servicing costs now consuming all GST revenue, putting additional pressure on public finances (Liberal budget fails the confidence test: fiscal policy, taxes and economic growth is getting worse | Business Council of Canada). Moreover, Canada’s GDP per capita has been trending down, falling behind the US, which saw a 4.5% increase since 2022, and China, which has shown significant growth over the decade (Canada’s gross domestic product per capita: Perspectives on the return to trend, Ranked: Real GDP Per Capita Growth by Country (2014-2024)).

Critique of the Plan

Mark Carney’s plan, “Canada Strong – Unite. Secure. Protect. Build,” aims to address these issues but falls short in several areas. Many proposals, such as removing interprovincial trade barriers and building 500,000 homes annually, lack specific implementation strategies and funding details. The plan’s fiscal strategy to balance the budget by 2028 seems optimistic given the current deficit of $61.9 billion for 2023-24, up from $35.3 billion the previous year, and the lack of clear revenue offsets for new spending (Annual Financial Report of the Government of Canada Fiscal Year 2023-2024). The proposed carbon border adjustment mechanism, while aimed at ensuring fair trade, could provoke retaliation from major partners like the US and China, potentially harming Canadian exporters.

Comparison to Trudeau’s Spending

The plan’s aggressive spending, including $25 billion for housing and over $30.9 billion for defense, risks increasing the deficit further, potentially exceeding the $250 billion figure mentioned, though current data shows a $26.6 billion increase in recent years. This spending approach seems even more aggressive than under Trudeau, given the current fiscal constraints and rising debt servicing costs.

Track Record and Conclusion

Carney’s track record at the Bank of England, marked by mixed results including a spike in housing prices and household debt, raises concerns about his ability to address Canada’s economic challenges effectively (Mark Carney – Wikipedia, Heed Britain’s stern warnings about Mark Carney | National Post). Given the plan’s lack of detail and Canada’s recent economic struggles, it seems likely that implementing these proposals without clear funding could exacerbate existing issues, leaving Canadians with higher taxes and lower living standards.

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Survey Note: Detailed Analysis of Mark Carney’s Liberal Plan and Economic Context

This survey note provides a comprehensive critique of Mark Carney’s Liberal plan, “Canada Strong – Unite. Secure. Protect. Build,” as outlined in the document “Canada-Strong.pdf.” It assesses each pillar against the economic performance of the last 10 years under Liberal rule, focusing on house prices, inflation, taxation, and Canada’s declining GDP per capita compared to the US and China. The analysis also examines Carney’s track record, the plan’s fiscal implications, and the controversial carbon border adjustment mechanism, aiming to provide a detailed, fact-based critique in the style of Bill Maher with the intellectual depth of Jordan Peterson.

Economic Performance Under Liberal Rule (2015-2025)

Over the past decade, Canada’s economy under Liberal governance has faced significant challenges. House prices have reached record highs, with affordability becoming a major issue, particularly in urban centers. Data from the OECD indicates persistent inflationary pressures, with headline consumer inflation at 2.0% in October 2024, driven by rising mortgage interest costs and rental prices (Canada Economic Snapshot | OECD). Taxation has also increased, with the Business Council of Canada noting that debt servicing costs now consume all GST revenue, projected at $54.1 billion for 2024-2025, up from $20.3 billion in 2020-21 (Liberal budget fails the confidence test: fiscal policy, taxes and economic growth is getting worse | Business Council of Canada).

Canada’s GDP per capita has been trending downward, with Statistics Canada reporting a 0.1% decline in Q2 2024, marking five consecutive quarters of decline, and being 7% below its long-term trend (Canada’s gross domestic product per capita: Perspectives on the return to trend). In contrast, the US saw real GDP per capita grow by 0.6% in Q2 2024, with a 4.5% increase since 2022, while China has shown significant growth over the decade, though starting from a lower base (Ranked: Real GDP Per Capita Growth by Country (2014-2024), Trevor Tombe: The Great Divergence: Canada’s economic gap with the U.S. reaches a new record – The Hub). This divergence highlights Canada’s productivity issues, with TD Economics noting insufficient growth in the numerator of GDP per capita, tied to longstanding productivity challenges (TD Economics – Mind the Gap: Canada is Falling Behind the Standard-of-Living Curve).

Detailed Critique of the Liberal Plan

The plan is structured around four main pillars: Unite, Secure, Protect, and Build, with additional focuses on fiscal strategy, social equity, and global leadership. Below, each pillar is assessed for its feasibility, funding, and alignment with past performance.

1. Unite: Building a Strong, Unified Canadian Economy

The plan promises to remove barriers to interprovincial trade and labor mobility by Canada Day, aiming to reduce internal trade costs by up to 15% and expand the economy by up to $200 billion. However, this is a long-standing issue, with previous Liberal governments struggling due to jurisdictional complexities. The plan lacks specific strategies, such as federal-provincial agreements or incentives, to achieve this goal, making it seem more aspirational than actionable.

