Full Comment - What happened to the Mark Carney who promised to make things better？

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00:01:17.720 Mark Carney has been Prime Minister for just over a year.

00:01:21.600 he was elected on many promises, but mainly that he would be the guy that could look after the

00:01:26.800 economy. He would be the guy that could deal with Donald Trump. Has it worked out? Hello and welcome

00:01:32.980 to the Full Comment Podcast. My name is Brian Lilly, your host. Today we will try to do an

00:01:39.700 honest assessment of Prime Minister Mark Carney's first year. Is he hitting the marks that he needs

00:01:45.820 to? Is he helping the Canadian economy, as he said, think big, act bigger, and move at speeds

00:01:52.060 not seen in generations? To help me understand all of this is Bill Robson. He is the President

00:01:58.100 Emeritus of the C.D. Howe Institute, recently semi-retired, as I like to tease him about,

00:02:03.960 and joins me now here in Toronto. Bill, thanks for the time.

00:02:07.980 My pleasure, Brian. We've got a difficult topic to unravel, so let's get at it.

00:02:12.340 so look i i i have said since everyone started talking about this a week or so ago that he's uh

00:02:19.880 he's hit some good move he's had some good moves he's not hit the mark on something so

00:02:26.000 you know if you were giving him a a grade off the top before we get into the nitty gritty

00:02:31.800 um how's canada doing economically and how is he doing handling all of it the report card is a good

00:02:41.440 way of thinking about it because it uh brings out a tension that i think is going to run through

00:02:47.080 this conversation in that the in terms of levels like where we're at it's pretty hard to argue for

00:02:55.320 better than a c uh canada's economy is struggling and the federal government's uh not doing anything

00:03:03.100 like the things that it should to kind of turn turn the situation around decisively on the other

00:03:09.160 hand, I would give Mark Carney credit for doing a good job in a tough situation. So you would be

00:03:15.720 in one of those situations where you'd be saying, in terms of levels, not so great. In terms of

00:03:20.760 moving in the right direction, yes. But to get us up to a B or an A is going to take a lot more.

00:03:29.240 Politically, the public is obviously liking what they're seeing. So whether he's getting results or

00:03:34.900 not is another matter. But you look at the polling and the average polling as put out by

00:03:42.880 aggregator338.com right now is the liberals are at 46%, the conservatives are at 36%, the NDPs at

00:03:50.360 eight. So the public is clearly okay with what's going on. But when we look at issues like the

00:03:58.980 unemployment rate, the inflation rate, which was down in February, but is going to skyrocket in

00:04:06.000 March. Things are overall, the fundamentals aren't doing well, are they? No, they're not.

00:04:13.920 The Canadian economy has been struggling now for a decade, really. And the thing that I would

00:04:20.740 highlight as critical to this underperformance is that we have very feeble business investment.

00:04:27.040 and all through our history and if you look around the world having high levels of capital

00:04:32.940 if workers are well equipped to be productive and earn high incomes then you're going to get ahead

00:04:37.000 and Canada has just not been in that category for a decade and until we see that turn around

00:04:42.760 there is going to be this fundamental problem of people not seeing real increases in their

00:04:49.260 living standards and that shows up like an affordability problem because people naturally

00:04:53.780 react to higher prices. But the root cause of it really is that our income growth has been so

00:04:59.600 feeble, GDP per person stagnating. So just to quickly jump to what you had said about the

00:05:06.060 good polling results, I think what people like, aside from the fact that Donald Trump has really

00:05:12.660 changed the whole kind of conversation we're having in Canada, there's a bit of rallying

00:05:17.520 around the flag that's been going on there, is we've seen a nice change in tone. And I give Mark

00:05:23.600 Kearney a lot of credit for this. And it's not necessarily the key thing in the polling, but you

00:05:29.160 see a kind of crispness, his impatience with people. I'll just go to some, you know, it seems

00:05:36.680 like cosmetic stuff. He's impatient when people are late for meetings. He wants people to show

00:05:41.660 up on time. He's used to kind of a high performance organization around him. And I think to some

00:05:47.720 extent, people are responding well to that. The question though, is how do you get that

00:05:53.400 kind of energy at the top, that kind of desire for execution to change the way the federal

00:05:58.960 government operates and to make a few things change that are going to have that economic

00:06:03.260 impact.

00:06:03.920 It's a very long way from that change in tone at the top to seeing the results that we need

00:06:10.320 to see.

00:06:11.840 You mentioned the change in tone and style.

00:06:15.820 I've talked to several premiers about that, and they all give them high marks, but that

00:06:21.300 might be because we lowered the bar so much with the past guy and the description that i've been

00:06:27.560 given is that justin trudeau would show up late for meetings with the premiers uh not um not listen

00:06:35.160 to them would lecture them for the first 20 minutes ignore what they said for the rest of

00:06:39.320 the meeting and then leave early and mark carney shows up on time so much so that you know one

00:06:46.140 premier I spoke with said they were doing a virtual meeting and they were just so used to

00:06:53.020 Trudeau being late that they showed up a couple of minutes late. For example, the meeting was

00:07:00.660 supposed to start at 11. They logged in at 11.02 as the second person. And the first person there

00:07:06.380 was Mark Carney waiting for the other people to join. So I think he's getting a lot of high marks

00:07:15.560 there, but you said that our economy has been stagnating for a long time. And you mentioned

00:07:20.620 GDP per capita. There was a big debate a little, you know, a couple of weeks back,

00:07:25.700 the Globe and Mail did a big takeout that Canada is poorer than Alabama. And those of us that have

00:07:31.980 been paying attention to GDP per capita for some time weren't shocked by that. But it sparked a

00:07:37.840 conversation saying, okay, how did this happen? But also is GDP per capita a good measurement of

00:07:45.840 the economy? And lots of folks came out saying, that's a horrible way to measure the economy.

00:07:51.020 You know, what about our healthcare? Well, you know, that's not doing so great at the moment

00:07:55.700 as well. And there's other things, but is GDP per capita a useful tool, one of many useful tools?

