For Carney, the time for talk is done

It was a year ago, minus a day, that Mark Carney called a snap election asking for a clear mandate to deal with U.S. President Donald Trump. Mr. Carney had been named Prime Minister just days before, following his victory in the Liberal leadership race.

Mr. Carney ran on the promise of strengthening Canada’s economy and military, protecting health care, stabilizing the immigration system and dramatically ramping up home building and infrastructure projects.

“I’m asking Canadians for a strong, positive mandate to deal with President Trump and to build a new Canadian economy that works for everyone because I know we need change – big change, positive change,” he told reporters as the election campaign got under way on March 23.

The rookie politician went on to win a minority government (that’s now on the cusp of a majority). And Mr. Carney has done a reasonably good job in rolling back many of the excesses of the Trudeau era.

However, on Mr. Carney’s more ambitious files, he has yet to make good on his promise of big change. Here are some of his successes and missteps on key files over the past year.

A needed rebalancing on energy and the environment

In his election night victory speech on April 28, Mr. Carney linked climate change with increasing Canada’s competitiveness. In office, he’s continued to marry the two, but he hasn’t been shy to jettison the green hallmarks of the Trudeau era.

Hours after becoming Prime Minister, he killed the federal fuel charge (a.k.a. the carbon tax), although he says he plans to “strengthen” industrial carbon pricing. Green home retrofit funding ended, the oil and gas emissions cap is likely on its way out, the EV mandate has been scrapped and a tax credit for the development of liquefied natural gas was reinstated.

Many environmentalists have been disappointed, including former activist Steven Guilbeault, who left cabinet after Mr. Carney announced a deal describing the conditions for building a new oil pipeline to the West Coast, which would include a carbon capture and storage project. Indigenous leaders have also expressed concern about being left out of development plans.

By jettisoning Justin Trudeau’s policies, Mr. Carney is both closing off a political vulnerability while facilitating opportunities for private investment, says Lori Turnbull, a professor in the Faculty of Management at Dalhousie University. Boosting development while still taking some measures to mitigate environmental impact makes sense, given that Canadians are more concerned about the economy than environment and climate change these days.

However, it’s not enough for Mr. Carney to sign the pipeline memorandum and leave it at that. More needs to be done to create the conditions to get the private sector to the table and start building, so Mr. Carney can achieve his stated goal of turning Canada into an energy superpower. The spike in oil prices due to the war in the Middle East is a reminder about the continued critical role of the energy sector.

The military gets a needed boost

Mr. Carney’s strong support of the military is a far cry from Mr. Trudeau’s (at best) lukewarm approach. Last year, the current Prime Minister pledged to boost core defence spending to 3.5 per cent of GDP within 10 years, as well as an additional 1.5 per cent for infrastructure that serves both military and civilian purposes.

Defence is one of the few areas of government that is growing: The year-over-year increase in the Department of National Defence between the current and the previous fiscal year is about 38 per cent. Mr. Carney boosted military salaries and created a new procurement agency to speed up military purchases and prioritize domestic suppliers. Canada has also signed more than a dozen defence partnerships with other countries in recent months. The Chief of the Defence Staff, General Jennie Carignan, announced she would create a 400,000-member volunteer reserve force.

More will be needed to revitalize the Canadian Armed Forces, which has been weighed down by recruitment and cultural problems for years. The purchase of submarines will be a test for the Defence Investment Agency to see if it speeds up the process or is yet another level of bureaucracy.

The military is being strengthened, which is warranted in today’s world. But without details on how the 5 per cent of GDP will be spent, it’s hard to evaluate if the proper priorities are being set and achieved. It’s past time for a detailed road map on Canada’s military spending plans, and details on how dollars are being spent now.

A steadier hand on immigration

Mr. Carney campaigned against Mr. Trudeau’s record on immigration, with his platform stating that “the previous federal government has let immigration levels grow at a rapid and unsustainable pace.” While Mr. Trudeau himself attempted to reverse course in his last year in office, Mr. Carney has gone further to stabilize the system, increasing cuts to international student permits and closing down various niche immigration streams.

Bill C-12, currently before the Senate, includes the sensible idea of restricting asylum hearings for foreign nationals who have been in the country for more than a year. With more than 2.3 million people in the country on temporary work and student permits, difficult decisions like these need to be made. It will take years to unwind the problems that built up under the Trudeau government, and sadly, some politicians are taking advantage of the problems to use immigration as a wedge issue.

