Juno News - October 23, 2025Carney WARNS of ‘sacrifices’ for Canadians ahead of new budget
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Summary
While they say the devil is in the details, anyone hoping for specifics about the upcoming federal budget walked away disappointed last night with Mark Carney s State of the Country address. Carney told an audience of students at the University of Ottawa, there will be sacrifices and challenges ahead.
Transcript
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While they say the devil is in the details, anyone hoping for specifics about the upcoming
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federal budget walked away disappointed last night with Mark Carney's speech. His State
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of the Country address was heavy on platitudes, light on specifics. Carney told an audience of
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students at the University of Ottawa, there will be sacrifices and challenges ahead.
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What kind of sacrifices? Carney said, wait for the release of the budget.
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You just said in your remarks, and you said it last night in your speech as well, that
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we'll have to do less of some of the things that we want to do. So what are some of those
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things? Well, look, we'll have a budget and all aspects of the budget will reveal that.
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We'll have to move more slowly on certain aspects of, well, you know what? I think we
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should, why don't I not scoop the budget and we'll let it come out through the budget.
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The point is, we've been clear about maintaining our transfers to individuals. There's certain
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demands or desires to expand in different areas, and we won't be able to move as quickly as
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we otherwise would. Right. Franco Terrizano of the Canadian Taxpayers Federation posted this
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on X. Carney was elected to be the guy with a plan. Carney's address had no real plan and
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no real substance about the upcoming budget. Also in his speech last night, Carney said it'll
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take time to transform the economy from one that was integrated with that of the United
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States to one that builds on trade relationships with other countries.
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We won't transform our economy easily or in a few months. It will take some sacrifices and
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it will take some time. Our government will work relentlessly to cut waste and drive efficiencies.
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And when we have to make difficult choices, we will be thoughtful, we'll be transparent,
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Meantime Conservative Party leader Pierre Polyev says young people have had it with sacrifices.
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But instead of saying, given that things are so bad, we Liberals are going to reverse course
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on all of the policies of inflation, of blocking home building, of standing in the way of resource
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projects. Instead of that, he asked young people to make more sacrifices. This was the sacrifice
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speech to Canadian youth. And he said it's going to take lots of time to reverse all the damage.
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Mr. Carney, our youth have sacrificed enough. All they have done for the last 10 years is sacrifice.
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There you go. Now you heard Mark Carney a few minutes ago, a few seconds ago really,
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say that he wants to double exports to countries not named the United States of America over the next 10
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years. What are we going to sell those people? Is it going to be oil, gas, the things that they really
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want or something else? Anyway, he's also adding that our relationship with the Americans will never
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This decades long process of an ever closer economic relationship with the United States
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is now over. Our relationship with the United States will never again be the same as it was.
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Our goal for Canada is to double our non-U.S. exports over the course of the next decade,
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generating more than 300 billion more in trade. And that's new orders for Canadian resources,
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So he's talking about decoupling Canada from the economy of the United States. But just earlier
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this month, Carney was at the White House in the Oval Office bragging about Canada's half trillion
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dollar investments in the United States over the last five years and saying that there would be much
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more in the years ahead. We'll just have to see how it all plays out on November the 4th.
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Our guest is Associate Professor Ian Lee from Carleton University's Sprott School of Business. Welcome,
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Good afternoon. Thank you very much for inviting me.
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You listened to the speech yesterday. What are your thoughts?
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I did. I listened to it from the beginning to the end. I am impressed with Mr. Carney. You know,
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he's obviously a very educated man. Nobody can deny that. He's got lots of experience. You know,
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he was 10 years, I think it was 10 years in Goldman Sachs. That impresses me as a former banker myself. I was
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with VMO. And of course, he was a deputy minister of finance and then central banker of two banks.
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So there's no question that he knows what he's talking about. I was
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expecting more from the speech because it was so unusual what he was doing. I've been studying and
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watching budgets probably since the late 70s when Pierre Trudeau was in his last term in office when I
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really started to focus on these things. And I think I've watched every budget speech since.
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And so having a speech prior to the budget speech is I don't recall that ever being done before.