00:08:03.520 is it a good measuring stick for an economy it doesn't tell us everything we want to know but

00:08:10.240 it tells us a lot uh gdp per capita is correlated with a lot of the things that we care about

00:08:15.700 uh it's it's correlated with employment it's correlated with wages it's correlated with how

00:08:21.440 able we are to afford the necessities of life and and and going beyond the necessities of life

00:08:26.660 one of the things that's convenient is that it's measured in very similar ways uh pretty much

00:08:31.460 around the world. So if you want to see how you're doing relative to the United States,

00:08:35.400 if you want to see how you're doing relative to Europe, it's a number that everybody kind

00:08:40.600 of understands or at least accepts, whether we all understand it or not. That's another question.

00:08:47.120 But if you want to compare, for example, growth in average earnings of people who are working

00:08:54.240 over time, GDP per capita is going to give you a pretty good read on that. And I like it partly

00:09:00.900 because of the comparability around the world. And you're able to say, what is it that seems to

00:09:06.580 support high living standards and growing living standards over time? And that's where you get to

00:09:11.340 what I was talking about with respect to capital investment. And the problem, it's a little bit of

00:09:18.780 a boiling frog syndrome. This decline has been going on for a long time. And the way that it

00:09:24.740 sort of shows up in your daily life um it's a bit of at one remove from some of the key drivers of

00:09:32.160 the economy over time you go to the supermarket you notice that coffee's gotten way more expensive

00:09:36.500 and you notice that beef's gotten way more expensive or if you're the gas pump lately

00:09:40.000 you notice that up 13.9 percent last month well if our wages were growing at the rate that they

00:09:47.740 used to you know if you were getting two or three percent real growth in your earnings so

00:09:52.520 on top of inflation you wouldn't experience those things the same way and i think mark carney has

00:09:58.880 talked a good game i do want to go back i mean thank you for for that comment about the meetings

00:10:04.320 with the premiers i think the tone at the top matters a great deal one of the things that is

00:10:09.320 frustrating about the federal government over a long period of time now is how poorly a lot of

00:10:14.900 it functions uh the cra love them or hate them uh you know they're they at least there are some

00:10:21.540 metrics out there that they're trying to beat, not always successfully. But other parts of our

00:10:27.920 economy or the federal government's apparatus that you once would have said work tolerably well,

00:10:33.580 like immigration, it's a complete mess. And when it comes to making coherent policy and delivering 1.00

00:10:40.880 on time, and for example, this whole project with the major projects office and trying to clear the

00:10:48.720 way for infrastructure projects. I mean, we're simply not seeing the kind of action that we

00:10:53.580 would need to see. And I think it's very helpful to have a prime minister who sets that kind of

00:10:58.020 tone at the top, but he must find it. I haven't spoken to him about this and I won't put words

00:11:04.100 into his mouth, but he does have a reputation for being a bit impatient. And I imagine it's

00:11:10.260 enormously frustrating for him to be trying to make this machinery move a little better.

00:11:14.200 And maybe one of the things that people are responding to positively in this change of tone is that they, you know, here's a guy who occasionally he lets it show. And it's not a good thing for him to be, you know, snapping at people in public in its own right. But it certainly shows that he's motivated and that he's trying to make a difference.

00:11:31.820 And I think whatever whatever our views are about some of his priorities or, you know, if you might be partisan one way or the other, it would certainly be nice to see a prime minister who's a little more able to make the things that need to happen happen.

00:11:46.380 We want the CRA, you know, the tax side of things to work well. We want the federal government to be sending out its payments on time. We want them to be paying the public servants, whether they're paid too much or too little. But at least, you know, that ought to be working. We want the immigration system to work a little better.

00:12:00.680 And these are all areas where the federal government has struggled for a long time.

00:12:04.820 Well, the Phoenix pay system, which is how civil servants are paid, has been a disaster for more than a decade.

00:12:14.240 And I lived in Ottawa when that was really a huge issue.

00:12:18.440 And well, if you live in Ottawa, you know a lot of civil servants.

00:12:22.540 And I talked to people who were not getting paid for weeks or months.

00:12:26.680 I talked to other civil servants who suddenly had $100,000 show up in their bank account,

00:12:31.820 and they called and said, you've got to take this back and it wouldn't work.

00:12:36.040 That was a pay system that was put into development under the Harper government.

00:12:44.120 It wasn't ready.

00:12:46.080 They were told it wasn't ready, so they didn't implement it.

00:12:49.520 When the Trudeau government came in, they said, well, just go with it.

00:12:53.900 And 10 years later, it still isn't fixed. And civil servants aren't being paid properly. That's a government that's putting up with incompetence as opposed to, you know, I agree with you. The new guy, such as he is, still a new guy a year in, doesn't seem to want to put up with that level of incompetence.

00:13:16.440 Um, you know, I, I, I got the, the access to information document showing that the Trudeau

00:13:21.720 guys were warned it's not ready.

00:13:23.620 And they still said, go, um, and, and then spent, you know, we're here a decade later,

00:13:29.720 but I, I do want to go back to the numbers, um, and the GDP per capita.

00:13:34.440 So I'm looking at our world and data.

00:13:37.120 This is run by Oxford university, very reputable website.

00:13:40.640 uh and they've got a so i pulled up a comparison chart of canada versus the usa

00:13:46.680 on gdp per capita and it's all uh u.s dollars at 2021 prices so that's that's their parameter so

00:13:57.840 everything is in 2021 usd and they go back to 1990 and in 1990 u.s gdp per capita was 44 000

00:14:08.580 dollars. Canadian was 40,000. You go up to 2010, and they were 59, we were 52. So the gap was

00:14:19.620 already growing. But by 2024, it was $75,000 versus $56,000. How do you change that? How do

00:14:30.720 you fix that? I mean, we are significantly poorer than our closest neighbor, the people that we

00:14:36.440 trade with the most, the people that we compare ourselves with the most, regardless of the

00:14:40.160 ongoing tension between Canada and the U.S., that's still our biggest comparison.

00:14:46.600 How do we fix that?

00:14:49.200 The roots of bad investment in Canada, this feeble level of capital investment that I

00:14:55.360 mentioned that I think is at the root of this decline, this relative decline, are many,

00:15:01.720 but there are some that really stand out. And because you were talking about the recent

00:15:07.340 comparison with the United States and how the gap has widened, I'll mention taxation.

