It's been a long time since Canada has had a budget, and it's finally here. But what exactly will it say about the economy, and what will it mean for the future of the country's finances? To find out, our three economic experts John Manley, Jean-Francois Perrault and Amanda Lang join us to discuss.
00:04:45.360And that creates kind of a weak economy with which to deal with the types of shocks that we're dealing with now.
00:04:52.180But importantly, what's going on in the context of this trade conflict with the Americans and this broader realignment of economic activity is a need to transform the economy, which, of course, the prime minister campaigned on very effectively.
00:05:05.120And that will entail a need for significant amounts of investments, ideally by the private sector, but obviously with some government assistance of some form, to help the economy kind of transition from the world in which we've been operating to the world in which we will be operating over the next few years and then maybe longer than that.
00:05:24.740So that's a tricky thing for governments to manage.
00:05:27.900You know, how do we how do we think about fiscal policy in that context?
00:05:30.900How do we think about the size of the budget deficit that is required?
00:05:34.360Is the budget deficit required to kickstart the economy, kickstart this transformation?
00:05:38.880Of course, the government is making that an informed decision.
00:05:41.400I suspect that that is the case, that we do need some government assistance, some government help to, you know, start that transition to catalyze investment.
00:05:50.040But, of course, how effective they will be will depend to some extent on what's in the budget tomorrow and how they go about convincing us that they are doing the right things for us.
00:05:59.560So the finance minister asks you, Amanda, you know, what advice do you have for me?
00:06:03.360I want to catalyze private investment because exactly what Jean-Francois said in that vein is what we have heard.
00:06:08.920The prime minister in particular say that will be the objective of either policy or the investments ultimately that they make on that so-called side of the ledger.
00:06:17.020What kinds of policies or investments, in your view, would be effective in that manner?
00:06:22.360So the problem here, Vashi, is there's nothing new.
00:09:11.260We've been very poor at getting those out of the ground and into foreign hands, where we want to sell them in order to get the returns on them.
00:09:21.040But that's the quickest way for us to earn the kind of money that we need to make, is to get those resources to markets.
00:09:29.520And it means regulatory reforms, and it means that we've got to have the prime minister and a cabinet and provincial premiers that are out there saying, we can do this.
00:09:43.520We're going to strip down those interprovincial trade barriers once and for all.
00:09:47.700We're going to build the infrastructure necessary in our ports, on our highways, our transportation systems, not just pipelines, but all of the other things that we need to do in order to get our goods into foreign hands.
00:10:00.420Now, I do know a politician that was willing to do all those things.
00:10:12.240I think his wife is South American, maybe Colombian, Venezuelan.
00:10:16.800If you know his name, let me know in the comments section.
00:10:20.120Jean-François, what is your perspective on, and what we've kind of talked about in laying out things they can do near-term, mid-term, long-term, your perspective on the fiscal situation?
00:10:30.840There's been a ton of conversation, sometimes debate about how sustainable or not the federal government's finances are.
00:10:37.200What is your level of concern about, let's say, a $75 billion deficit?
00:10:54.920What I'm worried about or what I'm more interested in is the path going forward as a kind of a secondary consideration to what you're actually getting for the $75,000, $80,000, whatever the deficit's going to be in the short run.
00:11:06.520If you have a deficit that generates growth that, again, catalyzes an investment that leads to stronger private sector investment next year, and even more so hopefully beyond that, that's an entirely different context in which you evaluate whether a budget deficit is sustainable or not.
00:11:22.140And historically, of course, that's not been the case.
00:11:25.960It's not led to the type of investment that would increase what we call potential output growth or median term growth.
00:11:32.160If there's elements of this budget that stream transformation that are clearly going to lead to higher private sector investment, that will lead to higher productivity, you know, if that costs us a little bit in the short run to kickstart that, I think that's okay.
00:11:49.220Now, if this time next year we're having this conversation and we've done the $75 or $100 billion deficit and productivity hasn't turned around, there isn't any early evidence that the private sector is doing anything differently, then it's a very different story, very different conversation we're going to have.
00:12:03.500But right now, you know, we've got a government that seems to understand the challenges we're facing, that we need a lot more investment.
00:12:09.780Part of the reason I think they have this split between operating capital is to signal that they're really serious about the capital side of things.
00:12:16.000And that gives me a greater degree of comfort that they will do the right things tomorrow and in months beyond that relative to, say, previous governments who were less focused on, you know, increasing capital stock.
00:12:31.160Amanda, the government has signaled a lot about what they want Canadians to know will be in this budget.
00:12:36.720Is there something that they haven't signaled yet that you would like to see explained, you know, detailed in the budget in some way?
00:12:46.000Do you know what, Vashti, as we have this conversation, what I'm really thinking about is I want to be surprised by something.
00:12:50.740I want to see something they haven't shared with us yet that's really visionary that makes me say, yes, this gives me confidence.
00:12:58.620You know, to GF's point, you can spend an awful lot of money.
00:13:01.800And if you're fighting off an emergency, your house is on fire, you need to put the fire out.
00:13:07.660If you've ever seen a house after it's been fire hosed, it doesn't look very good.
00:13:11.540You can spend a lot of money and not get anywhere.
00:13:14.400And then you've got this massive debt.
00:13:16.040What we would all, I think, like to see is something we haven't heard yet, something that will actually propel the country in some direction where the investment makes sense and will actually kind of galvanize, not just us, but foreign investors as well, that there's a real kind of vision for the future here.
00:13:33.980I'm just that's what I wish for, because that's that's really what we need right now.
00:13:37.480This is an emergency, but we can't waste the opportunity and spend on things that don't make a difference.
00:13:42.160So there you have it. CTV is literally admitting on live television that Canada is going bankrupt and Carney is to blame.
00:13:49.220Of course, they can't say it as directly as I can, but that's really what they're getting at.
00:13:53.880And based on their assessment, which aligns with my assessment and the assessment of many conservatives, Carney is not going to be around much longer.
00:14:01.700Think about it. If you're a prime minister and you sold yourself as an economic genius and now you have plans to literally bankrupt the country, you're not going to stick around very long.
00:14:11.220Eventually, people are going to figure out what's happening and they're going to turn on you.
00:14:15.640And I believe the way Carney is going, it's only a matter of time.
00:14:18.840Now, of course, I can't predict the future and I hate to make predictions, but two things are going to happen.
00:14:23.940Either the budget goes through and Carney sticks around or the opposition parties can vote against it and Carney's gone.
00:14:31.720Now, I really don't want to say which one is more likely, but I'll tell you what I want to happen.
00:14:36.280I'll be straight with you. Conservatives have seen a promising rise in the polls, and that's great.
00:14:41.420However, I don't think we're ready as conservatives for a Christmas election.