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So that suggests it's important when the prime minister asks, you know, schedule something like
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that in prime time. Didn't do it in the middle of the day like a press conference or 10 in the morning
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when people are busy at work. He did it in the evening knowing that then, you know, the networks will
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cover it, which they did. And I thought that he was going to do the bold stroke to use Richard
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Nixon's famous phrase and do something to show that he really is breaking with the past because
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he keeps saying we're at this hinge moment, the tipping point that others would say, and we're
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going to go in a dramatically different direction. And then I thought, well, maybe he's going to announce
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some very bold but very big picture movement in a new direction. And it didn't happen. He rehashed
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what has been announced thus far and rehashed arguments that he has given. There's nothing
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wrong with the arguments as such. But I didn't think it was a bit of a letdown because it didn't,
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I thought it underwhelmed. Not to say that what he said wasn't accurate, that, you know,
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there's big changes ahead, there's tough times ahead, etc. But I didn't hear anything new in the
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speech. And I thought, well, you know, if it's being billed as this very major speech on the upcoming
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budget, that it must, there must be some real substance and meat in there. And I really didn't
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think there was. I mean, he re-repeated it and re-emphasized it, but I didn't, I don't think I
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heard anything new. Well, there was talk of sacrifices and challenges. Okay. So which begs
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the question, what are you talking about here? Are we looking at cuts? Are we looking at deep cuts
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in government spending? Yes. And we've had bloated civil service for quite some time in Ottawa,
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increasing the size of it by 40% under Justin Trudeau. You know, is that going to be reversed?
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I guess the other thing was the export commitment. You know, the fact that over the next 10 years,
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we're going to double our export capacity to countries other than the United States. It occurred
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to me that, you know what, we were probably going to do that anyway. You know, over the course of 10
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years, you can expect to double the degree of exports that you've got to any country.
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Yeah, it did. I've been arguing in various media interviews I've been doing for several months now,
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based on the facts that we're facing. These aren't my facts. I didn't elect Donald Trump.
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He is the president. He has been consistent for at least 10 years that he wants to bring manufacturing
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back to the United States. This is not a secret. A lot of Canadians seem to be stunned and just amazed,
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like, where did this come from? Well, anyone who's been following Donald Trump knows he's been saying
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this since 2015 or before. That's a decade before he became president the first time. I'm not saying I
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agree with it. In fact, I don't, but it doesn't matter what I think. We knew anyone who follows
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it that he is going in that direction. And for those who study industries, as I do teaching the
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Strategy Capstone course for 35 years, I know that one knows that people know that manufacturing is
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enormously, enormously capital intensive and R&D intensive in the billions and billions and billions of
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dollars, which means that you need huge production runs, which to achieve economies of scale to break
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even, which means that's why there's only three really huge regions in the world that dominate
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manufacturing. One's called China, one's called Europe, and one's called the United States. Small
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countries like Canada can only survive in manufacturing if they have access to one of those huge gigantic
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markets. And we know that Trump has said, you're not going to anymore. He said, we want to make all
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the cars. So given all this information that's out there, and this is not secret information, I assure you,
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I thought, well, gee, isn't this an opportune moment to do the speech as a warmup, a prelude to the budget
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saying, look, everybody, I can't give you the details. It'll be coming out on budget night, but I can give you
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a very broad brush sense of the direction. And we cannot double down and do a made in Canada building
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ships and building cars and building planes and so forth because we simply don't have the scale. We
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don't have the size. So we're going to do what Australia did in 2017 when they exited the auto industry
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and they pivoted and doubled down and tripled down on resource sector. They were already there, but they
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really went after it much more aggressively. I thought he could have done something like that.
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In other words, don't throw manufacturing under the bus. Trump's already done it. Trump has done it
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in public. So has Lutnik. I thought he could have picked up on that and said, look, we don't agree
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with this. It's most unfortunate. We're going to fight like crazy to try and keep it, but we have to
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recognize what's happening. And so I want to let everyone know we're not just going to say, oh, well,
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that's that's the brakes. We have a plan to a plan B, if you will, to go down to pivot to resources
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writ large. And I don't mean just oil and gas. I mean everything that's a resources. It could be potash.
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It can be nuclear fuel. It can be timber. It can be cologne, canola, fish, electricity,
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critical minerals. And I thought he could have gone that way. But in the speech, he didn't. He
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continued talking about, we're going to reinvest. And he was very clear he meant manufacturing.