00:15:12.460 We tax capital investment much more heavily than they do. It's a tougher environment in Canada to

00:15:19.040 make investments in machinery and equipment. Intellectual property products, which is a

00:15:24.220 major category of investments that's really surging in the United States, a little more

00:15:27.520 complicated. But in general, I would say we have an urgent need in Canada to make our tax system

00:15:35.000 more competitive. In Donald Trump's first term, they did a lot of important changes to the U.S.

00:15:41.740 tax system that took a longstanding tax disadvantage. I mean, the U.S. used to get

00:15:46.160 away with a lot because they're such a big, dynamic internal market. They didn't worry so

00:15:51.020 much about their competitiveness against other parts of the world. But as the competition for

00:15:58.140 capital has kind of gotten more intense around the world with so many more countries now kind

00:16:04.580 of in the race than used to be, the United States really changed the way that it thought about its

00:16:11.100 investment position. And they made some changes that really undid a lot of the advantages that

00:16:17.660 Canada had developed over the course of the 1990s. So corporate tax, that's going to be an

00:16:22.120 interesting example of leadership for Mark Carney, because it doesn't necessarily work

00:16:29.420 all that well as the proverbial kitchen table issue. But he is in a position to make a convincing

00:16:36.400 case, and he's committed to doing something on this front, that we are not going to turn this

00:16:42.160 relative decline around until we do something that is going to spur investment. Now, how do

00:16:47.820 you make it? You didn't ask this question directly, but... Just to interrupt, Bill,

00:16:51.220 the argument from a lot of people is, well, no, companies need to pay more. We should tax them

00:16:58.520 more. They need to pay their fair share. And I used to have a chart on my website years ago

00:17:04.600 where I showed the corporate tax rate under Jean Chrétien and how as he lowered it,

00:17:12.200 starting in the late 1990s, except for the dot-com bubble bursting in the very early 2000s,

00:17:19.540 he consistently lowered the tax rate and the amount of money taken in by the federal government

00:17:25.660 from corporate taxes went up. And folks don't believe that. We had a government for the last

00:17:34.280 10 years that consistently use the Occupy Wall Street rhetoric of the 1% need to pay their fair 0.63

00:17:42.380 share. And we've had all kinds of tax cuts. We've got, you know, special taxes on banks and insurance

00:17:49.860 companies, a surtax on them. We increased corporate taxes, you know, April 1st, the alcohol escalator

00:17:58.340 tax. Every year, the excise tax just on alcohol goes up. We've done all these things to make us

00:18:06.320 less competitive vis-a-vis the U.S. And you can go back to Sir Wolfwood Laurier and the Canadian

00:18:14.760 tax policy regarding corporate taxes, whether it was a liberal or a conservative government for

00:18:22.440 far more than a century was, we need to be lower than the Americans to make us competitive. 1.00

00:18:29.120 Are we competitive still?

00:18:31.780 Well, we're not competitive on corporate taxation, and we're certainly not competitive

00:18:35.560 on personal taxes as well. We've got a top marginal rate that's over 50% in most of the

00:18:43.380 major provinces, certainly in Ontario right now.

00:18:45.760 That's for individuals.

00:18:47.160 For individuals, yes. And they do run together. I mean, when you look at the parts of the

00:18:52.100 economy that are really booming in the united states right now and you think about what's

00:18:56.040 happening in the tech economy i think you can make an argument that the taxation system both

00:19:01.860 for individuals and for businesses matters because the the entrepreneurs that are moving to the united

00:19:09.700 states and that's a problem in canada that we've faced for years but it seems to have become more

00:19:15.120 intense lately uh they're they're responding to both of those things they're responding to

00:19:20.660 the ease with which you can build up your capital, how well you're treated if you reinvest in the

00:19:26.880 business, and also what the personal tax rates look like. So you made the point that I just want

00:19:34.500 to come in and support you on this point about what I would describe as the elasticity of the

00:19:40.380 tax base. The corporate income tax as a share of GDP, it doesn't change that much. When you raise

00:19:46.220 the rates the base shrinks and you you raise less per uh you know a unit of activity there when you

00:19:52.600 lower the rate uh then the base expands it's the same with high income earners it's a losing game

00:19:58.920 to raise those marginal rates because you do see the base shrink and one of the reasons it shrinks

00:20:04.360 if you're canadian is the activity goes to the united states so we really need to get some

00:20:09.200 urgency about that one of the things and just to take it back to mark carney and the the change in

00:20:14.740 tone, I'm sorry that when it comes to some of the fiscal messaging, that he hasn't done more of what

00:20:23.200 he has done when it comes to major projects, getting the investments moving, getting the

00:20:27.380 economy moving, and diversifying trade. Because in those areas, he has said very clearly some

00:20:32.920 things that people needed to hear. And even if it's taking a long time to get it going, you can

00:20:37.940 see the effect of that kind of verbal leadership, and maybe just a bit more than verbal, when it

00:20:44.500 comes to the the what the federal government is talking about with respect to trade diversification

00:20:49.020 and getting some major projects moving he should be saying the same things on the fiscal front

00:20:54.040 because if the federal government if he doesn't lead on that then the objections and you cited a

00:20:59.420 few of them some of the things that people are saying uh that's that's what everybody is hearing

00:21:03.780 and we're not going to get past this idea that yeah we should hammer the rich harder and if they

00:21:08.780 leave, big deal. I think that's a big gap in federal fiscal leadership that Mark Carney

00:21:16.140 should turn around. We hear a lot, if you pay attention to American media, we hear a lot about

00:21:22.680 how California is a high tax jurisdiction and a lot of people are leaving. They recently brought

00:21:27.640 in a billionaire's tax and a whole bunch of people in the tech world and Hollywood moved elsewhere.

00:21:33.740 They made their principal residence elsewhere.

00:21:36.540 I did a couple of quick calculations maybe six months ago.

00:21:42.360 And, you know, Ontario's not great, but not bad within the Canadian scenario.

00:21:48.680 I think Alberta has the best tax rates for high income earners.

00:21:52.960 But just someone making in the U.S. to be considered 1%, you've got to be making almost a million dollars a year or more.

