Carney’s economic update gives more Harper vibes than Trudeau – National

Investing in skilled trades. The importance of sport to Canada’s national character. Few details available on the effects of significant public service cuts.

If you squinted and read Prime Minister Mark Carney’s Spring Economic Update, you would be forgiven for mistaking it for a Conservative fiscal document circa 2011 — few splashy new programs, relatively modest affordability measures and boosts to program spending, and a fiscal track to chip away at federal deficits over the next five years.

Both then and now, the federal government is focused on expanding trading relationships, attempting to address affordability issues with targeted tax relief and luring private sector investment to Canada. Small craft harbours, somehow a perennial section in federal budgets, remain a priority for Carney and his team.

Back then, in the wake of the 2008 financial crisis, Stephen Harper’s government liked to say economic troubles were lapping at Canada’s shores. Nowadays, the troubles prefer the land border, burbling up daily from Washington, D.C.

But in the face of those stubbornly persistent troubles, the Liberals’ economic update Tuesday sought to project a sense of stability.

“The changes we are witnessing are sudden and unprecedented. From geopolitical shifts to supply chain disruptions to rapid technological breakthroughs, including in artificial intelligence, the world is changing quickly and Canada must adapt to thrive,” Finance Minister François-Philippe said in a speech to the House of Commons Tuesday afternoon.

“Canada is resilient, Canada is resourceful, Canadians are resourceful people. So together we can chart a path forward through the fog of uncertainty because Canada has what the world wants, and increasingly needs.”

While the tone hearkens back to Harper, some of the Carney government’s decisions in this update will remind Canadians more of Justin Trudeau.

The government’s economic outlook has improved since Carney’s maiden budget in November, reducing the projected deficits over the document’s five-year planning horizon by $60.3 billion. The Liberals are proposing taking that windfall and spending $54.5 billion of it over five years, rather than reducing the federal deficit.

“There’s an enormous amount of uncertainty out there, and the risks are more on the downside in this environment,” said Kevin Page, the former Parliamentary Budget Officer now with the Institute of Fiscal Studies and Democracy, in an interview with Global News.

Page pointed to the ongoing U.S.-Iran war and the uncertainty it represents for oil prices and the global economy, but also to the ongoing trade talks between Canada and the Trump administration.

“It may not be prudent in this environment, given all the downside risks, to get a fiscal uplift because of a slightly better outlook and then just to allocate it away in the face of all these risks.”

Some of the new spending in the economic update, referred to in Ottawa as a “mini-budget,” is connected to the Carney government’s push to boost housing stock and get major domestic projects built. That includes $2 billion over five years, starting in 2026, to increase the number of young Canadians choosing a career in the skilled trades.

That’s a measure that’s likely to help with the government’s major projects agenda and be welcomed by industry, according to Jimmy Jean, chief economist with Desjardins.

“It’s been a longstanding issue … Construction workers will be the major bottleneck to the government’s ambitions,” Jean said in an interview.

“At the same time, it doesn’t create miracles, the numbers that we’re talking about, given the scale of new workers that we need going forward … But this was a key missing part of the equation.”

While the document provided a look at the government’s economic projections over the next few years, key parts of its agenda and spending program — including details around the new sovereign wealth fund and the government’s progress on cutting operational spending and public service jobs —are largely absent from the update.

It also includes no projections for defence spending — an increasingly sizeable chunk of federal spending — over the coming years.

The Carney government committed to NATO’s new defence spending target of five per cent of Canada’s GDP by 2035, but the Spring Economic Update provides no hint about how the government intends to make good on that commitment.

“It’s a major transparency gap in this particular document to not have that line,” Page said.

“They’re hiding it. They don’t want to show people that they don’t have a path that could build confidence we are moving to the (NATO) target,”

Page said he expects pressure on the Liberals to release concrete figures on defence spending from both Parliament and the media. Other governments, particularly Trump’s administration, are also likely to be interested to see Carney’s plan to drastically boost spending on national defence.

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