Infrastructure investment, including high-speed rail and trade corridors, is another focus. Yet, past projects like the Trans Mountain pipeline expansion have faced delays and cost overruns, with no clear indication in the plan of how new projects will avoid similar issues. The lack of detailed timelines and funding mechanisms undermines credibility.

2. Secure: Strengthening National and Economic Security

The plan allocates over $30.9 billion for rebuilding and rearming the Canadian Armed Forces, aiming to exceed NATO defence spending targets by 2030. While significant, Canada has historically underfunded its military, repeatedly missing NATO targets. The plan lacks specifics on allocation, such as addressing equipment shortages or personnel retention, and given past performance, it’s uncertain whether this funding will be effectively utilized.

Arctic security enhancements, through partnerships with Indigenous Peoples and allies, are mentioned but vague. Given increasing geopolitical tensions, this area requires detailed strategies and funding, which are absent, risking another unfulfilled commitment.

3. Protect: Safeguarding Canadian Values and Way of Life

Healthcare strengthening, including adding doctors and building hospitals, is proposed, but healthcare is a provincial responsibility. The plan does not detail federal-provincial coordination or funding, especially given past strains like lengthening wait times. Mental health and addiction funding is mentioned, but without specific amounts, its impact is uncertain, especially given the worsening crisis over the last decade.

Environmental goals, such as conserving 30% of lands and waters by 2030, lack funding details and specific targets, and undermine credibility given Canada’s missed environmental targets. Supporting official languages and cultural institutions is important, but again, funding specifics are missing.

4. Build: Creating a Prosperous, Sustainable Economy

This section includes contradictory policies, such as cancelling the consumer carbon tax while investing in clean energy. Cancelling the tax could undermine climate action and increase the deficit, with no clear revenue offsets. The “Build Canada Homes” initiative, aiming for 500,000 homes annually with $25 billion in financing, is ambitious but unrealistic given construction capacity constraints. The financing mechanism is not detailed, risking further deficit increases.

Clean energy and innovation investments are strategic, but the plan’s goal of catalyzing $500 billion in private investment over five years seems optimistic without specific incentives. Trade diversification is proposed, but without detailed trade deals, feasibility is questionable. The Carbon Border Adjustment Mechanism, aimed at ensuring fair competition, could provoke retaliation from the US and China, harming exporters, given the plan’s focus on protecting energy-intensive sectors like steel and aluminum.

5. Fiscal and Social Strategy

The plan aims to balance the operating budget by 2028 and reduce debt-to-GDP, but current data shows a deficit of $61.9 billion for 2023-24, up from $35.3 billion, with debt servicing costs rising (Annual Financial Report of the Government of Canada Fiscal Year 2023-2024, Fall Economic Statement 2024: Canada boosts investment appeal and the deficit deepens – RBC Thought Leadership). New spending commitments, such as $25 billion for housing and over $30.9 billion for defence, without clear revenue sources, could increase the deficit beyond the user’s mentioned $250 billion figure, though current data shows a $26.6 billion increase, suggesting possible exaggeration.

6. Global Leadership

Asserting Canada’s global role in human rights and climate action is noble, but with limited influence compared to the US and China, and no specific actions or funding, this feels aspirational rather than strategic.

Additional Considerations

Carney’s track record at the Bank of England, from 2013 to 2020, was mixed, with ultra-low interest rates leading to a spike in housing prices and household debt, similar to Canada’s current issues (Mark Carney – Wikipedia, Heed Britain’s stern warnings about Mark Carney | National Post). Critics, including Pierre Poilievre, have highlighted inconsistencies in interest rate policies and political involvement, raising doubts about his ability to address Canada’s economic challenges (Poilievre takes shot at Carney’s record, saying he failed at Bank of England).

The plan’s aggressive spending, compared to Trudeau’s, risks further fiscal strain, especially given Canada’s declining GDP per capita and productivity issues. The carbon border adjustment mechanism, while aimed at fairness, could backfire, given potential trade retaliation, particularly with the US and China’s rapid economic growth outpacing Canada.

Conclusion

Mark Carney’s Liberal plan, while ambitious, lacks the concrete details and funding mechanisms needed to address Canada’s economic and social challenges. Given the past decade’s performance, with high house prices, inflation, heavy taxation, and declining GDP per capita, the plan risks exacerbating these issues without clear strategies. Its fiscal strategy is inconsistent, and the carbon border adjustment mechanism could harm trade relations. Canadians deserve a plan that is not only bold but also realistic and grounded in the lessons of the past, not empty promises on a scorched-earth landscape of fiscal irresponsibility.