00:22:01.360 In Canada, you get there just over 200,000. We do not have high income earners, in part because we punish you for earning a high income. So I did a $250,000 personal income tax compared Ontario to high tax California.

00:22:19.960 in high tax California, you would keep more of what you earned than in Ontario and pretty much

00:22:26.520 every other jurisdiction in, in this country. We are on the personal side, completely non-competitive.

00:22:33.780 Do you see Mark Carney making any moves in that direction? Um, you know, I've never had a

00:22:41.600 conversation with the man about this sort of thing. So I don't know. I've read values, which

00:22:47.760 doesn't necessarily drill down on that, but what would your assessment be? Would he look and say,

00:22:53.260 look, we need to increase investment. We need to make it more competitive for corporations,

00:23:00.580 but we also need to make it more competitive for high income earners. Do you see him ever

00:23:05.220 lowering the corporate or personal income tax rate at the high level, as opposed to the low

00:23:11.080 hanging fruit is always at the lowest level, which everyone gets that. But do you see him

00:23:18.120 potentially ever saying the hard part out loud, which is we're unfair to people at the top. We

00:23:24.880 want to attract and keep these people. Let's lower rights. I'm sure he thinks about us. He knows as

00:23:32.000 well as anyone what talented people earn on the Canadian side of the border versus the US side of

00:23:39.540 the border and how much they get to keep after tax. He's worked in international businesses

00:23:43.720 and he, you know, he has kids. Everybody that I know of thinks about the attractions for their

00:23:53.980 kids of staying in Canada versus going and working somewhere else. And so it's on his,

00:23:59.940 I guarantee that it's on his mind. I can't read his mind in detail, but I guarantee he thinks

00:24:06.280 about these things. The problem that I have, and this is where I would not give a high mark

00:24:11.580 to the new federal government, if we can still call it that, is on fiscal leadership.

00:24:19.940 The federal budget is showing massive deficits as far ahead as the eye can see,

00:24:27.300 and they're taking more and more risks as well. When you run up high debt, you run an obvious

00:24:32.720 risk that the interest rate is going to go up and that's going to squeeze you. But also they're

00:24:37.340 using their balance sheet very aggressively. They're investing in stuff that I suspect is

00:24:42.580 going to turn out not to be very good investments. A lot of the stuff in green energy we know about

00:24:48.320 on defense, we're just getting started. But I'm very concerned that the federal government's

00:24:55.420 fiscal situation is headed nowhere good. And that's one of those areas where you would really

00:25:01.680 like to see a bit more leadership on the part of the prime minister to say, we've got to turn this

00:25:07.400 around. Instead, if you just look at the baselines for spending that were set by the Trudeau

00:25:12.920 government, this current government is overshooting them just as the Trudeau government repeatedly

00:25:19.120 overshot its own baselines. So if you don't do something about that, how are you going to find

00:25:24.160 the room to lower taxes? He's got to get control over that spending. He's got to get control over

00:25:30.140 that borrowing. He was critical of the Trudeau government for, I mean, in his own words, I don't

00:25:38.800 have the direct quote in front of me, but he was critical saying that they increased spending on

00:25:44.020 average 9% a year. And then he was bringing in his austerity budget. And when you look at total

00:25:51.360 spending, not just program, because I believe you have to look at total spending, including what

00:25:56.360 were spending on servicing the debt, total spending, his austerity budget still increased

00:26:02.840 spending by 7%. That's unsustainable. Yes. One of the things that really

00:26:08.960 disappointed me was this latest move to turn the GST credit into a renamed benefit and having

00:26:18.940 groceries. Other people have pointed this out. I'll just underline it. Putting groceries into

00:26:25.420 the name of the benefit was all the more ludicrous because there is no GST on groceries.

00:26:33.280 And this is an increase in an income support program that when you're running these big

00:26:39.440 deficits, it's paid for with borrowed money. And so it's just viewed in isolation. It's an

00:26:45.860 unsustainable thing. You're giving this new kind of enhanced welfare program. You're putting it in

00:26:51.680 place on the basis of money that you're borrowing. So you know that in the long run, you're going to

00:26:57.420 have to renege on some of these promises. That was a crazy move under current circumstances,

00:27:04.040 and it was an unforced error. There was no reason that they had to do it that way. There were other

00:27:08.220 things that they could have done to address the affordability issue. Such as what? What else

00:27:13.780 could you have done? Because I would argue that if you're paying for people's groceries,

00:27:19.100 If a government has to pay for your groceries, that's an admission of failure, that the economy

00:27:24.940 isn't working for people.

00:27:26.800 Yeah, absolutely.

00:27:27.640 Well, the problem with this slow rot that we're experiencing as a result of weak business

00:27:34.820 investment and therefore people's earnings aren't growing because we're not getting any

00:27:38.680 more productive is that's not really how it manifests to people.

00:27:42.200 As I was saying earlier, you're not so aware of how your paycheck is doing relative to

00:27:48.060 inflation i mean people are disappointed if they don't get a decent increment uh at the end of the

00:27:53.060 year but what but you know that's once a year and the visit to the grocery store that's once a week

00:27:58.680 so the high prices are kind of what hit you between the eyes um but we've we've seen situations

00:28:05.940 before where you had some real leadership on the part of the federal government to try and

00:28:11.000 lead the conversation in a more productive direction and i'm going way back here but

00:28:15.620 given the fiscal situation. I hope people will forgive me. Back in the 1990s, the federal

00:28:22.140 government, they had these kind of hokey ads on TV where you would see a loony and you'd see a

00:28:28.600 laser cutting a chunk out of it. And they would say, this is how much interest payments are taking

00:28:33.100 out of your tax dollar. We're not seeing anything like that from the federal government now. It's

00:28:38.460 all about how we're going to make your life better by giving you more money. We're going to subsidize

00:28:43.260 this. We're going to subsidize that. And we're a bit addicted to it by now. It's like that GST

00:28:50.680 holiday. I was thinking this is fiscal junk food. You know, if you keep getting fed this sort of

00:28:54.880 stuff, it changes your taste in food. And I think the federal government needs to be a lot stronger

00:29:01.300 in saying the root of our problem is not going to be solved by, you know, more subsidies to

00:29:08.580 consumption. That's not what we need. We need more subsidies to production or we need to punish

00:29:14.540 production less. We need to reward investment more. And so we're going to change the conversation.

