Could Mark Carney risk Canada's AAA credit rating？
Episode Stats
Words per Minute
151.76181
Summary
A major credit rating agency released a forecast warning that Canada could lose its AAA credit rating should the newly elected Liberal government implement the spending promised in their platform. Ontario Premier Doug Ford has sent a letter to newly elected Prime Minister Mark Kearney demanding federal funding for several major provincial projects. The Alberta NDP has voted to split from its federal counterpart after its crushing defeat in the general election.
Transcript
00:00:00.000
A major credit rating agency released a forecast warning that Canada could lose its AAA credit rating
00:00:11.060
should the Kearney Liberals implement the spending promised in their platform.
00:00:16.120
Ontario Premier Doug Ford has sent a letter to newly elected Prime Minister Mark Kearney
00:00:20.580
demanding federal funding for several major provincial projects.
00:00:24.100
The Alberta NDP has voted to split from its federal counterpart after its crushing defeat in the general election.
00:00:31.960
Hello Canada, it's Tuesday, May 6th, and this is the True North Daily Brief.
00:00:39.140
We've got you covered with all the news you need to know.
00:00:42.220
Let's discuss the top stories of the day and the True North exclusives you won't hear anywhere else.
00:00:47.500
Fitch Ratings has warned that Canada's coveted AAA credit rating may be at risk
00:00:56.260
if Prime Minister Mark Kearney's newly elected liberal minority government
00:01:04.560
Kearney, who replaced Justin Trudeau as Liberal leader in March,
00:01:08.120
led the party to a narrow fourth consecutive election win last week.
00:01:12.080
However, with only 168 seats, the Liberals are forming another tenuous minority government
00:01:18.580
and must rely on opposition parties to pass legislation.
00:01:22.920
Fitch estimates that if the Liberals deliver on all of their spending promises,
00:01:27.220
Canada's general government deficits will rise to 3.1% of GDP in 2025
00:01:33.360
and 3.2% in 2026, far above the pre-pandemic average.
00:01:39.900
In contrast, the agency had projected deficits of 2.7% and 2.4% respectively
00:01:52.780
approaching those seen only during the 2008 recession and COVID-19 pandemic,
00:01:58.520
risk pushing Canada's gross general government debt above 90% of GDP,
00:02:06.700
Currently, Canada holds an AA-plus rating with Fitch.
00:02:10.900
Other major credit rating agencies like S&P, Moody's and DBRS have rated Canada with AAA.
00:02:17.840
Federal deficits alone are set to hit $54.6 billion this year
00:02:22.960
and $43.4 billion next year under the platform,
00:02:30.080
Jean-Philippe Fournier, former policy advisor to Quebec's Ministry of Finance, said,
00:02:35.740
quote, the current Liberal plan needs to be modified
00:02:38.420
or it will put the financial viability of the federal government at risk.
00:02:43.000
Yet the Liberals claim only partial offsets through new taxes and efficiency measures,
00:02:48.000
many of which, Fitch says, rely on overly optimistic assumptions,
00:02:52.320
including uncertain revenues from retaliatory tariffs and government productivity gains.
00:02:57.420
In December, Fitch had projected a 1.1% deficit for 2025.
00:03:03.760
Now, under the Carney agenda, it seeks a risk of deficits nearly triple that amount.
00:03:09.100
In the same report, economic growth in Canada is forecast to slow to just 0.1% in 2025
00:03:20.200
So, Jeff, throughout the election, we saw not only Carney and the Liberals,
00:03:36.060
as an economic genius or expert who has experienced weighting economies through troubling times.
00:03:45.900
But how does this Fitch forecast contrast with the way Mark Carney was presented
00:03:55.560
Yeah, Cosby, the Fitch ratings warning about Mark Carney's $130 billion spending plan
00:04:01.120
paints a stark contrast to how Carney presented himself during the 2025 election
00:04:13.160
promising to split the federal budget into operating in capital segments
00:04:16.400
and balance the operating budget within three years
00:04:18.780
while running deficits in the capital budget to catalyze investment.