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And I thought, we're just going down the same road we've been doing for 70 years.
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We threw billions of dollars at Bombardier, said we're going to manage them up to become a world-class
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competitor of Airbus and Boeing. And what did Airbus and Boeing do? Well, they predictably,
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and there were people that predicted it. I was one of them 25 years ago. I said, they're going to
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retaliate and they're going to do everything possible to drive Boeing out of business,
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which is exactly what they did. And so I thought he had an opportunity, and still does,
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have an opportunity to have a frank conversation with the people, just like Roosevelt did with his
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fireside chats during the Great Depression. He didn't sugarcoat it and say, look, people,
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we're really not in a depression. Everything's fine. You know, just a little hiccup. He never did that.
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He never, he just went, he went right at them. Look at everybody. This is a really unbelievable
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crisis. Now I know Carney's saying that, but then he turns around and says, but it's okay. We're just
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going to throw lots and lots of money at it. And we're going to have our own made in Canada
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policy to look after all these industries. Well, it's not going to happen because we're only 40 million
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people, which is smaller than the state of California. Exactly. I mean, at one point he did
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say when he was talking about doubling our exports to other countries, he did mention a number of
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sectors, including the resource sector, which got me wondering whether or not that is directly tied
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into oil and gas. But, you know, if you're going to increase that resource sector allocation for your
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exports, how do you square that with this ongoing need to lower and reduce your carbon footprint?
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I mean, I don't hear any suggestion by this government, nor the people in it, that they're
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going to back away from this green agenda of theirs at all. And so go ahead, Mark, I'll go further.
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You're right. There were several contradictions in that speech, and I'm not trying to be a pedant and
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saying, you know, you can't contradict, but I'm talking serious strategic contradictions.
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He did notice resources. He did notify no resources. And it is a huge opportunity. Yes,
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we're going to go into resources. And by the way, we're going to double down on the green agenda
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to make it even cleaner. A contradicts B. There is no way around this.
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This idea that we can expand resources or manufacturing carbon free is is it's just a it's
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it's a fraud. We produce the emissions if one studies the emissions sector by sector and I've
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done it. The government does produce the sector emissions. So does the International Energy Agency
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for the whole world, by the way. And there's I'm not saying that there aren't more dirty industries
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and less dirty industries. There are. But anyone who thinks that we can somehow create a an economy
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or a sector that has zero emissions. And I know we've been told that for the last 10 years.
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Any serious study by serious people, not ideologues. I'm talking engineers. I'm talking scientists that
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really understand industry and understand capital costs and investment costs and carbon footprint
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knows that you cannot have a carbon free world, not for any time in the foreseeable future. And I
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mean, in the next 50 years or more. And so what I'm trying to say is he's offering, you know, a and
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the opposite of a we're going to go into resources. And by the way, our world's even going to get cleaner
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and cleaner. And there are tradeoffs to use the old fashioned word in resources in policy. There are
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tradeoffs. And he very clearly said we can have it all. And that's not making tough choices. When you
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say you can have it all, you can have everything. We're going to have a made in Canada policy. We're
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going to have a completely green policy and go to green zero emissions. And we're going to export
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resources. We're going to have it all, everybody. That's the opposite of saying, look, everybody,
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we've got some very hard, tough choices ahead. And that's my fundamental criticism of what what he
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was doing. I mean, the other contradiction comes around our relationship with the United States,
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because we all know that our trade negotiations are still under place underway. They are reaching,
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according to them, a level of intensity that we didn't see before. So we still want this deal.
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We've got the USMCA CUSMA renewal or review coming up one year from now. We still have 85% of our trade
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with the United States covered under that. And he bragged about that. He said, well, you know,
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things may be hard for Canada right now as far as trade goes. But our relationship with the United
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States, we have the best trade relationship with the United States. And by the way, our relationship with
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the United States is over in terms of what it is. That was my second major, his second major, not mine.
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That's my second major critique or criticism of this enormous contradiction where he's saying,
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on the one hand, it's over. He actually said that our relationship we've relied on for all these many,
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many years, it's done. It's over. And I'm going to turn around and sign a deal that's going to be the
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best in the world. Now, wait a minute, A or B. Okay. And I'm not saying he should have said,
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we're going to walk away from the United States. What he should have said, and I mean this very deeply,
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profoundly deeply, he should have said, look, everybody, yes, our relationship is changing.