00:29:20.140 That hasn't happened. All right. We need to take a quick break. But when we come back, we'll talk

00:29:25.220 about the labor force, the unemployment rate, and how fast the public sector is growing vis-a-vis the

00:29:33.080 private sector. Back in moments. There were so many missed opportunities to catch this

00:29:39.080 before the devastating thing happened. A third of them we found literally in the phone book.

00:29:45.860 These people were not afraid. They knew that nobody was effectively hunting them. They knew

00:29:51.100 they had escaped justice, that they were going to die in their beds. When I give talks at law

00:29:55.940 schools is that the charter ultimately is empowering a minority, and it's empowering

00:29:59.520 a minority that's a guild across the country and it's a fairly elite guild and the guild is lawyers

00:30:03.840 families who were split by referendum and brothers and sisters who never talked to each other for

00:30:10.720 years after the referendum because they were so angry at each other because of her emotions on

00:30:16.120 both sides the reason he was assassinated was not because he was trying to put a satellite into

00:30:20.980 space, but because the gun that he was creating had other applications that made him and the gun

00:30:30.180 very dangerous. It's finally here. A new season of Canada Did What? Host media podcast that

00:30:36.940 revisits the big Canadian political events you might think you remember and tells you the real

00:30:42.480 story you never knew. I'm Tristan Hopper. The voices you just heard are from our brand new

00:30:48.180 Season 2. We will unpack some of the pivotal moments that helped define our country,

00:30:53.120 often without a vote, usually without a plan, and sometimes without anyone admitting what they'd

00:30:58.580 done. We'll find out how Canada became a welcoming paradise for untold numbers of Nazi war criminals 0.94

00:31:05.540 after the Second World War. We let them build monuments to their wartime exploits and even

00:31:10.360 ended up honoring a Nazi fighter in the House of Commons. And I'm sorry to say that none of that

00:31:15.920 happened by accident. We'll bring you the little-known story of a troubled Canadian rocket

00:31:21.000 scientist who turned to a sinister life of selling giant guns to terrible people. And if that sounds

00:31:27.600 like a spy novel, it ends like one too. You'll hear the behind-the-scenes story of Quebec's

00:31:32.300 attempted secession from Canada, and how very close we came to a political crisis that would

00:31:38.020 have made Brexit look like a picnic. You'll hear about how the much-celebrated Charter of Rights

00:31:43.700 and freedoms turned into something its creators never wanted, and how many of the most extravagant

00:31:49.340 warnings about the document were all quickly proven true. And you'll even hear about how

00:31:55.000 authorities bungled multiple chances to stop the deadliest terrorist attack in our country's history

00:31:59.900 and then proceeded to pretend it never happened. These aren't dusty history lessons. They're

00:32:05.840 stories about power, ambition, madness, and the things about Canada that a lot of people would

00:32:11.160 rather ignore. But not you! You won't want to miss an episode. Subscribe to make sure you get

00:32:17.060 all of Season 2 starting March 2026 anywhere you get your podcasts.

00:32:41.160 Because the only thing better than a great playlist is a great trip.

00:32:47.300 Life's the trip. Make the most of it at Best Western.

00:32:51.060 Book direct and save at bestwestern.com.

00:32:59.220 Getting ready for a game means being ready for anything, like packing a spare stick.

00:33:04.060 I like to be prepared.

00:33:05.680 That's why I remember 988, Canada's Suicide Crisis Helpline.

00:33:09.620 It's good to know, just in case.

00:33:11.760 Anyone can call or text for free confidential support from a trained responder, anytime.

00:33:17.200 988 Suicide Crisis Helpline is funded by the government in Canada.

00:33:22.500 Some say the bubbles in an Aero Truffle piece can take 34 seconds to melt in your mouth.

00:33:27.500 Sometimes the very amount you're stuck at the same red light.

00:33:30.900 Rich, creamy, chocolatey Aero Truffle.

00:33:34.000 Feel the Aero Bubbles melt.

00:33:36.040 It's mind bubbling.

00:33:37.020 Despite what the Minister of Artificial Intelligence had to say in the House of Commons recently, the unemployment rate in Canada is not rising due to the war in Iran.

00:33:47.500 Last week or so, the unemployment rate rose to 6.7%. We added 347,000 people to the population, 15 and over, that they measure for the unemployment rate over the last year.

00:34:03.780 82,000 entered the labor force. There were 51,000 who got a job and 30,000 were added to the

00:34:11.640 unemployment rolls. But when you look at where those 51,000 new jobs came from, it was almost

00:34:17.820 all the private sector, 49,000 private sector jobs added between February, 2025 and February,

00:34:24.360 2026 bill um is that the sign of a healthy economy it has been a very disturbing to see

00:34:34.880 how the uh growth of public sector employment in canada has outpaced growth in private sector

00:34:42.160 employment uh and so much of it is deliberate i mean it's i think just to give people a quick

00:34:49.700 comparison, it was 49,000 were added in the public sector, 49,900, 22,900 were added in the private

00:35:00.100 sector, but there was a drop in self-employed people of 21,000. So pretty much the only growth

00:35:07.600 was in the public sector. Yeah. And over time, over the last decade, the public sector has

00:35:14.460 increased its share of employment in Canada fairly relentlessly. I mean, we're now back to

00:35:20.780 where we were ahead of all the fiscal problems that we ran into in the 1990s. So the progress

00:35:26.820 that was made in slimming down the public sector has essentially reversed since then.

00:35:32.800 The federal government is particularly at fault here. I have some sympathy with the provincial

00:35:39.320 governments. We could run our healthcare system more efficiently, it's true, but over time it

00:35:43.960 does make sense that there'd be more employment delivering health care services because the

00:35:49.040 population is getting older and we're able to treat things more than we used to be able to do.