00:04:24.780
telling Canadians in Charlottetown that his government would spend less and invest more,
00:04:28.980
framing his $130 billion in new measures as a strategic response
00:04:33.360
to a fundamental reordering of Canada's relationship with the U.S. and the global economy.
00:04:38.740
His pitch was rooted in technocratic credibility,
00:04:41.660
suggesting he could navigate Canada through economic turbulence,
00:04:45.260
particularly with U.S. President Donald Trump's tariff threats looming.
00:04:48.860
Fitch's forecast, however, undercuts this narrative with a grim outlook.
00:04:52.320
The agency warned that Carney's platform would worsen Canada's fiscal position,
00:04:56.220
projecting a 2025 general government deficit of 3.1% of GDP,
00:05:04.840
significantly higher than the 2.6% and 2.4% deficits
00:05:08.940
they had previously anticipated for those years under Trudeau's trajectory.
00:05:13.280
Fitch flagged that these increased structural deficits
00:05:18.480
despite the country's AA rating and economic stability offering some buffer.
00:05:22.160
They also noted the uncertainty of Carney's minority government,
00:05:25.000
suggesting that legislative compromises could further deviate from the platform's promises,
00:05:31.940
This forecast directly challenges Carney's image as a fiscal steward,
00:05:36.000
highlighting the potential for his plan to balloon deficits
00:05:40.760
which are outcomes that clash with the economic discipline he claimed to embody.
00:05:44.280
While Carney sold himself as a pragmatic expert
00:05:46.480
who could manage Canada's finances through a crisis,
00:05:49.000
Fitch's analysis suggests that his approach might instead lead to greater economic vulnerability,
00:05:53.360
casting doubt on the very expertise he centred his campaign around.
00:06:00.700
Ontario Premier Doug Ford has penned a letter demanding further federal funding
00:06:04.720
for several provincial resource and transit projects amid a still-hot trade war with the U.S.
00:06:11.460
urges newly elected Prime Minister Mark Carney to support several infrastructure projects
00:06:15.680
flagged as a priority for Ford and his progressive Conservative government.
00:06:18.800
Ford noted five projects for which he wants further federal funding
00:06:22.180
in partnership with Carney's Liberal government,
00:06:24.360
including all-season roads and electricity transmission lines to Ontario's Ring of Fire
00:06:28.700
to ensure an end-to-end, made-in-Canada, critical mineral supply chain.
00:06:32.700
He also called for federal backing on nuclear energy infrastructure,
00:06:36.180
a new northern seaport to bring Ontario goods to new markets,
00:06:39.680
a controversial transit tunnel under Highway 401,
00:06:43.500
Many of Ford's requests echo previous appeals for Liberal government funding
00:06:51.520
or were outlined in Ford's 2025 Ontario election campaign.
00:06:55.380
However, the request for a new northern seaport is new.
00:06:58.800
Ford envisions a James Bay port that would, quote,
00:07:01.280
serve as a gateway to our northern seas to bring Canadian resources to new markets,
00:07:06.240
helping to diversify Canada's trade and reduce our reliance on the U.S.
00:07:09.720
International ports fall under federal jurisdiction.
00:07:12.540
Specific figures on the scope and costs of the James Bay port have yet to be released,
00:07:17.160
but in comparison, the 2023 construction of the Iqaluit deep-sea port cost Nunavut approximately $84.9 million.
00:07:25.960
Ford has advocated for increased funding and partnership on most of these projects before the letter,
00:07:31.100
including the Ring of Fire development, nuclear energy, infrastructure, and transit projects.
00:07:36.160
Though operated by Metrolinx, which reports to the Ontario Ministry of Transportation,
00:07:40.060
the federal government has a history of funding GO Transit projects.
00:07:43.840
During the latest Ontario election in February,
00:07:46.720
Ford pledged to increase transit options in the Golden Horseshoe region, in the GTA, and in Toronto.
