The “Buy Canadian” Paradox

If “Part One” of this review exposed the accounting tricks—relabeling spending as “investment” and redefining debt as “net debt”—then “Part Two” must expose the core economic contradiction that proves the entire narrative is a house of cards.

The Carney Government has presented a budget that is fundamentally at war with itself.

It is a document that, on one page, champions the virtues of “Increasing Competition” to lower prices, and then, a few pages later, launches a massive protectionist policy that guarantees prices will rise.

This isn’t just a minor inconsistency. It is a structural lie.

It is the fiscal equivalent of a personal trainer telling you to get healthy by cutting out sugar, while simultaneously handing you a mandatory “Buy Local” coupon book that is only valid at the neighborhood doughnut shop.

This budget does not have a coherent economic strategy. It has two opposing strategies mashed together, held in place by political talking points, in the desperate hope that no one will notice they are mutually exclusive.

This is not a plan for productivity. This is a plan for a high-cost, low-efficiency national enclosure.

The Budget’s Internal War: Reality vs. Reality

In your first review, you correctly identified the core conflict as “Reality vs. Narrative.” But here, the conflict is even more obvious. We just have to read the government’s own words in the order they’re written.

The Story (From Chapter 1): “Increasing Competition”

First, the budget tries to tell us it understands inflation. In Chapter 1, Section 1.4, the document correctly states:

“Competition is central to productivity, innovation, and affordability. When businesses face healthy competitive pressures, they operate more efficiently, cut costs, and innovate to stay ahead of rivals. These benefits are passed on to Canadians through lower prices…” (Budget 2025, p. 114)

This is correct. This is basic economic physics. It’s the “healthy diet” part of the speech.

The Reality (From Chapter 2): The “Buy Canadian” Trap

Then, just 20 pages later in Chapter 2, Section 2.1, the government introduces its actual plan: a massive new industrial policy that does the exact opposite.

“Canada’s new government is launching a new Buy Canadian Policy—moving from ‘best efforts’ to a clear obligation to buy Canadian.” (Budget 2025, p. 134)

This policy mandates that when the government spends its (your) money, it “will select Canadian suppliers by default, wherever possible.” This applies to “all federal agencies and Crown corporations,” including the new housing and rail projects.

Let’s be clear, in plain English:

This policy is inflation.

This policy is anti-competitive.

This policy is a barrier to productivity.

You cannot, in a single document, claim your goal is to “increase competition” and “lower prices” while simultaneously launching a state-run protectionist program that eliminates competition and guarantees higher prices.

It is like claiming you want to win a gold medal in the 100-metre dash by making it a “clear obligation” for your runners to train exclusively by walking. The strategy does not match the goal.

The “Smoking Gun” That Proves the Deception

Here is the single most telling sentence in the entire 400-page document. It’s the part that proves the government knows this policy is anti-competitive and is already hiding the evidence.

Tucked away on page 134, the budget states the government will:

“…implement regulatory amendments to ensure that Buy Canadian aspects of federal procurement processes are not subject to review by the Canadian International Trade Tribunal.”

Read that again.

The government is building a wall around its new policy to legally prevent the nation’s own trade tribunal—the very body that exists to ensure fair and open procurement—from even looking at it.

This is the legislative equivalent of putting yellow “POLICE LINE – DO NOT CROSS” tape around an accounting ledger.

Why would you do this? You would only do this if you knew, with 100% certainty, that your new policy would fail any test of fairness, competition, or value-for-money.

It is a public admission of guilt.

This Is Not “Capital Deepening.” This Is “Capital Insulation.”

In “Part One,” you correctly identified that the only “adult strategy” is “Capital Deepening”—giving more and better tools (machinery, automation, software) to every worker.

The “Buy Canadian” policy achieves the exact opposite. It creates “Capital Insulation.”

Productivity growth doesn’t come from patriotic feelings. It comes from the brutal, relentless pressure of competition. It’s the fear that a competitor in Germany, South Korea, or Ohio will build a better product for less money that forces a Canadian company to invest in a new machine or a new software system.

This policy removes that pressure.

It tells Canadian suppliers: “Don’t worry about being the best or the cheapest. You just have to be Canadian. We will force the government to buy from you by default.”

This doesn’t incentivize innovation. It incentivizes complacency. It creates a protected class of domestic suppliers who have no reason to invest, automate, or become more productive because their biggest customer (the federal government) is legally obligated to buy from them regardless.

This policy is a long-term productivity killer.

The Real National Risk: A High-Cost, Low-Growth Spiral

This policy directly feeds the debt spiral you warned about in “Part One.”

1. The “Buy Canadian” policy forces the government to pay more for everything (lumber for houses, steel for rail, software for services).
2. This inflates the cost of all government capital projects, driving the “Generational Investment” deficits even higher than projected.
3. The higher costs are passed to taxpayers. This is inflation, directly caused by government policy.
4. Simultaneously, the policy strangles productivity by shielding domestic firms from competition, which lowers long-term GDP growth.
5. This creates the debt trap: Debt is growing faster (due to higher costs) while the economy’s ability to pay for it is growing slower (due to lower productivity).

This is the same “structural weakness + exponential spending” you identified, but now with an inflationary accelerant poured on top.

Closing Impact Statement

This budget asks Canadians to believe in two opposite ideas at the same time: that we can get richer by “Increasing Competition” while simultaneously getting stronger by “Eliminating Competition.”

This is not a paradox. It is a lie.

The “Buy Canadian” policy, combined with the “accounting tricks” from Part One, confirms the government is not engaged in an economic strategy. It is engaged in a political survival strategy.

It is spending money it doesn’t have (the deficit) on things that will now cost more than they should (the “Buy Canadian” premium), while protecting its actions from legal review (the Trade Tribunal exemption) and hiding the true cost with accounting tricks (Net Debt, Operational vs. Capital).

We must choose a path.

We can have a protected, insulated, “Buy Canadian” economy. It will be high-cost, low-growth, and non-competitive.

Or, we can have an “Increasing Competition” economy. It will be innovative, efficient, and productive.

We cannot have both.

This budget’s greatest failure is not just that it picks the wrong path—it’s that it tries to convince Canadians we are on both paths at once.