00:35:54.460 Education, again, maybe we could be more efficient with what we're doing in that sector,

00:36:00.100 but it's very labor intensive. You do need people providing education and there are a lot of

00:36:05.760 frontline services, especially, you know, provincial, municipal level, however efficiently

00:36:09.600 they're delivered there's no question you need cops on the street you need people out there

00:36:14.240 working on the roads the reason I go on at some length about that is because the federal government

00:36:20.040 is so different the federal government has a few duties that do require people on the front lines

00:36:26.020 and so we would miss them if they didn't provide us with defense in fact we'd like them to do more

00:36:31.900 of that there are certain types of things when it comes to administering things at the border

00:36:36.080 administering the tax system and so on we might not love them but they're necessary and we need

00:36:40.860 them done and they require people but the explosion in employment at the federal level

00:36:45.360 so much of it has been in sort of policy departments these aren't frontline people

00:36:50.160 these are people that are right they're not delivering us services they're they're not

00:36:55.740 delivering services and i think that the federal government is actually long past the point where

00:37:01.480 adding a person uh adds any uh output at all i think they've gotten so big that it's dysfunctional

00:37:08.680 and you've got a lot of people who are just using up each other's time uh uh you know on in

00:37:14.500 communications uh uh outward looking communications because the federal government is such a

00:37:19.420 communications oriented organization rather than service delivery uh writing each other emails um

00:37:25.180 they they could actually do a better job if they were slimmed down the trudeau government ramped

00:37:30.940 up hiring like crazy. I think perhaps it was quite... I think it was up 40% under Trudeau.

00:37:37.500 Yes, the head count expanded dramatically. And there is no way you can argue, and the

00:37:43.320 Parliamentary Budget Office had some very strongly worded comments about this, that there was

00:37:48.000 anything like a proportional increase in the value of services that we got. And so you could trim

00:37:53.820 that way back. And Mark Carney has talked about that. The difficulty that he faces is that when

00:37:59.880 you turn to the public sector and you say, okay, now where would you trim? There's an old story

00:38:06.580 about how the RCMP's musical ride was first on the chopping block back in the 1990s. It's kind

00:38:12.800 of a vivid example. They will not serve up to you the areas that will be the easiest to chop. They

00:38:18.460 will serve up to you some of the painful areas first. And so we're hearing stories about the

00:38:24.000 federal government cutting back in areas that we would probably say are useful to get, like

00:38:28.680 statistics or some of the fundamental research that they do. And that's something that Mark

00:38:35.560 Carney has to get a handle on because it is crowding out the private sector. I have said

00:38:41.120 already, and I'll say it again, we have a problem with private sector investment and productivity

00:38:46.640 in this economy. One of the reasons that we are seeing people losing their jobs in the private

00:38:51.880 sector is because we are losing competitiveness. We've got a big trade war going on with the

00:38:57.060 United States, as everybody knows. We've got other parts of the world that have continued to power

00:39:01.680 ahead, and we're not equipping our workers properly. And one of the reasons we're not

00:39:05.500 equipping our workers properly is because the public sector is crowding it out. For every dollar

00:39:11.180 that you spend on something in the public sector, consumption of all the things that governments

00:39:18.160 use up, including paying people, that's a dollar less that's available for private sector

00:39:24.300 consumption and private sector investment. So there's a bit of a slow strangle going on here

00:39:28.660 when it comes to the private sector in Canada, just getting less room to breathe, less nutrition,

00:39:34.300 if you like, and less money available for investment because of the growth of the public

00:39:38.420 sector. Can you explain a bit more how that crowding out works? Why does the public sector

00:39:47.640 spending so much hurt the private sector? How and why? If you think of an economy that's operating

00:39:55.680 over time at capacity, so leaving aside the effective cycles and with inflation, you know,

00:40:01.300 having been around target now, it's clear the Canadian economy on average has been operating

00:40:06.120 close to capacity for a while. So under those circumstances, if one thing grows, something else

00:40:11.300 has to shrink. We can only produce so much output at a time. And what concerns me in Canada is that

00:40:17.120 uh we have become a very consumption oriented economy uh the the government of course they

00:40:24.040 talk about investment they like to use the word investment but when you look at what government

00:40:28.080 is doing mostly it's it's providing uh you know it's it's paying wages and salaries of public

00:40:33.540 servants uh it's using things up uh the amount of actual investment that yields lasting benefits

00:40:41.320 over time in the public sector is actually quite small um in the private sector you've got

00:40:46.240 investment that happens in plants and equipment and machinery uh that the businesses invest in

00:40:52.920 uh you you also in canada this is a big deal for us there's a lot of investment in housing

00:40:57.500 you add all those things up it all has to it all has to work out right we can produce so much and

00:41:03.440 so you look okay how much of it's getting consumed how much of it's getting invested one way or

00:41:07.120 another and over time what we've seen is that the public sector has just generally gotten bigger

00:41:11.960 one of the things that really concerns me about all this deficit spending is that the same thing

00:41:17.800 is happening in a way that's a little harder to see if the government tells you oh we're going to

00:41:22.060 you know provide this new income support and we're going to pay for it with borrowed money

00:41:25.440 then at the time there's no additional tax raise to pay for it you get to the end of the year you

00:41:30.620 might have in your portfolio you got a few more government bonds you feel richer but the country

00:41:35.320 isn't richer because they took that money and they turned it you know they they gave it away

00:41:38.860 and most of it got consumed. So over time, it really does matter how much you invest versus

00:41:43.980 how much you consume. And as the government sector has gotten bigger, we've seen less

00:41:47.640 investment and more consumption. Well, the amount that we're spending on

00:41:54.000 that government overspending is unreal. This year, it's going to be $55.6 billion in this

00:42:03.440 fiscal year, that's more than a billion a week just to pay off the minimum payment on the national

00:42:09.880 credit card. Next year, it'll be 60 billion, then going up to 66, then 71. That crowds out

00:42:17.000 spending that could be going into actual frontline services. Yes, it does. So Mark Carney promised

00:42:26.140 he would get that under control and his own projections say he won't. No, that is an area

00:42:32.540 where there has been no significant change in direction we've had two problems that have

00:42:39.840 continued one is that the projections were always kind of irresponsible yeah the ratio of debt to

00:42:46.900 gdp is going to level off after a while and then go down sometime in the out years so that was never

00:42:52.900 any kind of sense of urgency there's nothing like a in my in my view there's nothing like a balanced

00:42:57.860 budget to exercise some discipline. If you're targeting the debt to GDP ratio, that doesn't

