It is not unusual in recent decades for a government to prepare the ground for an upcoming budget. Typically, in advance of a budget, announcements are made about initiatives (there have been many) with more details and funding set out in the actual Budget and Estimates to follow. It is also wise for a government to disseminate the bad news in advance of a budget so that the nattering classes have stopped gasping by Budget Day. Some “surprises” are always held back to be announced on Budget Day (cue the Minister) to offset some of the bad news.
What is unusual is for a Prime Minister to make a major speech so close to his Finance Minister’s “moment in the sun” on Budget Day. Avoid the temptation to read this major speech as undercutting or pre-emoting the Minister of Finance. There is no light between Prime Minster Carney and Finance Minister Champagne.
The PM’s somber speech Wednesday at the University of Ottawa provides vital context for the upcoming Budget falling somewhere between a quiet fire side chat: “We have nothing to fear but fear itself” and a baseball coach’s: “Now let’s go out there and win it”.
From the beginning, the Prime Minister has always been straightforward with Canadians and resolute. This speech was all that, describing a dangerous and divided world where many of Canada’s strengths based on close ties to the United States have become our vulnerabilities. In this world, the Prime Minister states that Canada’s economic strategy needs to change dramatically. That new strategy will include drawing on our strengths, relying on our values and being inspired by our history. Canada has what the world wants-unparalleled access to global markets through a web of trade agreements, an energy superpower, rich in critical minerals, an educated population, fiscal capacity to act and values to which the world aspires and which make Canada a reliable partner.
As one does in these speeches, the PM lists steps taken since assuming office around housing, major projects and interprovincial trade. But hard choices lie ahead – the size of government must shrink (it grew dramatically under the previous Liberal governments), Canada will have to do less of the things it wants to do so it can afford what it must do. Choices. Choices. The Budget will tell us about more about those choices.
The Prime Minister is doing his Finance Minister a huge favour – taking some of the heat so his Finance Minister can say: “Hey don’t look at me”.
President Trump’s abrupt announcement ending all trade negotiations with Canada will have the Finance Minister and his officials revising financial projections and digging deep in contemplation of financial supports for a number of sectors continuing long into the future. All this will have to be immediately reflected in budget planning. A few days ago it looked that CUSMA/USMCA would be renewed with some acceptable concessions and that sectoral deals (steel, aluminium, lumber) were near. Now Canada could be dealing with absorbing a costly broad based trade disruption not just a sectoral one.
Pierre Elliot Trudeau said: “Just watch me” when asked how far he’d go to fight the separatists.
Paul Martin said: “Come hell or high water” he’d balance the budget, and he did.
In the face of our existential challenge Prime Minister Carney had this to say: “We won’t play games. We won’t waste time. And we won’t hold back. We will do what it takes. We will play to win. We will bet on Canada.”
You can find the Prime Minister’s full remarks here.