One aspect that still needs reform is the selection of economic immigrants for permanent residency. Mr. Carney’s Immigration Minister, Lena Metlege Diab, has followed in the footsteps of her recent predecessors in watering down Canada’s economic immigration programs. Skipping the most qualified candidates for permanent residency in the Express Entry system in favour of temporary residents and francophones means the cut-off scores are dropping, which is concerning, as the scores measure the qualities that are likely to allow candidates succeed economically in Canada.

A slow and winding road on crime and justice

During the election campaign, Mr. Carney took some of the wind out of the Conservatives’ sails by promising to take a tougher stance on crime. In the course of the year, his government has introduced three crime bills to tackle the issue.

Bill C-9, the anti-hate bill, is more reasonable than similar measures in the previous Online Harms Bill. It criminalizes intimidation and obstruction outside of religious and community centres, creates a stand-alone crime of committing a hate-motivated offence, and limits the use of symbols, such as the Nazi swastika and those associated with designated terrorist groups. However, passage of the bill has been slowed by the Conservatives, who have voiced concerns about the removal of a religious exemption to some hate speech laws. The bill has been welcomed by many Jewish groups, who are also calling for the federal government to do more in the wake of a series of synagogue shootings, such as expediting the often slow release of security funding.

Legislation that aims to protect victims of gender-based and intimate-partner violence, Bill C-16, has garnered praise from women’s advocates. However, concerns have been raised about a provision that says courts don’t need to order a stay of proceedings in a criminal case because of an unreasonable delay. It gives Ottawa a pass to avoid much needed reform.

Bill C-14, which aims to toughen up bail rules, is being backed by city mayors and police forces, but its mild tinkering is unlikely to solve the issue of the release of repeat violent offenders.

Similarly, the gun buyback program, which focuses on legal “assault-style weapons,” is unlikely to greatly reduce firearms crimes, which are largely caused by illegal obtained guns. The fact that none of the crime bills have managed to pass yet leaves the Liberals vulnerable on the file.

Opening doors to international trade, but no relief from Trump’s tariffs

In order to keep Canada strong during Mr. Trump’s trade war, Mr. Carney vowed to move away from American markets and towards “other more reliable partners.” Since taking office, Mr. Carney has travelled extensively, defrosting relationships with China, India and Middle Eastern countries.

His efforts are starting to bear fruit: a deal with China saw a drop in canola seed levies and India has agreed to buy $2.6-billion in Canadian uranium. Canada is set to expand its trade deal with the EU, and is spearheading talks to build a massive trading bloc that would include the EU and Asia-Pacific nations.

Talks with Mr. Trump are proving more challenging. Last year, Mr. Carney said his goal was to have a deal with the White House to lift all U.S. tariffs by July 21, and Canada rescinded the digital services tax to facilitate trade talks. However, no deal was made. Canadian businesses are still facing steep tariffs on steel, aluminum, automobiles and some other products, but they currently have lower overall tariff rates than most countries because of exemptions for goods sold under the USMCA trade deal.

Even though Canada hasn’t improved its situation in regards to U.S. trade – in fact, in some ways it’s gotten worse – Mr. Carney’s trust with the public has gone up, says Ms. Turnbull. Canadians recognize that few if any world leaders have done better in bargaining with the mercurial President.

The Prime Minister’s speech in Davos brought him international acclaim, and his domestic approval rate has risen. Mr. Carney’s strategy seems sound, but with USMCA talks restarting, his approach will soon face a test. If the trade agreement expires, Canadian exporters could face soaring tariffs to enter the U.S. market.

But the reality is, Canada has still not reached an agreement. Walking away from a bad deal might end up being the right call. But Mr. Carney pitched himself as the best person to deal with the U.S.; walking away again empty-handed would be a political setback for the Liberals, and an economic setback for the Canadian economy.

Big economic plans have yet to become reality

Mr. Carney’s tone about building big has been welcomed by business leaders, but so far, the economy is still sputtering. He vowed to build the strongest economy in the G7, yet GDP growth has been flat in the last three quarters, coming in slightly below the G7 average.

The Liberal platform also promised to unite Canada’s disjointed 13-jurisdiction economy into a single entity, and to go big on “nation-building infrastructure on a scale not seen in generations.” The federal government has quickly eliminated its own barriers to internal trade, but it’s been unable to prod the provinces into fully opening up their fiefdoms, with significant barriers remaining. Sadly, there’s a long way to go to achieve the Liberals’ promised “One Canadian Economy.”

The Major Projects Office was announced in spring with much fanfare to streamline and accelerate approval processes and co-ordinate financing. The initial five projects were already far down the path of development, while the other six projects being looked at are abstract concepts or far from the investment stage, such as a revamp of the Port of Churchill.