00:07:52.420
Opposition critics have criticized Ford's plan to build a driver and transit tunnel expressway under the 401.
00:07:57.500
Detractors say the project could cost up to $100 billion, making it potentially the most expensive project in the provinces.
00:08:04.380
Ford says that with the federal government's help, the tunnels could improve our economic competitiveness by acting as a shipping room.
00:08:10.120
Dr. Shoshana Sachs, a University of Toronto associate professor in the school's Department of Civil and Mineral Engineering,
00:08:16.680
estimated the tunnel could cost approximately $1 billion per kilometer.
00:08:20.340
Though Ford's government hasn't released information on the length of the project,
00:08:23.700
Sachs estimates it could cost taxpayers $55 billion.
00:08:27.040
So, Cosman, could Doug Ford's behavior during the campaign and attempts to throw shade at the federal conservatives
00:08:32.500
have been a way to gain favor with Kearney to fund these projects?
00:08:35.580
Yeah, absolutely. And when you just look at these projects themselves, right,
00:08:39.980
these are things that the liberals, by and large, have already funded.
00:08:44.400
So asking for more money on projects that already have funding agreements is just an extension of funding agreements.
00:08:52.540
And one of the things we didn't discuss here is, like, the nuclear reactor stuff.
00:08:57.500
Like, several provinces have asked for funding for small nuclear reactor research and development,
00:09:04.600
which I don't think is a bad thing. I think it's a good thing.
00:09:07.780
But there's already been a federal commitment to that.
00:09:10.780
So to the Ontario government, if the liberals have already committed to funding,
00:09:15.680
extending that funding further and making a request clearly outlining these programs,
00:09:21.200
which have already been greenlit, by and large.
00:09:24.660
A few haven't, like the Ring of Fire stuff and a couple others in that letter.
00:09:32.900
And I'm not so sure that Pierre Polyev would have agreed with Ford on all of these.
00:09:39.120
In the sense, I don't think he would have played nice with Ford just due to his behavior during the campaign.
00:09:46.740
We know that conservative leader Pierre Polyev wants to develop the Ring of Fire.
00:09:52.400
He made it one of his key campaign promises with regard to natural resource development.
00:09:59.180
But I think Doug Ford pretty much hedged his bets in a way,
00:10:03.460
knowing that, well, here are some things in my re-election platform when he went up to the ballot
00:10:14.100
while I can play the other side with Mark Carney
00:10:17.140
and appeal to him, knowing that federal funds will continue to flow to certain programs I want,
00:10:23.380
and I can try to make a case for the new ones that I pledged in my re-election platform.
00:10:31.920
Despite Alberta NDP leader Nahid Nenshi criticizing Alberta Premier Daniel Smith
00:10:37.480
amid the province's growing separatist movement,
00:10:40.440
he is now applauding a separation movement of his own.
00:10:43.340
Alberta's new Democratic Party delegates have voted to allow its members to opt out
00:10:48.660
of joining the federal NDP at Sunday's annual party convention in Edmonton.
00:10:54.000
This comes as an attempt to distinguish the highly unpopular federal party
00:10:58.100
from the provincial opposition party in public optics.
00:11:02.540
NDP leader Nahid Nenshi shared remarks celebrating this action, saying,
00:11:07.400
This is a great movement for the very, very many thousands and thousands of Albertans
00:11:12.720
who really like what the Alberta NDP have to say,
00:11:15.940
but don't necessarily agree with the federal party,
00:11:21.260
Until now, Alberta NDP members were automatically signed up as federal NDP members,
00:11:27.040
a practice Nenshi described as a political liability.
00:11:33.180
passed with only a small minority of delegates standing in opposition.
00:11:37.400
In a crowd of more than 1,000, just two or three dozen expressed dissent.
00:11:46.300
It's saying to everyone, look, you're welcome here,
00:11:48.980
adding that the Alberta NDP remains financially and politically independent.
00:11:53.640
The move also signals a departure from the legacy of former leader Rachel Notley,
00:11:58.700
who last year called the idea of separating from the federal party, quote,
00:12:05.040
Nenshi's broader mandate, however, appears solidified.