00:43:03.280 speak to anybody. That's not a serious constraint. So that was one problem. The other problem was

00:43:07.360 that they always overspent. The projections we learned over time just weren't anything that you

00:43:13.760 could bank on because you knew that at the end of the year, they would jam all this spending in at

00:43:18.700 the last minute. And so that has continued and that's very disturbing to see. I think that what

00:43:24.960 is on many people's minds right now is they look around the world and they say, well, everybody's

00:43:29.380 doing it. Just look at the fiscal inferno that's burning south of the border. That's true. But to

00:43:35.320 me, that doesn't say, oh, it's okay for us to be the same. What that says is there's way too much

00:43:41.260 hyperextension of governments all around the world. That's why we're seeing long-term interest

00:43:45.940 rates moving up. And it may be that Canada doesn't look as bad as the United States. Maybe we can

00:43:50.660 borrow at a lower rate than they can but that's going to be pretty cold comfort if the rate on

00:43:55.680 30-year bonds goes up you know three four five six seven eight percent which can easily happen

00:44:00.840 it's happened in the past yeah maybe we're borrowing at a lower rate than they are but

00:44:05.260 all of a sudden that burden that you mentioned is going to get you know one quarter one third bigger

00:44:10.460 and at that point you're talking about serious tax hikes or program cuts just to stop yourself

00:44:16.100 from getting further into the hole yeah i the american overspending is out of control but

00:44:23.820 unlike them we're not the reserve currency of the world we don't have that sort of uh leverage

00:44:31.140 that they do how much of the fiscal problems the economic problems that we're facing

00:44:39.440 are a result of the trade war with the U.S., the tariffs, etc., and how much of it is just

00:44:48.180 bad policy? Because the government tends to try and say it's due to what's happening in Washington

00:44:59.080 or in the last little while, they blame both the housing prices being so high and the unemployment

00:45:06.060 rate being so high on the war in Iran, which started after the statistics they were rebutting

00:45:12.380 had been collected. But how much of this is our own fault versus external factors?

00:45:18.920 Well, I would say that it's mostly our own fault. It's true that Donald Trump's trade war is hurting

00:45:24.880 us. Businesses do not like uncertainty with Canada as exposed to the United States as it is.

00:45:30.660 you can see the impact on confidence. And I'm sure that that has, there are clearly some sectors

00:45:36.560 like steel, for example, where it is doing a lot of damage. But this problem that we have started

00:45:42.340 more than a decade ago. And so Donald Trump was not president during most of that time.

00:45:48.740 And when he was president, he wasn't hitting us with the same kind of tariffs that he

00:45:52.620 has in his second term. So you have to look much more broadly to understand why Canada has been

00:45:58.480 in such a mess for a while. And I think it's a bit of a problem that we've got Donald Trump to

00:46:03.120 blame it on now. If it were spurring us more effectively to action, get another pipeline to

00:46:08.140 the West Coast, maybe even get some fossil fuels shippable off the East Coast, that's harder to do.

00:46:14.300 But we're certainly seeing reasons why you would want to do that now. Maybe it's going to do us

00:46:19.820 a little bit of good. In the short run, though, what it ought to be making us think about is,

00:46:26.180 you know, what can we control? Well, we can't control Donald Trump. We can certainly control

00:46:31.460 our own corporate tax rate. We can control the speed with which we issue permits for various

00:46:37.980 things. We can control our impulses to slap silly taxes on things. I thought earlier we might get

00:46:48.240 onto the impulse that causes governments to just do things to hurt rich people because it sort of

00:46:54.280 feels good and it's good populism like slapping taxes on expensive boats and airplanes and ships

00:46:59.140 and then you you pull back on it when you realize uh how much harm is done uh all kinds of things

00:47:04.780 they brought in the the a luxury tax on planes and boats and such um there was a boatmaker in

00:47:12.460 the Kelowna area that packed up shop and moved to Texas Bombardier didn't sell a single plane

00:47:18.160 in canada uh for their you know cry me a river rich people didn't buy jets uh they didn't buy

00:47:25.880 a private plane well those those private planes employ an awful lot of people making good money

00:47:33.620 out at uh plants in mississauga and montreal so we we hurt ourselves with those bad policies

00:47:41.300 we we did and we backed off or the government backed off uh when uh the the harm that you

00:47:47.400 talked about became evident, and it was predicted ahead of time. Other countries have tried taxes

00:47:51.960 like that, again, for populist reasons, and they pull back on them because they realize the damage

00:47:57.760 that it does and the silliness of it. Taxing expensive cars, well, that looked okay, I suppose,

00:48:04.760 when the price of cars was a lot lower, but now they're still talking about switching us all over

00:48:09.080 to EVs at some point, which are a whole lot more expensive. So, they'll back away on that one too.

00:48:14.600 those are all self-inflicted wounds none of that stuff needed to happen so i i i do think donald

00:48:20.500 trump is doing us harm uh and i do think it would be good for us to respond to the harm that he's

00:48:25.360 doing us with some of the things that we could do to diversify our trade and make ourselves more

00:48:30.540 competitive okay if we're going to face a 10 tariff on something to the united states that

00:48:34.620 used to be tariffed at zero well let's make ourselves 10 more competitive and then we'll

00:48:39.520 just suck it up and we'll still be employed and we'll still be exporting. The rot started back in

00:48:45.740 2015. And I think that to say that everything that's gone wrong with the Canadian economy and

00:48:51.640 the stagnation of our living standards since then is all the fault of Donald Trump, that's just

00:48:55.440 getting it all wrong. Yeah, it's frustrating trying to make arguments for how we can improve

00:49:04.460 when that easy argument back is, but Trump. And, you know, even on something as, you know,

00:49:13.600 core is food inflation. Look, the overall inflation rate went down in February because

00:49:19.020 gas prices dropped compared to February of 2025. That has clearly reversed in the past couple of

00:49:25.740 weeks. But food inflation has been persistent and we're persistently higher. And you say, well,

00:49:31.600 well, we need to fix this. Here are some ideas how to fix it. Don't you know that Donald Trump

00:49:36.840 is hurting us? That cannot be our answer. Well, because you mentioned food inflation,