The Major Projects Office met the mood, but it hasn’t shown results. In fact, it’s a distraction from the real issue of streamlining the approval process for all viable projects, not just those chosen as winners by government. Initiatives such as the new agreement between Ottawa and Alberta to speed up approvals could be more useful in spurring development.

Meanwhile, the Liberal plan to “build homes at a scale and at a speed not seen since the Second World War,” is facing headwinds. The purpose of the new agency Build Canada Homes has been clarified to focus on social and mixed-income housing, which is a worthy goal. However, with private-sector building slowing to a crawl, and municipal development charges remaining high, the pipeline of homes coming to market will be small in the foreseeable future. Affordability is still a huge problem, but dropping home prices and rents are taking the issue off the front burner.

In regards to electric vehicles, the Carney government has only partially revamped Mr. Trudeau’s eco-industrial fantasy of propping up the sector with subsidies and barriers to gas-powered vehicle sales and Chinese EV imports. Mr. Carney is allowing some Chinese EVs in while continuing the costly and efficient method of offering consumer and industrial subsidies.

Overall, there’s still too much pork-barrel politics propping up uneconomic industries. The perennial tendency to dole out favours to select industries and businesses, rather than creating a better overall business climate, hinders growth.

Federal finances are heading in the wrong direction

Mr. Carney’s Finance Minister, François-Philippe Champagne, delivered a hype-filled budget in the fall, but beneath the bluster, there is reason to worry. The Liberals have jettisoned previously used fiscal anchors meant to keep debt in check (including one that Mr. Carney campaigned on).

Now, they are promising to abide by the fiscal anchors of a balanced “operating budget” by 2029, and a declining deficit-to-GDP ratio. However soothing, the idea rests on the fictional concept that so-called capital investments somehow don’t count toward the deficit, despite the fact this includes dubious measures such as tax breaks for companies. The reality is that the cumulative deficit from the current fiscal year through to fiscal 2030 has doubled, rising to $321.7-billion.

In addition to the hefty boost in military spending, the Carney Liberals boosted the GST credit, rebranding it as the Canadian Groceries and Essentials Benefit, despite the fact the payments can be used for anything. At the same time, the government cut personal income tax rates, and cancelled a planned hike in capital gains and a luxury tax on boats and private jets.

Mr. Carney has made some tentative steps at rolling back the numbers at federal public service, which ballooned under his predecessor. The budget announced plans to cut 30,000 positions, and while thousands have received letters saying their jobs might be axed, retirement packages need to be offered first to determine if layoffs are necessary. The process so far has been poorly co-ordinated, with little focus on which parts of the public service are worth keeping. Even if these 30,000 positions are lost, it won’t be enough to keep the cost of the public service in check. Also, it’s notable that on his own priority projects, Mr. Carney has created new agencies, rather than doing the less glamorous work of reforming existing bureaucracies.

A missing checkup on health care

In his victory speech, Mr. Carney promised dental care and pharmacare for everyone who needs it. The dental care program did expand to cover 18- to 64-year-olds, and nearly 100 per cent of oral health care providers have joined it. However, the pharmacare program appears to be in limbo, with provinces that hadn’t inked deals under Mr. Trudeau left out for now. That might be for the best, however, given that for many, the program needlessly replaces private coverage.

A new bill aims to make it easier for doctors and patients to share medical records, and an immigration pathway has been created for foreign doctors. Meanwhile, the promises of pan-Canadian licensure for health workers and ways to speed up drug approvals remain on the drawing board. Mr. Carney hasn’t spent much energy on the health file, and the systemic problems straining the system remain unsolved by both the federal and provincial governments.

The year ahead will be a turning point for the Prime Minister. Polling shows that while voters like Mr. Carney’s approach, they feel the outcomes so far haven’t been good, with U.S.-Canada relations, and the cost of living, in particular, worsening.

Mr. Carney has provided a concise diagnosis of Canada’s economic problems – he knows that weak business investment and declining GDP per capita are big threats to the country’s future – but he’ll need to ensure that there are tangible economic gains that translate into increased prosperity. Rising separatist threats in Alberta and Quebec, and escalating tensions from the Middle East, will compete for his attention.

The last year has been a tumultuous time; the coming year promises to be even more so. But it’s now time for Mr. Carney to deliver on the results he promised in last year’s campaign, and to prove that despite the turbulence in the world, Canada is getting stronger.

The Sunday Editorial