00:12:09.300
In his first leadership review, Nenshi received 89.5% support from delegates,
00:12:15.460
up from the 86% he received during last year's leadership contest.
00:12:20.520
However, Elections Alberta cited the Alberta NDP for inflating membership numbers during Nenshi's
00:12:27.440
The Alberta NDP was treating donations as automatic membership renewals,
00:12:35.200
Premier Daniel Smith, speaking in the legislature ahead of the convention,
00:12:39.540
said the vote reflects the Alberta NDP's attempt to distance itself from a, quote,
00:12:44.500
damaged brand, pointing to the federal NDP's losses in last Monday's federal election,
00:12:50.420
where it dropped 17 seats and lost official party status.
00:12:53.940
Nenshi rejected the characterization, accusing Smith of misrepresenting the move.
00:13:00.080
Just to go more off of, uh, Danielle Smith's comments there,
00:13:03.640
is this a rebranding project for the Alberta NDP, Jeff?
00:13:07.720
Can Albertans actually expect that Nahid Nenshi's party will have any different values than the federal
00:13:17.500
The NDP's decision to allow members to opt out of federal NDP membership voted on at their annual
00:13:23.780
convention in Edmonton marks a clear rebranding effort under Nahid Nenshi's leadership.
00:13:28.580
Nenshi himself framed the move as a way to broaden the party's appeal, saying, quote,
00:13:32.680
this is a great movement for the very, very many thousands and thousands of Albertans who really
00:13:37.120
like what the Alberta NDP have to say, but don't necessarily agree with the federal party,
00:13:41.940
and this now gives them that choice. The overwhelming support for the change,
00:13:46.240
passing with only a small minority of the over 1,000 delegates dissenting,
00:13:50.600
shows a strategic pivot to distance the provincial party from the federal NDP,
00:13:54.860
which Premier Daniel Smith called a damaged brand after its recent federal election losses.
00:14:00.080
This rebranding is further underscored by Nenshi's rejection of Smith's characterization
00:14:04.140
and his emphasis on the Alberta NDP's financial and political independence, aiming to shed the
00:14:09.800
perception of being tied to an unpopular federal entity. The move also breaks from Rachel Notley's
00:14:14.800
legacy, who had dismissed separations as short-sighted and superficial, signaling a new
00:14:20.420
direction under Nenshi, who enjoys strong support with an 89.5% approval rating in his first leadership
00:14:26.340
review. However, whether Albertans can expect the Alberta NDP under Nenshi to have meaningfully
00:14:31.820
different values from the federal NDP is less clear. The structural separation does allow the
00:14:36.840
Alberta NDP to carve out a more Alberta-centric identity, particularly on issues like the oil and
00:14:42.380
gas industry, which the federal NDP has often opposed. Their 2021 platform, for instance,
00:14:47.860
criticized pipeline projects like Trans Mountain, a stance that doesn't sit well in Alberta.
00:14:52.760
Nenshi's rhetoric about welcoming all Albertans and focusing on local priorities suggests a pragmatic
00:14:57.500
shift, likely to better appeal to rural and resource-focused voters who have been
00:15:01.800
weary, who have been wary of the federal NDP's environmental policies. Yet the Alberta NDP's
00:15:06.820
core values remain progressive at heart, emphasizing social equity, health care, and education,
00:15:12.660
much like the federal NDP. Nenshi's high approval rating indicates party members still align with
00:15:17.540
these ideals, even if tailored to Alberta's context. So while the rebranding creates space for a more
00:15:22.700
distinct provincial identity, Albertans shouldn't expect a fundamental departure from the federal NDP's
00:15:27.880
progressive values, just a more localized, resource-friendly spin on them.
00:15:34.980
That's it for today, folks. Thanks for tuning in. You can stay on top of new episodes every weekday by
00:15:40.340
subscribing to The Daily Brief on iTunes and Spotify. Also, while you're at it, make sure to hit us with