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It's changing in a very major and significant way. It is not done. It is not over for the simple reason
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that nobody is going to pick up the continent of the half continent of North America of the United
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States and move it halfway around the world. And nobody's going to pick up Canada and move it
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halfway around the world. We are joined at the hip by geography for almost 9,000 kilometers. And that's
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not ever going to change, not for millions of years. Therefore, therefore, Canadians,
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we have to go forward with a revised and renewed Kuzma. Well, at the same time, we do want to
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diversify our trade to become a little bit less dependent on the United States. If he had said
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that, he would have had me screaming from the rafters with joy, but saying it's over, it's dead,
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it's finished. And by the way, we're going to have the greatest deal in the world with the United
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States. You just said it's done. It's over. It's finished. How can you be doing that?
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You know, and so it reduces his credibility. And again, I'm not saying this to take cheap shots.
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He's a smart man. I think he's got advisors around him or political spin doctors, because
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that's what happens in every political party. They have all these spinsters, spin doctors,
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who are spinning, and they're trying to have their cake and eat it. And I think he would be much better
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advised to say, don't sugarcoat it. I'm not saying you're going to tell everybody we're all going to
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die and we're doomed. Of course not. You don't have to say that. You can say tough times are here
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again. He's saying that. And then don't sugarcoat it about the relationship. Yes, it's changing.
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It's changing very dramatically, but it's not dead. It's not over. It's going to continue because we're
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joined at the hip, everybody. So all those people shouting and putting their hair on fire, we got to
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stop dealing with the United States. We're not going to go to the United States anymore. We're not going to
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trade with the United States. And there are people saying this. We got to bring them down to earth.
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And they're in a bubble, in a little bubble, a Trump delusion bubble, because they hate Trump so
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much. I'm not here to defend Trump. I don't agree with his policies. But there's people suffering
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from derangement syndrome. And they say really insane, crazy things like, we got to stop dealing
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with them completely. This is silly. Because the United States is not, Canada is not going to leave
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geographically from where we are in the world next door to the United States. So we've got to,
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you know, you got to deal with whatever you're dealt with. And if you've got a neighbor that's
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not completely reliable, okay, you got to deal with it. You don't say it's dead. It's over. It's
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finished. I'm never going to talk to them again. I'm going to go and sulk.
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Yeah, you get the sense that he's trying to cater to two blocks of voters and supporters,
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right? The people who voted for him, the elbows up crowd that really gave him the,
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you know, the degree of support that he needed to win that election. And the other side that is
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kind of waiting for a deal to happen. You know, July 21st, the deadline came and went. We still
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don't have a deal with the Trump administration. And some of them realize that, no, we do need a deal
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with the Americans. They're our biggest trade partner. And the fact that that hasn't happened yet
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is troubling. And, you know, it suggests that a promise was broken here. So he's trying to
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balance those two sides off. Did you get that sense in a speech yesterday?
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Yes, he is. But what, yes, yes, he is. And I did get that. But what I'm saying is,
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I don't think he should pander to the crowd who are really, really angry at Donald Trump
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and don't want to have anything to do with them, and then throw them some red meat,
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as he did. All right. Lyndon Johnson, a Democrat, a liberal Democrat.
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Yes. In his biography, autobiography, I don't normally read autobiographies,
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but he was a very, very momentous president. You know, Vietnam War and Civil Rights Act and
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Voting Rights Act and a whole bunch of things. He was truly a transformative president.
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Great Society. Yeah. And he said something along the line. He had this very colorful
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philosophical phrase. He said, you know, the leader has to look ahead and realize that many
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people don't have the same perspective because they don't have access to all the information
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the president has because he's at the very commanding heights at the top. And he says that
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he is his job as leader to bring people forward to go to the next mountaintop. And it was very eloquent,
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very beautiful, very afraid. I'm not even doing justice to it. What I'm saying is you can't
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pander to people who are advocating policies that are just simply not possible because they're not
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credible. They're not realistic. You know, the idea we're going to stop dealing with the states and we're
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going to just pivot completely to Europe or China is just, it can't happen. It won't happen because
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they're too far away. They're too different from us and so forth. So what I'm saying, he could
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have said, look, I feel your pain. I really understand what you're saying. But the reality is
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we have a border that's almost nine or eight thousand kilometers long, and we're going to
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be dealing with them to the end of time. So now what we got to do is make the best of a bad situation.