00:49:43.800 I'll mention supply management. I mean, we have cartels that keep the price of dairy products 0.88

00:49:48.580 and poultry and eggs higher than they would be if we had a freer market. This is going back

00:49:56.880 decades now, but Canada used to be a huge dairy exporter. Cheese used to be our second most

00:50:02.840 valuable export after timber. It's hard to believe now. Then supply management came along and we

00:50:08.820 now have this very struggling, inefficient industry. Donald Trump and the American dairy

00:50:15.100 farmers would like to see us lower some of the barriers. They should get their wish. They'd 0.87

00:50:19.880 suddenly find they got a fierce competitor on their hands, but it's harder to get rid of these

00:50:23.420 things when you got donald trump uh uh doing what he's doing so we we have to get past that

00:50:29.780 and i would love to see the federal government kind of seize the moment and make a few of these

00:50:36.020 changes that are politically difficult on the very straightforward argument that we have to

00:50:40.900 make ourselves more competitive we have to make ourselves more efficient and more resilient one

00:50:46.720 of the things uh david crane had a piece uh just recently uh david and i argue about many things

00:50:54.980 but i thought he had a nice suggestion that the prime minister ought to be providing us with kind

00:51:00.280 of a state of the nation report card on how we are doing in a whole lot of areas including the

00:51:07.740 ones that we've just been talking about and to sort of put those markers down uh to get his

00:51:14.160 government to perform a little better. I'm not sure that's exactly how David would have put it.

00:51:19.960 But I think somebody with Mark Carney's orientation, that kind of business background,

00:51:27.240 I think he could do a lot if he were to say, here are the things that are going to be different

00:51:32.120 in a year's time, in a couple of years' time. And that would get back to something we were

00:51:37.780 talking about earlier in this conversation, which is the difficulty that he's making.

00:51:41.660 yeah he attends meetings on time he wants accountability he wants the people around

00:51:46.360 of him to be delivering around him to be delivering what they say they're going to deliver

00:51:50.500 when they're supposed to and to do it right that's all great but to make that example you know sort

00:51:58.480 of propagate through the federal government all of its agencies all of the things that it does

00:52:03.040 down to the front line that's very hard and I think it would be useful for him to get out there

00:52:07.780 and say, here are some indicators of performance where you're going to see a change for the better

00:52:12.260 in a year's time, in a couple of years' time. He could do that still. He's got a bit of runway in

00:52:17.220 front of him. And maybe that would make the example he's trying to set at the centre propagate a

00:52:22.200 little better. All right. So a C from Bill Robson. Let us know what you think. Leave a comment. Great,

00:52:28.820 the Prime Minister. Thanks for the time, Bill. My pleasure. Thanks for having me.

00:52:33.100 Full Comment is a post-media podcast.

00:52:35.240 My name's Brian Lilly, your host.

00:52:36.740 This episode was produced by Andre Proulx.

00:52:38.760 Theme music by Bryce Hall.

00:52:40.500 Kevin Libin is the executive producer.

00:52:42.140 Please make sure that you hit subscribe, leave us a review.

00:52:45.440 Thanks for listening.

00:52:46.260 Until next time, I'm Brian Lilly.

00:52:52.820 There were so many missed opportunities to catch this

00:52:56.200 before the devastating thing happened.

00:52:59.100 A third of them we found literally in the phone book.

00:53:03.000 These people were not afraid.

00:53:05.220 They knew that nobody was effectively hunting them.

00:53:07.860 They knew they had escaped justice, that they were going to die in their beds.

00:53:12.280 When I give talks at law schools, it's that the charter ultimately is empowering a minority.

00:53:16.100 And it's empowering a minority that's a guild across the country.

00:53:19.120 And it's a fairly elite guild, and the guild is lawyers.

00:53:21.120 Families who were split by referendum and brothers and sisters

00:53:26.240 who never talked to each other for years after the referendum

00:53:29.120 because they were so angry at each other because of the emotions on both sides.

00:53:33.880 The reason he was assassinated was not because he was trying to put a satellite into space,

00:53:38.580 but because the gun that he was creating had other applications

00:53:44.640 that made him and the gun very dangerous.

00:53:49.140 It's finally here.

00:53:50.520 A new season of Canada Did What?

00:53:52.380 a post-media podcast that revisits the big Canadian political events you might think you remember

00:53:58.160 and tells you the real story you never knew.

00:54:01.340 I'm Tristan Hopper. The voices you just heard are from our brand new Season 2.

00:54:06.540 We will unpack some of the pivotal moments that helped define our country,

00:54:10.260 often without a vote, usually without a plan, and sometimes without anyone admitting what they'd done.

00:54:16.680 We'll find out how Canada became a welcoming paradise

00:54:19.840 for untold numbers of Nazi war criminals after the Second World War.

00:54:24.340 We let them build monuments to their wartime exploits

00:54:27.100 and even ended up honoring a Nazi fighter in the House of Commons.

00:54:31.160 And I'm sorry to say that none of that happened by accident.

00:54:34.900 We'll bring you the little-known story of a troubled Canadian rocket scientist

00:54:38.580 who turned to a sinister life of selling giant guns to terrible people.

00:54:44.020 And if that sounds like a spy novel, it ends like one too.

00:54:47.380 You'll hear the behind-the-scenes story of Quebec's attempted secession from Canada,

00:54:51.420 and how very close we came to a political crisis that would have made Brexit look like a picnic.

00:54:57.600 You'll hear about how the much-celebrated Charter of Rights and Freedoms

00:55:01.460 turned into something its creators never wanted,

00:55:04.260 and how many of the most extravagant warnings about the document were all quickly proven true.

00:55:10.440 And you'll even hear about how authorities bungled multiple chances

00:55:14.060 to stop the deadliest terrorist attack in our country's history

00:55:17.020 and then proceeded to pretend it never happened.

00:55:20.520 These aren't dusty history lessons.

00:55:22.660 They're stories about power, ambition, madness,

00:55:25.320 and the things about Canada that a lot of people would rather ignore.

00:55:29.440 But not you!

00:55:30.800 You won't want to miss an episode.

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Full Comment - March 23, 2026

What happened to the Mark Carney who promised to make things better？

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