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If he talked like that, I think he would have had his credibility would have gone through the roof.
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You know, people said, holy Moses, he's saying where he's going, but he's also explaining,
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you know, to those who don't like it. And he's trying to bring them forward. And that's where
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I don't think, I mean, I'm not a politician. Okay. But I understand that he's got to and he
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understands we've got to go forward. We have to have a trade agreement with the United States.
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It is just inconceivable that we're not going to have a trade agreement with the United States,
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largest economy on the planet Earth, 30 trillion dollars. No one else is close, including the
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Europeans, by the way. And secondly, we share the same continent. We speak the same language dominantly.
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Yes, I know there's minority languages. Yes, French and Quebec and Spanish in some pockets.
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But anyone who thinks that, you know, the U.S. is anything other than an English-speaking
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country, it just hasn't traveled over the United States as I have. And I've been to 44 of 50 states.
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And I've lived there twice. And I've been all across Canada. And it's dominant English.
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That's the language of business. That's the language of commerce. That's the language of politics.
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That's the language of municipalities. That's the language of interest groups.
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It's the language of voters. So, you know, you got to go out there and talk and speak truth to power,
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but at the same time, acknowledging their pain and acknowledging their anger and just say,
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look, we're going to come up with the best deal possible for Canada, but we're not going to do it
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out of spite and say we're going to cut off the Americans because we're upset with them and we're
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really angry with them. And that's where I think he's not. He hasn't gone the extra mile to bring
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people along to where we have to go. And one more quick point on this, Mark. It's very important.
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When people talk about, politicians all do it. Well, we're going to double our trade. We're just
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going to put trade over there and there. I've talked to my students every week about this.
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This is almost like the delusion of, not Alice in Wonderland, the Wizard of Oz. And people think
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there's a little old man and he's running a big computer in the back of the room, you know,
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and he's manipulating everything. There's no computer in the back of the room. The idea that
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the president of the White House or the prime minister is sitting there at a computer saying,
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okay, company A, you're going to put some more stuff over there to Thailand and you're going to go
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over there. It don't work like that. Every company is trades on its own because trade is
00:23:58.640
voluntary exchange between two companies. The prime minister does not determine this.
00:24:04.720
He can shout and say, please trade more, but he can't. The parliament doesn't have any authority
00:24:10.000
to go to a company and say, I command you to start selling to that country over there.
00:24:14.560
It doesn't work like that. It's exchange based on, because I make a good product
00:24:19.680
and it's better than the competitor's products. And I'm going to sell it to your company because
00:24:23.200
you think my product's better than my competitors. That's what the market economy is. And yet this
00:24:28.080
delusion, illusion has emerged that somehow the prime minister is going to determine who we're
00:24:34.480
trading with. We're not. Presidents and leaders can influence trade by putting tariffs on or taking
00:24:41.440
tariffs off, but they can't dictate where any one country, a company, excuse me, is going to trade.
00:24:48.960
That's up to each company. And they send out their sales reps to different countries to pound the
00:24:54.640
door and knock on doors to sell product or services. But countries don't make that decision.
00:25:00.800
And yet you would listen. I listen to people all the time. They think that it's up to the prime
00:25:04.880
minister to decide we're going to go from, you know, 10% to 20% with another country or another part
00:25:10.160
of the world. Governments don't make those decisions. They're made by companies on the ground
00:25:16.320
through the sales forces and companies also decide whether they want to operate in your
00:25:21.920
country or not. And if, and if the environment has changed, if the economics has changed,
00:25:27.280
well, they're going to get up and leave. And we saw that illustrated in Ontario and Quebec now,
00:25:32.400
of course, because of course that truck manufacturing plant in St. Torres just announced that they were
00:25:37.200
going to be downsizing, not entirely, but moving back, moving their production. So in a way, Trump's
00:25:43.600
tariffs are being rewarded by the companies that make those decisions. And it's legitimizing
00:25:50.240
the fact that he made this move in the first place. As I said, I don't agree with Trump whatsoever.
00:25:56.560
I have supported every free trade agreement since 1988 with this in Canada. I'm Canadian. I have
00:26:01.840
supported every free trade agreement and trade. Think of trade as the opposite of tariffs. It's the
00:26:08.160
opposite of Trump. Trump wants to put tariffs on. What do trade agreements do? They try to take tariffs
00:26:13.360
off. I mean, anybody who's a free trader wants a tariff-free world. So clearly I'm not on the side
00:26:19.440
of Trump. I want more free trade. I want all tariffs to go. Okay. But I want, I'm not blind to the fact
00:26:28.080
that they can work, especially if you're a very large, powerful country like the United States.
00:26:33.600
Small countries, it's much more difficult because people can go elsewhere. Companies can go elsewhere.
00:26:38.400
But the US is the largest economy on planet Earth. And every country around, most countries around the
00:26:44.640
world, most companies around the world want to do business with the states. So they can do things
00:26:49.920
that others can't, such as putting tariffs on everybody and making them change their behavior.
00:26:54.640
And people say, how did, where does Trump get that from? Well, it's a sheer scale.
00:26:58.720
When you're 30 trillion and 400, 350 million people, you can do it. And is it fair? No, it's not.
00:27:06.640
Is it right? No, it's not. But that's reality. Well, we still have supply management though,
00:27:12.960
don't we? Yeah. We've been doing it for years. I think if you were to say to Trump, all right,
00:27:17.040
that's it. No tariffs on anything. Let's have wide open free trade. I think he'd probably go for it.
00:27:22.080
I said in January several times that if, and I said, I wish the government of Canada would go to
00:27:29.120
Trump and say, look, Trump, okay, we know that there's these industries that drive you crazy
00:27:33.200
because we're protecting them. One of them is supply management. Another is telecom, where we
00:27:37.360
don't allow American telecom into Canada. Another is airlines. Another is banks. We've got our
00:27:41.120
restrictions. Go to him, say, we'll take all those restrictions on those six or seven or eight
00:27:47.360
restricted industries. We'll take them off the table completely wide open access for your companies.
00:27:53.840
If you guarantee us no tariffs whatsoever coming in to the US from our country, I still think Trump
00:28:00.720
would go for the deal. I agree. I think the government of Canada didn't do it because they're
00:28:04.800
worried about the blowback here. It wasn't they're worried about Trump. They knew that people go crazy
00:28:10.640
because they want to support and continue to support supply management. So I think that we,
00:28:17.120
we are sometimes our own worst enemy. And I think that we are one of the reasons why we don't have
00:28:22.960
a trade deal, because we said we, what we were saying was, Trump take off all those tariffs. And
00:28:29.520
by the way, we're not going to take our tariffs off. So, but we want you to take your tariffs off.
00:28:33.600
Now let's do a deal. And of course, you know, go to hell. Yeah. I mean, that's what he said.
00:28:37.920
Absolutely. Yeah. Because we wouldn't take our tariffs off. I still think if we took them all off
00:28:42.720
and then said, well, I'm not saying we will take them off. If you take all your tariffs off,
00:28:47.760
I think we can do a deal with them. Yeah. I don't think we haven't tried it. I don't think
00:28:53.840
I wasn't in behind the room behind the closed doors, but I don't think they did.
00:28:57.280
I saw the Canadian Parliament went past a bill saying, we cannot end supply management,
00:29:04.160
even for negotiations with the Americans. My goodness me. Yeah. And we're supporting a system
0.73
00:29:10.800
for 8,000 dairy farmers, mostly in Quebec, that jacks the price up double the market price if we
00:29:16.480
didn't have supply management. So in other words, we're exploiting 40 million Canadians with much
00:29:20.320
higher milk and dairy prices to support 8,000 farmers. Yeah, absolutely. And jeopardizing a
00:29:28.000
jeopardizing deal. Great agreement. Thank you so much for coming on the show. I really do appreciate it.
00:29:33.040
Lovely speaking with you, sir. Yeah, my pleasure. Thanks very much. Thanks for inviting me. All right.
00:29:37.520
All right. That is Professor Ian Lee from Carleton University. And that is it for this edition of
00:29:43.840
The Mark Petrona Show. Appreciate you tuning in, my friends. Let's do it again soon, shall we?